AMCU Specified Penalties Charged for Anti-Corruption Laws Infringement

On 17.02.2016 the AMCU published on its official web-site the Recommendations for penalties calculation charged for the violation of the legislation on economic competition protection including the laws on the protection against unfair competition (Recommendations –№ 6-рр as of 16.02.2016).

In comparison to earlier published Recommendations № 16-рр as of 15.09.2015 the AMCU has not changed the two-level penalty calculation algorithm, but updated the calculation of the basic penalty for certain categories of law violations in the sphere of economic competition. In addition, the AMCU has specified the meaning of such aggravating circumstances as the obstruction of case investigation.

In particular, the Recommendations № 6-рр as of 16.02.2016 specify that the basic penalty charges for the business entities’ anticompetitive concurrent actions relating to the falsification of the tenders, auctions, competitions results shall equal to the highest offer amount of the parties participating in anticompetitive concurrent actions.

Moreover, for the conduct of unauthorized concentration, which did not lead to monopolization and significant impediment of competition on Ukrainian market , the AMCU recommends to calculate the basic penalty in accordance with the total revenue (income) received from the sales of products (goods, services) at all commodity markets of Ukraine. This method is recommended in case the respondent did not provide any information on the total revenue at the market where the concentration took place and at adjacent markets.

Nevertheless, as previously the AMCU is of the opinion that the basic penalty should amount to not less than 30 000 of non-taxable incomes of the residents or up to 5% of the revenue from the sales of products (goods, services) at the market where the concentration took place and at adjacent markets. Additionally, the AMCU specified in its Recommendations № 6-рр as of 16.02.2016 that the basic penalty charges cannot be lower that 30 000 of non-taxable incomes of the residents.

It is worth to mention that comparing to previous Recommendations the AMCU increased significantly the amount of basic penalty for the commitment of violation envisaged by articles 1, 4 – 19 of the Law of Ukraine «On the Protection against Unfair Competition», in particular, for unfair competition (article 1), violations regarding the misuse of the economic entity’s business reputation (articles 4-7), obstruction of economic entities in the process of competition and achievement of unfair preferences in competition (articles 8-14). Thus, previously the basic penalty equaled up to 5% of the revenue from the sales of the products (goods, works, services) of economic entity in the last reporting year prior to the year the penalty was charged, and if there was no revenue or the respondent did not provide any information on the total revenue – the penalty equaled to 10 000 of non-taxable incomes of the residents. Today the AMCU increased the penalty up to 30% of the revenue from the sales of the products (goods, works, services) that violated the legislation on the protection against unfair competition.

The AMCU made the greatest specification regarding the calculation of the basic penalties in the cases of the infringements of informational character. It was underlined that for calculation of the abovementioned basic penalty it is required to take into account the purpose of the request (evidence collection during the case proceedings regarding the violations of economic competition, concentration and concurrent actions or conduct of the goods market studies beyond the case consideration), the subject and the content of violation (provision of untimely, incomplete, incorrect information or failure to provide the information).

Moreover, the AMCU believes that if the incorrect information has been provided several times during the consideration of the case regarding the violation of informational character, the total penalty charges shall amount to the penalty for one relevant violation.

It is worth to mention that the AMCU established the reduced penalty, which may be imposed on the respondent during the investigation of the case of informational character and on the applicant in the case regarding the concentration and the concurrent actions if they provided incomplete case information. This penalty shall now amount to 108 000 UAH (previously it equaled to 136 000 UAH).

The Recommendations № 6-рр as of 16.02.2016 specify that the creation of obstacles by economic entities to the AMU’s representatives during the inspection, confiscation or imposition of arrest on property, documents or other data carriers, shall not be considered as an aggravating circumstances influencing the calculation of the total penalty charges.

Moreover, in its previous recommendations the AMCU stated that the basic penalty charges shall be increased twice if it is proved that the infringement of competition law was repeated and/or continued. And in its new Recommendations № 6-рр as of 16.02.2016 the AMCU made it possible to increase the basic penalty only in case of repeated violations, except the violations of informational character.

Please pay your attention that the AMCU’s position regarding the designation of the penalty amount in two steps remains unchanged (in Recommendations № 16-рр as of 15.09.2015 and № 6-рр as of 16.02.2016):

Determination of basic penalty for each respondent;

Correction of previously determined penalty taking into consideration the aggravating and mitigating circumstances.