Following last year's success in updating Ukrainian competition laws, Ukrainian Parliament has taken another step forward by adopting a set of long-awaited amendments.

Bans for sanctioned companies

On 9 November 2017, the Parliament adopted draft law No. 4287 that introduces explicit bans on both merger and concerted practices clearances for companies that are subject to Ukrainian sanctions. Under the amendments, the Antimonopoly Committee of Ukraine ("AMC") must reject a clearance application if either of the applicants has a sanctioned entity within its corporate group. While prior to these amendments it was technically prohibited for a sanctioned entity to get approval of the AMC, in practice the AMC followed a practical approach and approved transactions of large multinational companies if their sanctioned subsidiaries were in no way involved in the transaction. As the final text of the draft law is not yet available, it is unclear whether the AMC will apply the ban retroactively (as was declared by the Parliament).

The amendment will become effective after it is signed by the President and published.

Two more drafts in the pipeline

On the same day, two more draft amendments, No. 6723 and No. 6746, passed their first reading at the Parliament. The key changes envisaged by the amendments are as follows.

Draft law No. 6723:

Vertical block exemption

Clears the way for the new Vertical Block Exceptions Regulation introduced by the AMC (which is expected to become effective soon), and removes certain idle provisions of Ukrainian competition laws. Following these changes, the AMC will determine the concerted practices that may be carved out from the general notification requirement. It is envisaged that, at the end of the day, vertical restrains will be subject to a separate AMC regulation (unlike currently, where they are covered by the fairly broad General Block Exceptions Regulation), and that the assessment of their competitive effects will be based solely on the Vertical Block Exceptions Regulation. More specifically, the Vertical Block Exceptions Regulation provides for a block exemption for certain categories of vertical restraints (so-called "safe harbors"), which may be implemented without the approval of the AMC.

Additional grounds for a fast-track review

Introduces additional grounds for a simplified 25-day review procedure for a concentration (in addition to those indicated in our previous alert), namely if:

  • the parties’ activities do not overlap on the relevant market in Ukraine, as well as on the upstream or downstream markets;
  • there is a change from joint to sole control (provided that control was duly established);
  • the parties voluntary filed a notification (e.g., the notification is not required under Competition Law, but the parties seek additional comfort and/or legal certainty)

Investigation of a de-minimis case

Allows the AMC to refuse to investigate a case if it qualifies for a de-minimis case, i.e., where there are no substantial threats to competition.

Enforcement of the AMCˈs decision

Introduces the following changes with respect to the AMCˈs decisions:

  • empowers the AMC to issue enforcement orders;
  • abolishes the 1.5% penalty for the late payment of fines; and
  • introduces a 50% discount for the early voluntary payments of the fine.

The draft law also envisages that the filing fee for review of a concentration via the standard 45-day procedure will be increased two-fold.

Draft law No. 6746:

Statutory deadlines

Introduces the following deadlines for the AMCˈs investigations:

  • 3 years for violations of significant gravity (such as cartels or unauthorised concentrations);
  • 6 months for violations of low gravity (such as provision of false or misleading information to the AMC).

The deadlines are also subject to 3 months’ extension upon a party’s request.

Conflict of interest

Allows the AMCˈs state commissioner to withdraw from a case if he/she is in conflict. The parties concerned may also ask for withdrawal of the commissioner for the same reasons (which is in line with Ukrainian anticorruption laws). Moreover, the AMCˈs state commissioner who was involved in investigation of a case cannot participate in the decision-making process or vote on the committee.

Dawn raids

Grants the AMC extensive investigative powers, in particular free access not only to the premises and/or means of transport of the undertaking suspected but also to the premises and/or means of transport of third parties (and even if the owner is absent during the dawn raid).

Settlements

Introduces the possibility of a settlement agreement with the AMC and a 10% discount of the possible fine. However, to receive the discount the respondent will have to cooperate with the AMC and facilitate its investigation up to the final decision on the case.

Boost leniency program

Sets gradual discounts for providing the AMC with certain information relevant for an investigation of the cartel in question, namely 50% off for the first notice, 30% off - for the second notice, and 20% off for the third and the following notices.

Independent commissioner

Introduces a position of an independent commissioner who will be responsible for conducting hearings. The independent commissioner may issue guidelines for the case in question, which will be of recommendatory nature for the AMC.

Although there remains substantial room for further improvement, draft laws No. 6723 and No. 6746 are likely to get the Parliament’s endorsement after certain modifications on or before their second reading.