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New revision of the law «About countering monopolistic activities and promoting competition” comes into force

31 August 2018

New revision of the law “About countering monopolistic activities and promoting competition” comes into force on August 3rd, 2018.

In particular, the document clarifies rules of coordination of actions related to the economic concentration, introduces new types of unfair competition, identifies actions related to the procurement that can be considered as anticompetitive, specifies procedure of the Ministry of antimonopoly regulation and trade to detect existence or absence of facts of antimonopoly legislation violence.

REVERA lawyers Ekaterina Pedo and Mikita Talkanitsa investigated key changes. 

Dominant position on the market 

Quantitive indicators of combined market share of several companies based on which several entities may be considered as dominant on the market have been changed in the new revision:

— for less than three entities — more then 50% for all (before 54%) and 15% for each company.
— for four and five entities — more then 75% for all (before 78%) and 15% for each company.

Indicators of competitive restrictions

List of indicators that can demonstrate presence of competitive restrictions was formalized:

— reduction in the number of entities on goods market;
— increase or reduction of price that is not connected with the changes in general conditions of goods market;
— refusal of entities from independent actions;
— definition of general conditions of good circulation on the goods market based on the agreements between entities, instructions of third parties or as a result of coordination of actions, etc.

The list mentioned here above is not full. Consequently, other circumstances may demonstrate presence of competitive restrictions on the market as well.

New types of unfair competition

List of actions that may be considered as unfair competition was extended. In particular, the following was attributed to the new types of illegal actions:

— misrepresentation not only related to the goods, works and services of the competitor but also related to the one's own goods;
— illegal obtention, use and release of competitors’ trade secret.

List of cases of incorrect comparison was extended as well. For example, information that cannot not be checked in an objective way can be present on this list.

Monopsony

The new revision enshrined the terms of monopsony and monopsonically low price that previously could be considered as illegal actions.
Monopsonic position – dominant position of one or several buying entities on the market of a certain good.
Monopsonic price – price that was established by a buying entity (buying entities) in a way that it allows the entity to obtain additional income due to cost cut, and the price below the sum of necessary expenses and manufacturer’s profit.

Antimonopoly requirements for goods procurement

List of actions while goods procurement (except of procurement process from one source) that may be considered as contradictory to the antimonopoly legislation was established:

— coordination of participant activity by a procurement organizer (customer);
— conclusion of agreements between organizer, customer and participant;
— provision of the access to the information for the participant, unless otherwise established by a law;
— creation of preferential conditions, unless otherwise established by a law;
— participation of the organizer (customer) or their employees as participants of ongoing procurements, etc.

Goods procurement with the violation of the requirements mentioned here above may be declared invalid by a judge court (based on claim of antimonopoly authority inclusive). Declaration of procedure invalidity involves annulation of agreements executed as its result.

Rules of economic concentration

The new revision added cases of economic concentration that may require approval of the Ministry of antimonopoly regulation and trade. Now, they include the following as well:

— conclusion of simple partnership agreements between competitors;
— acquisition of ownership, acquisition for use or acquisition of possession of company basic and intangible assets with value more than 20% of net book value.

The Ministry of antimonopoly regulation and trade will not approve economic concentration unless net book value of antimonopoly control entities exceeds 200 000 basic unit (previously — 100 000 basic units), and revenues for last year — 400 000 basic units (previously — 200 000 basic units).

The Ministry of antimonopoly regulation and trade has the right to bring a caution

The new revision provided the antimonopoly authority with the possibility to send to the companies and public authorities office holders cautions about action performance inadmissibility that can lead to the violation of antimonopoly legislation.

The Ministry of antimonopoly and trade can issue such cautions on its own initiative during 10 working days from the moment when it learned about planned behavior of the entity based on the public statements of this entity or from other sources.

Procedure for establishment of presence or absence of facts of antimonopoly legislation violation was specified

Procedure for establishment of presence or absence of facts of antimonopoly legislation violation was specified. The Ministry of antimonopoly regulation and trade will be able to do it based on the information from declarations about violations, mass media and public authority messages as well as based on proves obtained in the furtherance of its powers.

In case of receipt of an alleged violation formalized in accordance with the specified requirements, the Ministry of antimonopoly regulation and trade has to review it within three months if the three-year term from the date of violation commission did not expire. Three-month term may be extended with notification of declarant within 5 working days.

Prior to decision making about establishment of presence or absence of facts of antimonopoly legislation violation, the Ministry of antimonopoly regulation and trade has the right to issue the caution сontaining list of actions to be done by the entity within specified period. If all conditions of the caution have been applied, review of the fact of antimonopoly legislation violation is terminated. If all conditions have not been applied or have been applied partially, the antimonopoly authority may take a resolution about presence (absence) of the fact of antimonopoly legislation violation that may be appealed in a judge court within 30 days.

Henceforth, instruction containing an action to be done by the entities within specific term determined by the Ministry of antimonopoly regulation and trade is issued.

In case if newly discovered circumstances are detected, the antimonopoly authority can reconsider the previous resolution.

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