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.
WinnerLex Law Firm provides the following services for structuring agreements in compliance with the requirements of the Antimonopoly Committee of Ukraine (AMCU):
- Written and/or oral consultations regarding the compliance of the agreement’s text with antimonopoly legislation requirements prior to its execution.
- Development of agreements for conclusion with counterparties or analysis of already concluded agreements, particularly concerning the establishment of specific obligations or restrictions for buyers, such as non-compete clauses, rules for granting discounts, bonuses, and more.
Practice experience: 19 years
Specialization: litigation support, tax, customs and antitrust practices, agricultural law, IT and M&A
Practice experience: 21 years Specialization: support of economic, civil, labor and administrative disputes, energy
Practice experience: 11 years Specialization: tax, customs and corporate disputes, support of inspections, contractual activities
Practice experience: 6 years
Specialisation: business and civil law, tax and customs practice, corporate law, registration and reorganisation of business
Practice experience: 11 years Specialization: support of economic, civil, labor and administrative disputes, inspections
When drafting a contract, avoid including terms that require the buyer to purchase a specific product solely from one supplier.
Do not include clauses obligating the buyer to purchase more than 80% of the product exclusively from one supplier, while also requiring the buyer not to buy or resell competitors’ products.
Avoid imposing obligations on the buyer to purchase products from the supplier in specified minimum quantities.
Avoid using provisions that obligate the buyer to refrain from competition for an indefinite period or for a period exceeding five years.
Discounts and bonuses set by the supplier should not be a tool that could result in creating market entry barriers for other companies.
According to Article 60 of the Law of Ukraine “On Protection of Economic Competition,” decisions of the Antimonopoly Committee of Ukraine, the Administrative Board of the Antimonopoly Committee of Ukraine, and the state commissioner of the Antimonopoly Committee of Ukraine are appealed to the commercial court of Kyiv. Decisions of the administrative board of the territorial branch of the Antimonopoly Committee of Ukraine are appealed to the relevant commercial courts of the regions and Kyiv city. The applicant, defendant, and third parties have the right to appeal the decisions of the Antimonopoly Committee of Ukraine in full or in part to the commercial court within two months from the date of receipt of the decision. This period cannot be restored.
Thus, these deadlines are exhaustive. The statute of limitations set by the Civil Code of Ukraine for the relevant legal relations does not apply, just as it does not apply in the case of appealing the orders of the Antimonopoly Committee of Ukraine and its bodies.
The status of business entities as participants in business obligations arising from a business contract or other agreements implies an awareness by the business entities of the potential consequences of executing the respective contracts (agreements) in the form of anti-competitive coordinated actions.
Moreover, the provisions of the Law of Ukraine “On Protection of Economic Competition” do not provide grounds to consider that the execution of obligations by a business entity under a business contract (agreement) exempts it from responsibility for violating the requirements of this Law.
The lack of a monopoly (dominant) position of a business entity does not exclude the possibility of the business entity negatively impacting the goods market as a result of anti-competitive coordinated actions with other business entities.
The presence or absence of a violation in the form of anti-competitive coordinated actions is not exclusively linked to whether the business entity holds a monopoly (dominant) position in the market.
The coordination of actions by business entities creates an independent violation of competition law, and this does not depend on whether the relevant business entities, or one of them, holds a monopoly (dominant) position in the market.
