Ukraine: Procedures improved for competition cases and leniency proceedings

Ukraine

On 7 February 2019, the Ukrainian Parliament adopted a new law extending the scope of the existing leniency program and introducing new procedural rules for competition cases reviewed by the Antimonopoly Committee of Ukraine (AMCU).

The Law addresses procedural fairness issues with the aim of balancing the procedural rights of parties involved in competition cases and harmonising Ukrainian competition law procedural rules with EU standards. Changes to procedural rules include:

Time limits for handling the cases

For the first time, the Law determines the time limits for the AMCU to complete their review of cases:­

  • Five years for cases on anti-competitive concerted practices (e.g. cartel cases);
  • One year for cases concerning mergers in which prior permission was not granted, non-compliance with the terms of the charter provisions of a new company for which merger clearance was granted (if the result was restricted competition), or unfair competition;
  •  Six months for informational violations including failure to submit information or submitting inaccurate or incomplete information to the AMCU;
  • Two years for all other cases.

In exceptional cases, the above terms can be extended by six months and time limits will apply to AMCU cases from the day the Law comes into effect.

Recusals of AMCU officers, experts, translators

The Law introduces a new mechanism for recusals during investigations of AMCU officers, including the AMCU head, state commissioners and investigators, as well as experts or translators.

A recusal can be either self-declared or initiated by one of the parties filing the recusal motion, which will be considered within ten calendar days after its submission.

Any doubts about impartiality or objectiveness (e.g. conflict of interest) can be grounds for recusal. The Law forbids initiating unjustified or repetitive recusals.

Settlement procedure

The Law introduces a settlement procedure in anticompetitive concerted practices cases where a company can initiate a settlement before the AMCU issues its preliminary findings in a case.

A company is eligible for a 20% fine reduction if it agrees to AMCU settlement agreement terms, pay the reduced fine, unconditionally admit to the violation, terminate the violation, and cooperates with the AMCU throughout the investigation.

Remarkably, in cases where there was a failure to enter into a settlement agreement, the AMCU cannot treat any company’s statement made in the course of negotiations as a confession of guilt.

In the event of a successful negotiation, a settlement agreement is signed by the company and the AMCU, and is subject to further approval by the commercial court.

Late Payment Penalties Cancelled

The Law cancels the current AMCU late payment penalty of 1.5% per day.

Other notable procedural fairness developments

  • The Law enhances the procedural rights of defendants, including access to case files, taking copies of case materials, asking questions and receiving responses from the AMCU.
  • It introduces certain improvements and brings legal certainty to AMCU hearing procedures.
  • It introduces the principle that an AMCU decision cannot rely on evidence, which the party had no opportunity to study or on evidence received in violation of the law.

Changes to the leniency program

The Law amends formal requirements and conditions for existing leniency procedures, and in particular offers partial immunity to whistleblowers who report anticompetitive concerted practices.

A company that is the first applicant to report its participation in anticompetitive concerted practices obtains full immunity (i.e. no fine shall apply). This immunity does not apply if:

  • the undertaking initiated the anticompetitive concerted practices or took steps to coerce others to participate;
  • it did not terminate its participation in the anticompetitive concerted practices prior to reporting them to the AMCU;
  • it has not cooperated (e.g. not provided requested information and evidence) with the AMCU throughout the investigation;
  • it has disclosed information about the leniency application to third parties.

The Law introduces a fine reduction mechanism for those undertakings, which stated their participation in anticompetitive concerted practices after the report of the initial whistleblower.

The first undertaking to report on its participation in anticompetitive concerted practices is eligible for a 50% fine reduction, the second a 30% reduction, and all others 20% reductions.

Undertakings may even receive full immunity and full reduction of fines if they report on their participation before the AMCU issues its preliminary conclusions on the case.

When the Law comes into effect, the AMCU will bring by-laws in line with the new rules.

The Law is currently awaiting the President’s signature and should come into effect three months after its promulgation, except for those provisions related to settlement procedures, which will come into force on 1 January 2020. For more information on this law and how it might affect your business, feel free to contact one of authors of this publication.

Legislation: Draft Law No. 6746 dated 17 July 2017 “On Amending Certain Legislative Acts of Ukraine for Ensuring Principles of Procedural Fairness and Enhancing Effectiveness of Handling the Cases in Relation to Infringement of Legislation on Protection of Economic Competition