Review for competition compliance

One of the main economic tools for any manufacturer or supplier in matters of competition is the pricing of products or services. However, price competition is not always effective. For this reason, manufacturers, suppliers, or sellers of goods or services often strive to gain significant competitive advantages within the framework of contractual relationships with their buyers. Consequently, contracts based on certain "advantageous" schemes for the sale of goods often attract the close attention of the Antimonopoly Committee of Ukraine (AMCU), as they may violate competition law. Structuring agreements in compliance with AMCU requirements is, therefore, one of the key areas of work for the WinnerLex Law Firm.

Contracts containing certain provisions as defined under the Law of Ukraine "On the Protection of Economic Competition" are classified as concerted practices. As a general rule, engaging in concerted practices is prohibited if they have led or may lead to the prevention, elimination, or restriction of competition.

At the same time, the legislator has established certain exceptions to the general prohibition of anti-competitive concerted practices by business entities for specific categories of such actions, namely:

• concerted practices by small and medium-sized enterprises regarding the joint purchase of goods;
• concerted practices related to the supply and use of goods;
• concerted practices concerning intellectual property rights.

The practical application of the aforementioned exceptions proves to be overly complicated, particularly in the part concerning the supply and use of goods, as it allows for ambiguous interpretation due to the evaluative concepts contained in the law.

For example, the prohibition of anti-competitive concerted actions does not apply if a participant in the concerted actions imposes restrictions on another participant concerning:

• the use of goods supplied by them or goods from other suppliers;
• the purchase of goods from other business entities or the sale of goods to other business entities or consumers;
• the purchase of goods that, by their nature or according to trade and other fair customs in business practice, do not relate to the subject of the agreement;
• the formation of prices or other conditions of the agreement for the sale of the supplied goods to other business entities or consumers.

At the same time, if such concerted actions result in significant restriction of competition in the entire market or a substantial part of it, including monopolization of relevant markets, restrict access to the market for other business entities, or lead to economically unjustified price increases or product shortages, they are prohibited and entail liability under the law. Interestingly, the use of evaluative terms such as "significant," "substantial," or "unjustified price increases" does not provide clear criteria for determining the impact on competition. This creates room for abuse by antitrust authorities in proving anti-competitive effects and holding business entities accountable for violations of competition law.

The attorneys at Winnerlex Law Firm can assist you in resolving issues related to structuring agreements in compliance with the requirements of the Antimonopoly Committee of Ukraine (AMCU). This includes interaction with counterparties during contract negotiations or conducting a legal analysis of already concluded agreements regarding the establishment of certain obligations or restrictions for buyers, such as non-compete clauses, rules for providing discounts, bonuses, and more, based on legislative provisions and current AMCU practice.