The findings of the Supreme Court, which allowed Tedis Ukraine to satisfy the cassation appeal against the Antimonopoly Committee of Ukraine (AMCU) and invalidate the fine of UAH 3.4 billion, will also significantly enhance the prospects of cigarette manufacturers to revoke the decision of the committee on fines, according to lawyers interviewed by Interfax-Ukraine.
“Speaking of other tobacco trials, it should be said that the Supreme Court’s findings on the inconsistency of the Antimonopoly Committee’s decision with the rules of prejudice and evidence can significantly enhance the prospects of cigarette manufacturers to overturn the Antimonopoly Committee’s decision,” Asters law firm partner Oleksiy Pustovit said.
He recalled that the Supreme Court had put an end to the Tedis Ukraine lawsuit against the Antimonopoly Committee, invalidating the committee’s decision incriminating anti-competitive concerted actions by Tedis and cigarette manufacturers Philip Morris International (PMI), JT International (JTI), Imperial Tobacco (IT) and British American Tobacco (BAT).
“The decision is important both in terms of influencing the law enforcement practice of the Antimonopoly Committee as a whole and in terms of changing the balance of power in ongoing similar litigation between cigarette manufacturers and the committee,” he said.
The lawyer called the Supreme Court’s decision “brief and capacious at the same time.” In particular, according to the lawyer, the most remarkable position is the illegality of the committee’s use of its decisions and recommendations in other cases as adjudicated. Many of the committee’s findings were not established or examined on the basis of evidence, as required by law, but were taken from other cases in which participants, markets and circumstances differed. In addition, the committee’s decision also contained elements of letters of recommendation as evidence in the case, which was closed without establishing any facts of violation of competition law.
“The Supreme Court concluded that the Antimonopoly Committee, citing other decisions, did not in fact investigate the market itself, which is decisive for any antitrust case, while other decisions dealt with other markets. The issue of the illegality of the committee’s use of its decisions in other cases as adjudicated was raised by the manufacturers and Tedis at the stage of consideration of the case by the committee. From a legal point of view, such an approach is tantamount to charges without some hard evidence,” he said.
The lawyer said that similar arguments were used in the claims of the tobacco manufacturers.
“Following the decision of the Supreme Court, courts will most likely follow the position of the illegality of the committee’s decisions and recommendations made in other cases as adjudicated, in other cases under manufacturer’s claims, which enhances the manufacturer’s chances of winning disputes with the committee,” Pustovit said.
In turn, partner of the Legal Alliance Andriy Gorbatenko reminded that the Antimonopoly Committee imposed a fine on tobacco companies due to the fact that with the entry of Tedis Ukraine (formerly Megapolis-Ukraine) in 2010, the number of cigarette distributors began to decline sharply and by 2013 Tedis Ukraine was the only distributor to which cigarette manufacturers supplied their products. Following the investigation, the committee concluded that this circumstance was the result of anti-competitive concerted actions that concerned the elimination of other distributors from the market or restriction of market access to them. In particular, the Antimonopoly Committee found that cigarette manufacturers had identified unfeasible selection conditions for distributors, which even Tedis Ukraine did not meet.
However, the lawyer said that “the unfortunate decision of the Antimonopoly Committee does not contain exhaustive evidence that would unequivocally answer this question,” and the Antimonopoly Committee did not provide evidence of consistency between the actions of cigarette manufacturers and Tedis Ukraine.
“Could this decision of the Supreme Court be the basis for reversing the decision of the Antimonopoly Committee and some cigarette manufacturers? Definitely, yes. Given the position set out in the decision of the Supreme Court, the accusation of the Antimonopoly Committee in this case is as follows: there seemed to be some agreement to establish barriers for other distributors to enter the primary cigarettes market, but it is not clear who agreed on this and with whom and it does not mean that the conditions established as a result of such an agreement (if any) could really create a barrier,” the lawyer said.
Gorbatenko also said that “the rest of the charges are based on evidence that cannot be used because it was collected in other investigations.”
“The probability that the Antimonopoly Committee’s decision regarding the accusations against the manufacturers will be backed by courts is akin to the probability of meeting an alien mind. Of course, there is a chance, but everyone will be very surprised if it really happens,” the lawyer said.
“We just have to hope that this decision of the Supreme Court will not only bring disappointment to the Antimonopoly Committee, but will also be an incentive for more thorough investigations and preparation of decisions, possibly in relation to Tedis Ukraine,” Gorbatenko said.
