An agreement or practice can be considered anticompetitive if it has the prevention, elimination or restriction of competition as its object or effect. Below is a non-exhaustive list of practices that are hardcore restrictions:
- fixing prices or other purchase or sale conditions;
- limiting production, markets, technological development or investment, as well as assuming control of them;
- dividing markets or sources of supply according to territory, type of goods, sale or purchase volumes, or classes of sellers, buyers or consumers;
- distorting the results of trading, auctions, competitions or tenders;
- ousting other companies from the market or limiting their market access;
- applying different conditions to identical agreements to put a specific company at a disadvantage;
- executing agreements that are conditional on the contracting party’s acceptance of additional obligations unrelated to the subject of the agreement;
- substantially limiting the competitiveness of other companies without justifiable reasons; and
- parallel behaviour (actions or omissions) that resulted or may result in the prevention, elimination or restriction of competition is also considered a violation, unless there are objective reasons for that.
There are also general exemptions (exempting horizontal, conglomerate and mixed arrangements) and block exemptions (exempting vertical and R&D arrangements).
Prohibition of anticompetitive practices will not apply:
- where the aggregate market share of the parties (including their respective corporate groups) to any horizontal, conglomerate or mixed arrangements in any of the product markets concerned is less than 5 per cent (except for hardcore restrictions; see below); or
- to conglomerate arrangements where the parties’ combined market share is below 20 per cent, and to horizontal and mixed arrangements where the parties’ combined market share is below 15 per cent. However, market share-based exemption cannot apply if (cumulative conditions):
- the aggregate worldwide turnover or assets value of the parties (including their respective groups) exceeded €12 million in the preceding financial year;
- the aggregate worldwide turnover or assets value of at least two undertakings that belongs to the parties’ groups separately exceeded €1 million in the preceding financial year; or
- the aggregate turnover or assets value in Ukraine of at least one undertaking that belongs to either party’s group exceeded €1 million in the preceding financial year.
However, it appears that, in practice, the value of assets or turnover test does not serve as an appropriate benchmark for the AMC to assess potential competition concerns, where effects on competition primarily depend on the market position of the parties (for example, their market shares).
If the parties are at least potential competitors, the general exemptions do not apply to horizontal or mixed hardcore restrictions, including:
- price fixing;
- territorial, customer or supplier and other market sharing;
- restrictions on (including imposing an obligation to refrain from) production or distribution of products; and
- distortion of the results of trading, auctions, competitions or tenders.
The recently adopted Vertical Block Exemption Regulation generally exempts vertical restraints (save for hardcore restrictions) where the market shares of the supplier and the buyer on the market where they, respectively, sell and buy the contract goods or services, do not exceed 30 per cent.
The following practices, however, are not covered by the exemption:
- vertical agreements between competing undertakings (unless the vertical agreement is non-reciprocal);
- hardcore vertical restraints, such as:
- restriction of the buyer’s ability to determine its sale price, except for imposing a maximum resale price or recommending a resale price, provided that they do not amount to a fixed or minimum sale price as a result of pressure or incentives;
- restriction of the territory into which, or of the customers to whom, a buyer party to the agreement, without prejudice to a restriction on its place of establishment, may sell the contract products goods, except for:
- restrictions of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer, where such a restriction does not limit sales by the customers of the buyer;
- restriction of sales to end users by a buyer operating at the wholesale level of trade;
- restriction of sales by the members of a selective distribution system to unauthorised distributors within the territory reserved by the supplier to operate that system; and
- restriction of the buyer’s ability to sell components, supplied for the purposes of incorporation, to customers who would use them to manufacture the same type of goods as those produced by the supplier;
- restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment;
- restriction of cross-supplies between distributors within a selective distribution system, including between distributors operating at different level of trade; and
- restriction, agreed between a supplier of components and a buyer who incorporates those components, of the supplier’s ability to sell the components as spare parts to end-users or to repairers or other service providers not entrusted by the buyer with the repair or servicing of its products;
- non-compete obligations exceeding five years (or indefinite), save for cases where the contract products are sold by the buyer from premises or land owned by the supplier or leased by the supplier from third parties not connected with the buyer, provided that the duration of the non-compete obligation does not exceed the period of occupancy of the premises and land by the buyer;
- obligations causing the buyer, after termination of the agreement, not to manufacture, purchase, sell or resell goods or services, with certain exceptions; and
- obligations causing the members of a selective distribution system not to sell the brands of particular competing suppliers.
The exemption under the R&D Regulation applies when the combined market share of the parties on the relevant market does not exceed 25 per cent and the parties meet a set of other criteria (ie, all parties have equal access to the results of the R&D activity; such activity does not go beyond a certain industry, etc).
When assessing their practices, undertakings may obtain advice from the AMC regarding their compliance with competition legislation. It is also possible to seek authorisation (individual exemption) of certain potentially anticompetitive concerted practices if:
- the parties can prove that these practices encourage manufacturing, technological or economic development, or other efficiencies; and
- the practices do not lead to a substantial restriction of competition.
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