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International tobacco companies intend to defend their rights in international arbitration

06/ 08/ 2020

International tobacco companies consider the imposition of fines by the Antimonopoly Committee of Ukraine for allegedly anti-competitive concerted actions of international companies as unjustified (AMCU decision № 697-r dd. 10.10.2019 in case № 126-26.13 / 18-17).

It is well known that the monopolization of the cigarette market took place with the consent of the Antimonopoly Committee of Ukraine, which at the time granted the respective permits for concentration in the cigarette distribution market.

Currently, the EBA member companies are appealing the decision of the AMCU in court. However, the companies did not have full access to the evidence on which the AMCU based their allegations. Besides, according to the business, the arguments of tobacco companies were not given enough attention during the trial. Thus, the court ignored the independent economic analyzes and assessments provided by the companies and conducted by reputable international consultants in the field of economy and competition. Also, the court did not pay due attention to the conclusions of leading Ukrainian experts and recognized jurists in the field of antitrust regulation and EU law who unanimously supported the legal position of companies and found the accusations of the AMCU illegal.

So far, two groups of international tobacco companies have filed a notice to Ukraine on defending their rights as foreign investors in international arbitration. Two more companies also consider filing such a notice shortly. If a quick solution cannot be reached through negotiations with the state authorities of Ukraine, then the case will be examined by international institutions for the settlement of investment disputes. In this case, the State of Ukraine will be the party to the dispute instead of the AMCU. At the same time, such high-profile disputes usually attract a lot of attention from the international community and will have extremely negative consequences for Ukraine’s investment climate.

Therefore, the business calls on the Government of Ukraine to respond appropriately to the notice of the investment dispute with the state of Ukraine initiated by international investors from the USA, Great Britain, Switzerland and the Netherlands regarding the AMCU decision and to impartially consider the issue in compliance with Ukrainian legislation and international agreements.

We hope that this frustrating situation will be resolved quickly and professionally while maintaining business relations between strategic investors and the state, and without significant losses for the investment climate in Ukraine.

 

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