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.
Mix Line LLC (Chornomorsk, Odesa region), which organizes cargo transportation, can buy shares of Odesa Airport Development LLC (Kyiv), which will provide the buyer with over 25% of the voting shares on the company’s board.
According to the Antimonopoly Committee of Ukraine (AMCU), it provided Mix Line LLC with the appropriate permissions on February 4.
The founder of Mix Line LLC is Liudmyla Shinkarenko. She is also the founder of Agro-Aldmish LLC and Phoenix Security Agency LLC.
As reported, in 2011, the disposal of municipal property of Odesa International Airport took place in favor of economic entities. The alienation took place as a result of the creation by Odesa City Council and Odesa Airport Development, the beneficial owners of which at that time were known local Odesa entrepreneurs Borys Kaufman and Oleksandr Hranovsky, of Odesa International Airport LLC, in whose charter capital the property of municipal enterprise Odesa International Airport was transferred. At the same time, the city’s share in the newly created company was only 25%.
The Antimonopoly Committee of Ukraine (AMCU) on Tuesday decided to impose a fine of UAH 175.9 million on JSC DTEK Zakhidenergo and UAH 99.2 million on D.Trading LLC for abuse of monopoly position on the Burshtyn Energy Island in July-October 2019.
For its part, DTEK considers the decision taken as biased and unfounded.
“During the consideration of the case, the committee did not conduct a proper study of the functioning of the electricity market, the evidence and expert opinions provided were ignored,” DTEK said in a statement following the decision.
The Antimonopoly Committee of Ukraine (AMCU) fined the Ukrainian industrial company Interpipe UAH 69.3 million for violating antimonopoly legislation.
“Today, on October 29, 2020, the Ukrainian industrial company Interpipe has received a fine from the AMCU in the amount of UAH 69.3 million for violating antimonopoly legislation. According to the decision of the AMCU, the fine was imposed in connection with the abuse of a monopoly position in the wheel supply market,” the company’s press release reported on Thursday.
At the same time, Interpipe officially declares that it categorically disagrees with such decision of the AMCU and intends to contest this decision in court.
“As a national producer, we consider the AMCU’s decision to be unfair and unreasonable, taken not on the basis of facts, but on assumptions. The Ukrainian market is open to producers from other countries, and there are no protective duties on the market,” the press release emphasizes.
At the same time, it is noted that by submitting such complaints to the AMCU, unscrupulous competitors are trying to discredit the national manufacturer in order to ensure the supply of products of Russian manufacturers to Ukraine.
The statement also recalls that unlike the Ukrainian market, the Russian Federation protected its market from Ukrainian wheels with a 39% protective duty.
The Antimonopoly Committee of Ukraine (AMCU) has provided permission to Canadian Fairfax Financial Holdings Limited to acquire PJSC Universalna insurance company (Kyiv) via subsidiary of FFHL Group Ltd. FFH Ukraine LCC, which would grant over 25% of the votes in the management body of the insurance company. According to a regulator’s posting on its website, the committee also permited Fairfax Financial Holdings Limited to acquire shares in Universalna insurer via newly created FFH Ukraine Holdings LLC, which would grant 50% of the votes in the management body of the insurance company.
Besides, the AMCU permitted to acquire shares in the share capital of FFH Ukraine Holdings LLC by the European Bank for Reconstruction and Development (EBRD), which would grant 25% of the votes in the management body of the company.
In addition, the regulator granted a permit for agreed actions to Fairfax Financial Holdings Limited and Whiteford Limited (Cyprus) in the form of liabilities to refrain from competition and the ban to drain human resources away from the companies for the period of five years.
According to the National Commission on Securities and the Stock Market, Whiteford Limited is a holder of 42.3358% of shares of Universalna as of second quarter of 2019.
For Fairfax, the acquisition of Universalna insurance company will not be the first asset in Ukraine. Earlier in February 2019, the company already bought two of its Ukrainian subsidiaries, AXA Insurance and AXA Life Insurance, from the French AXA Group. Three years earlier, Fairfax acquired 100% of the insurance company QBE Ukraine (and changed its name to Colonnade Ukraine).
Universalna was founded in 1991. The company specializes in providing services in the field of risk insurance, its regional network has more than 300 offices.
According to the results of the first half of 2019, the company collected UAH 490.311 million in gross insurance premiums (17.4% compared to the previous year) and paid UAH 127.2 million (+11.4%) to customers.
The authorized capital of the company is UAH 192.7 million, with liquid assets of UAH 125.006 million (decreased by 32.73%). Deposits in the amount of UAH 293 million are on the company’s accounts.
