The fine amount should be based on clear criteria and not on the inspector’s subjective assessment

15/ 11/ 2021

Provisions that allow inspection bodies to impose fines of millions based on the subjective assessments of a particular inspector of the State Service of Ukraine on Food Safety and Consumer Protection should be excluded. This was discussed at a business meeting with the head of the temporary investigative commission for the protection of investors rights – Ms. Halyna Yanchenko, as well as the head of the State Food and Consumer Service – Ms. Vladyslava Mahaletska, the head of the State Regulatory Service – Mr. Oleksii Kucher. As the representative of the European Business Association, Svitlana Mykhailovska, EBA Deputy Director, joined the discussion. Also, at the meeting, a new draft law was presented aimed at solving existing problems that arise when businesses are being inspected by representatives of the State Food and Consumer Service. Thus, it provides for three key novelties. First, it is proposed to reduce the fine for the so-called obstruction of inspection bodies from the range of 1% to 10% of the value of sold products for the previous calendar month to the range of 0.1% to 5%. Secondly, to avoid corruption risks when determining the percentage of the fine by the inspector, it is proposed to establish a clear gradation to determine the amount of the fine depending on the company’s risk degree, as well as whether it was the first violation this year or repeated. For example, for the first violation for a company with a low degree of risk, the fine will be 0.1%, and for the second - 0.5%. For companies with a medium degree of risk, the fine will be 1% or 2%, respectively, and for companies with a high degree of risk 3% or 5%. At the same time, the degree of risk should be clearly defined in the bylaws, thus eliminating the possibility for the inspector to subjectively determine the amount of a fine. Thirdly, it is proposed to clearly define that the obstruction during inspections is precisely the non-admission of inspectors to inspection, and not simply non-compliance with their legal requirements. The European Business Association supports the need to improve the law on the imposition of fines on businesses for so-called obstruction of inspection bodies, and legislation on consumer protection. The Association has long emphasized the need to implement effective mechanisms to prosecute officials for abuse of power during inspections, - said EBA Deputy Director, Svitlana Mykhailovska. At the same time, it is extremely important to leave the possibility to administratively appeal the decision of inspection bodies to a higher body. This, in turn, will enable the resolution of a problem in a pre-trial procedure, which is usually much faster and less expensive. Therefore, the Association will continue to advocate the need for legislative changes that will allow, on the one hand, the State Food and Consumer Service to effectively exercise its powers, and, on the other hand, will be as clear and unburdensome for law-abiding business. Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

Also, at the meeting, a new draft law was presented aimed at solving existing problems that arise when businesses are being inspected by representatives of the State Food and Consumer Service.

Thus, it provides for three key novelties. First, it is proposed to reduce the fine for the so-called obstruction of inspection bodies from the range of 1% to 10% of the value of sold products for the previous calendar month to the range of 0.1% to 5%. Secondly, to avoid corruption risks when determining the percentage of the fine by the inspector, it is proposed to establish a clear gradation to determine the amount of the fine depending on the company’s risk degree, as well as whether it was the first violation this year or repeated. For example, for the first violation for a company with a low degree of risk, the fine will be 0.1%, and for the second – 0.5%. For companies with a medium degree of risk, the fine will be 1% or 2%, respectively, and for companies with a high degree of risk 3% or 5%. At the same time, the degree of risk should be clearly defined in the bylaws, thus eliminating the possibility for the inspector to subjectively determine the amount of a fine. Thirdly, it is proposed to clearly define that the “obstruction” during inspections is precisely the non-admission of inspectors to inspection, and not simply “non-compliance with their legal requirements.”

The European Business Association supports the need to improve the law on the imposition of fines on businesses for so-called “obstruction” of inspection bodies, and legislation on consumer protection.

“The Association has long emphasized the need to implement effective mechanisms to prosecute officials for abuse of power during inspections,” – said EBA Deputy Director, Svitlana Mykhailovska. At the same time, it is extremely important to leave the possibility to administratively appeal the decision of inspection bodies to a higher body. This, in turn, will enable the resolution of a problem in a pre-trial procedure, which is usually much faster and less expensive.

Therefore, the Association will continue to advocate the need for legislative changes that will allow, on the one hand, the State Food and Consumer Service to effectively exercise its powers, and, on the other hand, will be as clear and unburdensome for law-abiding business.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.