In turn, the American Chamber of Commerce in Ukraine reminded that “the rule of law and fair justice is one of the strategic priorities identified by the American Chamber of Commerce in 10 steps for Ukraine’s economic recovery and growth in 2021.”
The Chamber, in particular, notes the need for transparent and fair litigation, as companies have expressed concern that they have not been given full access to the evidence on which the Antimonopoly Committee’s allegations are based, and that insufficient attention was paid the companies’ arguments during the trial.
“Such high-profile disputes usually attract a lot of attention from the international community and can have an extremely negative impact on Ukraine’s image among foreign investors. A quick, transparent and fair solution will help maintain business relations between strategic investors and the state, not damage Ukraine’s reputation and investment climate and avoid losses for the budget,” President of the American Chamber of Commerce in Ukraine Andy Hunder said.
Two thirds of hotels have reduced their expenses by headcount optimization, 27% of respondents have implemented alternative services and rented rooms as offices, according to the study entitled “Ukraine Hotel Market & COVID-19 Impact” conducted by the Ukrainian Hotel & Resort Association (UHRA) together with international tourism experts from Horwath HTL.
“Two-thirds of hotels have decided to reduce prices – an instinctive (yet not necessarily efficient) step to boost occupancy. One third of respondents introduced digital & marketing tools. Apparently, before the pandemic was not considered critical. Some 27% of respondents have introduced alternative services, i.e., co-working, renting rooms as offices, etc,” UHRA International Relations Director Ivan Lun told Interfax-Ukraine.
He added that some respondents (7%) decided to change the function of some areas, i.e. for a gambling facility.
Lun said that vast majority of respondents (93%) confirmed an overall drop in their revenues, and more than 60% of hotels had revenues shrink by more than 40%.
“Only 4% of hotels showed an increase in revenues, and 3% reported that it remained at the level of 2019. Hoteliers who reported growing revenues were all located in the countryside,” the expert said.
Despite a difficult year for the industry, only 2% reported that they are actively seeking exit by selling their hotels and over 90% responded that they will keep operating even with certain limitations.
According to Lun, almost a quarter of hoteliers (23%) expect their performance to return to 2019 levels in 2021; 57% – in 2022 and only slightly less than 20% – in 2023 or later.
Some 122 respondents have participated in the survey, with an average size of 72 rooms per property. Two thirds of the responses came from urban, while 34% from rural locations.
Foreign direct investments in Ukraine in q-iii of 2020 (operations, $ MLN).
NBU
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MP Oleh Dunda (the Servant of the People faction) registered in the Verkhovna Rada bills on reforming the State Architectural and Construction Inspectorate and enhancing liability for violations in the urban planning sphere.
Relevant bills No. 5071 and 5072 were registered by the MP in the Verkhovna Rada on February 16, the website of the parliament said.
According to the explanatory note to bill No. 5071, which is available to Interfax-Ukraine, the bill provides for the introduction of phased state control over the construction process, which is carried out by local self-government bodies. State supervision is carried out by the central body of state power, which ensures the formation and implementation of state policy in the field of construction, one of the deputy ministers is also the chief inspector of the state urban planning supervision.
The bill also proposes to expand the range of entities providing services in the construction sector, subject to their certification. In addition, compulsory liability insurance is provided for certified persons in the field of urban planning (architects, design engineers, technical supervision, experts, etc.).
According to the provisions of the bill, a building permit will be granted if there is a positive conclusion of a comprehensive examination of design documentation, posted in the register with the qualified signatures of an expert organization.
Commissioning of facilities of CC1 class is carried out on the basis of an act of readiness of the facility, drawn up after its inspection in the presence of the customer, and signed by the technical supervision engineer and the author of the construction project. In the case of CC2 and CC3 class facilities, registration of a free state certificate of acceptance of the facility into operation is also carried out, which is formed after the signing of the act of readiness by the contractor, the head of the expert organization, experts and the insurer. These documents are also included into the register.
In turn, bill No. 5072 provides for an increase in fines for violation of legislation, building codes and regulations, including during planning and development of territories, violation of environmental safety rules, failure to comply with legal requirements of officials of state construction control and supervision, as well as personify liability for these violations.
In addition, it is proposed to introduce administrative liability for violations in the issuance of expert conclusions, author’s and technical supervision, performance of work without a qualification certificate or insurance contract, etc.
Criminal liability is provided for the issuance of a deliberately unlawful expert conclusion, violations by the executors of urban planning activities, non-implementation of state control and supervision, indicated in the explanatory note.
