Tedis Ukraine company increased tax payments to the budgets of all levels by 5% in 2020, year-over-year, to UAH 1.4 billion.
The company’s press service told Interfax-Ukraine on Tuesday, UAH 612 million of deductions went to the central budget, while UAH 809 million to local budgets.
“During its ten-year history, our company has consistently been one of the largest taxpayers in Ukraine, and since its inception, Tedis Ukraine has transferred over UAH 10 billion to the country’s budget,” Director General of the company Taras Korniyachenko said.
According to Tedis Ukraine, in 2020, the company paid UAH 705 million of retail excise tax on the sale of tobacco products to local budgets, which allowed it to become the largest taxpayer in Ukraine.
As reported, Tedis Ukraine in February was the first to achieve in the Supreme Court the satisfaction of the cassation appeal against the Antimonopoly Committee of Ukraine (AMCU) and the invalidation of a fine of UAH 3.4 billion. The Supreme Court said it sustained the cassation due to the impossibility of bringing any person to justice on the basis of decisions of the AMCU in other cases (having no prejudicial significance), without obligatory proof of guilt in each individual case and taking into account the erroneous legal qualification of actions of Tedis Ukraine LLC.
Tedis Ukraine is one of the largest Ukrainian distribution companies. The company employs about 2,300 employees. The regional network consists of 32 structural divisions throughout the country. The company covers a retail network of about 45,000 retail points throughout Ukraine.
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.
Northern Commercial Court of Appeal of Kyiv decided to postpone the meeting to consider the appeal of Tedis Ukraine LLC, the largest distributor of cigarettes, regarding the seizure of the company’s accounts on the application for securing the claim of the Antimonopoly Committee of Ukraine (AMC) under enforced collection of a fine.
“The personal presence of the MP from the Servant of People party Oleksandr Dubynsky and the rally of representatives of National Corps under the courthouse during the court session are eloquent. We regard this as a demonstration of unprecedented political and media pressure on judges and on our company, the only goal of which is to redistribute all tobacco market in the interests of certain groups of influence,” said the press service of “Tedis-Ukraine” to Interfax-Ukraine.