How Much will Cost the Breach of the Protection of Economic Competition Law?

On 21.07.2015 AMCU published draft Clarifications regarding implementation of part 2 and 5 of Article 52 of the Law of Ukraine “On protection of economic competition”, part 1 and 2 of Article 21 of the Law of Ukraine “On protection against unlawful competition” on its web-site.

The Draft stipulates clarifications regarding the order of the imposing of the fines for the breach of the protection of economic competition law.

According to the Draft it is proposed to define the amount of fine in two steps as follows:

• To define the basic amount of a fine for each defendant;
• To adjust the defined amount of a fine taking into consideration the aggravating and mitigating circumstances.

While estimating the basic amount of the fines the AMCU bodies are recommended to pay attention to the following categories:

• Amount of income from sell of the products (goods, services) and/or amount of reduced costs, occurred due to the breach;
• Severity of the offence;
• Necessity to ensure the restraining effect.

The Draft states the fixed basic amounts of the fines depending on the offence severity. In addition, so as to prevent the business entities from the commitment of the offences that especially negatively affects the competition, the fines may be charged in bigger amount than defined under the Clarifications, but within the limits, stipulated according to the Article 52 of the Law of Ukraine “On protection of economic competition”.

Among the aggravating circumstances that shall be considered for the amount of the fine, the Draft states the following: repeated commitment of the same offence within 3 years; duration of the offence is more than 1 year; initiating actions (inaction) containing signs of violation, or their directing; making obstacles in investigating the breach, excluding the cases, stipulated under clause 16 of the Article 50 of the Law of Ukraine “On protection of economic competition” (making obstacles for the AMCU bodies during the inspections).

It shall be mentioned that the list of the aggravating circumstances, stated pursuant to the Draft is deemed exhaustive.

The Draft proposed to define the following circumstances as the mitigating: self termination of the actions (inactions) by a defendant that contain signs of the breach; compensation of the damages, caused by the violation, or mitigation of the consequences of the violation in another way; provision of evidence that a breach was committed due to the negligence., etc. It shall be noticed that the list of such circumstances, stipulated under the Draft is not exhaustive.

Moreover, it shall be highlighted that while defining the final amount of the fine the AMCU bodies shall take into consideration all essential circumstances of the breach.

To sum up, the adoption of the Clarifications will make the business entities better understand the order of the imposing of the fines and estimation of the amount of the fines in case of the offence commitment, stipulated under the Law of Ukraine “On protection of economic competition” and “On protection against unlawful competition” as well as will stimulate the fulfillment of the principles of legal certainty, non-discrimination and reasonability during the imposing of the fines.