The Antimonopoly Committee of Ukraine (“AMC”) adopted the rules for vertical agreements establishing several criteria that could exempt vertical agreements – containing vertical restrictive covenants – from the requirement to obtain the AMC approval for concerted practices (“Rules”). The Rules were published and became effective on 5 December 2017.
These rules are part of the UA-EU law approximation process in accordance with the UA-EU Association Treaty and follows closely the Commission Regulation (EU) 330/2010 of 20 April 2010 (Block Exemption Regulation).
The exemption from the AMC approval applies to the vertical agreements containing restrictive covenants on a vertical level (i.e. supplier-customer alike), provided the market share of each of the parties to the agreement does not exceed 30% (excepted stringent restrictions).
This exemption does not apply to the following restrictions (exceptions apply) such as:
- resale price maintenance,
- restrictions by territory or customers type;
- restrictions of cross-supplies between buyers within a selective distribution system;
- restrictions of the supplier to sell the components as spare parts to end-users or to repairers;
- non-compete restrictions with undefined term or term exceeding five years;
- restrictions that apply after termination of the agreement (not to sell/re-sale/buy, not to produce);
- prohibition to sell goods under specific competitors’ trademarks in a selective distribution system.
Generally, agency arrangements do not constitute vertical concerted practices, provided the agent bears no or insignificant commercial and/or financial risks. The Rules also define the circumstances under which agency arrangements may constitute vertical concerted practices, thus the Rules being enforce thereto.
The Rules set forth much awaited and sound requirements for businesses, resolving the ambiguity in assessing the anti-competitive effects of vertical agreements, which constitute another step toward the fulfilment of Ukraine’s obligations under the UA-EU Association Treaty.
Legislation: Order of the Antimonopoly Committee of Ukraine No. 10-рп of 12 October 2017 On Approval of Typical Requirements for Vertical Concerted Actions of Business Entities and Amendments to Typical Requirements for Vertical Concerted Actions of Business Entities for the General Exemption from Prior Clearance Approval of the Antimonopoly Committee of Ukraine