Pragma: Strengthening Authorities of the Antimonopoly Committee of Ukraine

11/ 08/ 2023

Photo: Scott Graham, unsplash.com In this issue AMCU inspections: detalization of authorities and procedure Consideration of cases and leniency procedures Access to information and AMCU transparency Novelties in the sphere of control over economic concentrations On August 9, 2023 the Parliament of Ukraine adopted draft law no. 5431, significantly amending the legislation concerning authorities of the Antimonopoly Committee of Ukraine (AMCU) and general approaches to control over compliance with antimonopoly legislation. While the draft law was developed as a part of the implementation of EU legislation, it was discussed broadly for a long period, taking into account the importance of adopted changes. Short overview of the main amendments – in our newsletter AMCU inspections: detalization of authorities and procedure AMCU had the authority to conduct inspections in the framework of investigation before, but the draft law no. 5431 clarifies respective provisions. First, it explicitly mentions that during the inspections, on the basis of the economic court decision, AMCU has a right to: access to the enterprise’s premises and other belongings of the enterprise regardless of their location; make copies, or receive copies of information; seize objects or information media, documents, seal the premises and information systems in order to prevent access to information; inspect the premises and other belongings of the enterprise. Taking into account such detalization of authorities during the inspections was broadly discussed, as these actions may significantly affect the business activities of the enterprises. Also, the first draft of the act contained a provision authorizing inspections in the employees’ dwellings, which was considered an excessive authority and removed in the process of preparation of the draft law for the second reading. Inspections may be conducted only in the framework of consideration of the case. However, if an inspection is needed, AMCU may not inform an enterprise about opening a case before the inspection – unless it is conducted later than 20 days after opening the case. In order to secure the rights of the enterprise to be inspected, the draft law clarifies the procedure for conducting such inspections, including prohibiting their conducting outside of business hours, providing details regarding the documents produced during the inspections, grounds for conducting inspections, setting the maximum duration of the inspection (up to 30 days). At the same time, representatives of police and other law enforcement bodies, customs bodies may be involved in conducting the inspection. Also, since inspections according to this draft law are somehow similar to the searches, conducted in the framework of criminal investigations, additional amendments were made to the Economic Procedural Court of Ukraine, ensuring judicial control over them. Consideration of cases, settlement and leniency procedures The adopted draft law amends a number of procedural issues, such as setting the timeframes for consideration of cases, providing a procedural framework for the collection of evidence and changing leniency procedures. First, according to the newly adopted regulation, the cases regarding violation of the legislation on protection of economic competition should be considered within 3 years. In case of necessity this period may be prolonged – but not more than for 2 years. In case no decision was made within defined timeframes the case should be closed. Second, the recently adopted draft law pays attention to the collection of evidence both by providing additional instruments (including inspections and access to some types of restricted information), as well as obliging other state authorities (in particular, fiscal authorities) to transfer to AMCU information that may be considered evidence in cases regarding violation of the legislation on protection of economic competition. The adopted draft law sets rules for the collection, storing and use of evidence, collected by the AMCU during consideration of the case. Finally, the adopted law provides more detailed settlement and leniency procedures – including grounds for its application, possible reduction of liability and grounds for non-application of such procedure. Access to information and AMCU transparency Another important novelty – significantly broadened authorities of the AMCU in terms of access to the information. The adopted draft law prescribes that the AMCU has access to the information, protected by banking secrecy and notary secret. At the same time, it provides enterprises with a right not to provide information that was already provided within 12 months period. In addition, the new regulation obliges the AMCU to work transparently, in particular, by ensuring the publication of recommendations, preliminary decisions within 10 days after their adoption. Since AMCU apart from its functions of protection of economic competition is also ensures control over public procurements and is responsible for consideration of complaints, the adopted draft law provides it with the obligation to keep a state registry of enterprises, deemed liable for violation of legislation on public procurements, auctions and other selection. Access to information in this registry should be open and free of charge. Novelties in the sphere of control over economic concentrations First, the adopted draft law amends the definition of the terms “single property complex” and “control”, which are crucial for understanding the processes leading to economic concentration. Then, the adopted law clarifies the definition of certain actions which are considered as an economic concentration and adds a new one - purchasing rights which make it possible to determine the conditions of economic activity, issue binding orders or perform the functions of the management body of the economic entity and/or provide a decisive influence on the formation of the management body, on the results of voting or decision-making by the bodies of the economic entity. In addition, the newly adopted draft law explicitly lists among participants of concentration persons, participating in the privatization of state and communal property. It also sets the rules for the calculation of thresholds for obligatory control by AMCU over economic concentrations in the Law of Ukraine “On Protection of Economic Competition” itself. Important: in the version of the draft law that was provided for the second reading by the Committee it was suggested to add to the draft law amendments to the Law of Ukraine “On State Aid”, aiming at improvement of procedures for provision of state aid. However, these amendments were not supported by the Parliament during the voting and were removed from the final text.

Photo: Scott Graham, unsplash.com

In this issue

AMCU inspections: detalization of authorities and procedure
Consideration of cases and leniency procedures
Access to information and AMCU transparency
Novelties in the sphere of control over economic concentrations

On August 9, 2023 the Parliament of Ukraine adopted draft law no. 5431, significantly amending the legislation concerning authorities of the Antimonopoly Committee of Ukraine (AMCU) and general approaches to control over compliance with antimonopoly legislation. While the draft law was developed as a part of the implementation of EU legislation, it was discussed broadly for a long period, taking into account the importance of adopted changes. Short overview of the main amendments – in our newsletter

AMCU inspections: detalization of authorities and procedure

AMCU had the authority to conduct inspections in the framework of investigation before, but the draft law no. 5431 clarifies respective provisions. First, it explicitly mentions that during the inspections, on the basis of the economic court decision, AMCU has a right to:

access to the enterprise’s premises and other belongings of the enterprise regardless of their location;
make copies, or receive copies of information;
seize objects or information media, documents, seal the premises and information systems in order to prevent access to information;
inspect the premises and other belongings of the enterprise.

Taking into account such detalization of authorities during the inspections was broadly discussed, as these actions may significantly affect the business activities of the enterprises. Also, the first draft of the act contained a provision authorizing inspections in the employees’ dwellings, which was considered an excessive authority and removed in the process of preparation of the draft law for the second reading.

Inspections may be conducted only in the framework of consideration of the case. However, if an inspection is needed, AMCU may not inform an enterprise about opening a case before the inspection – unless it is conducted later than 20 days after opening the case.

In order to secure the rights of the enterprise to be inspected, the draft law clarifies the procedure for conducting such inspections, including prohibiting their conducting outside of business hours, providing details regarding the documents produced during the inspections, grounds for conducting inspections, setting the maximum duration of the inspection (up to 30 days). At the same time, representatives of police and other law enforcement bodies, customs bodies may be involved in conducting the inspection. Also, since inspections according to this draft law are somehow similar to the searches, conducted in the framework of criminal investigations, additional amendments were made to the Economic Procedural Court of Ukraine, ensuring judicial control over them.

Consideration of cases, settlement and leniency procedures

The adopted draft law amends a number of procedural issues, such as setting the timeframes for consideration of cases, providing a procedural framework for the collection of evidence and changing leniency procedures.

First, according to the newly adopted regulation, the cases regarding violation of the legislation on protection of economic competition should be considered within 3 years. In case of necessity this period may be prolonged – but not more than for 2 years. In case no decision was made within defined timeframes the case should be closed.

Second, the recently adopted draft law pays attention to the collection of evidence both by providing additional instruments (including inspections and access to some types of restricted information), as well as obliging other state authorities (in particular, fiscal authorities) to transfer to AMCU information that may be considered evidence in cases regarding violation of the legislation on protection of economic competition. The adopted draft law sets rules for the collection, storing and use of evidence, collected by the AMCU during consideration of the case.

Finally, the adopted law provides more detailed settlement and leniency procedures – including grounds for its application, possible reduction of liability and grounds for non-application of such procedure.

Access to information and AMCU transparency

Another important novelty – significantly broadened authorities of the AMCU in terms of access to the information. The adopted draft law prescribes that the AMCU has access to the information, protected by banking secrecy and notary secret. At the same time, it provides enterprises with a right not to provide information that was already provided within 12 months period.

In addition, the new regulation obliges the AMCU to work transparently, in particular, by ensuring the publication of recommendations, preliminary decisions within 10 days after their adoption.

Since AMCU apart from its functions of protection of economic competition is also ensures control over public procurements and is responsible for consideration of complaints, the adopted draft law provides it with the obligation to keep a state registry of enterprises, deemed liable for violation of legislation on public procurements, auctions and other selection. Access to information in this registry should be open and free of charge.

Novelties in the sphere of control over economic concentrations

First, the adopted draft law amends the definition of the terms “single property complex” and “control”, which are crucial for understanding the processes leading to economic concentration.

Then, the adopted law clarifies the definition of certain actions which are considered as an economic concentration and adds a new one – purchasing rights which make it possible to determine the conditions of economic activity, issue binding orders or perform the functions of the management body of the economic entity and/or provide a decisive influence on the formation of the management body, on the results of voting or decision-making by the bodies of the economic entity.

In addition, the newly adopted draft law explicitly lists among participants of concentration persons, participating in the privatization of state and communal property. It also sets the rules for the calculation of thresholds for obligatory control by AMCU over economic concentrations in the Law of Ukraine “On Protection of Economic Competition” itself.

Important: in the version of the draft law that was provided for the second reading by the Committee it was suggested to add to the draft law amendments to the Law of Ukraine “On State Aid”, aiming at improvement of procedures for provision of state aid. However, these amendments were not supported by the Parliament during the voting and were removed from the final text.