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Typical Requirements for Vertical Concerted Actions Came into Effect

Typical Requirements for Vertical Concerted Actions Came into Effect

Ukraine
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On 5 December 2017, Typical Requirements for Vertical Concerted Actions of Business Entities (hereinafter the "Typical Requirements"), approved by the Antimonopoly Committee of Ukraine (the "AMC"), became effective.

According to the Typical Requirements, vertical concerted actions are those carried out between two or more undertakings, each of which

  • acts at a different level of the production or distribution chain, and
  • may purchase, sell or resell certain goods or services.

Agency agreements are not recognized by the Typical Requirements as vertical concerted actions if agents do not bear significant financial and/or commercial risks as a result of their activities.

Apart from the concerted actions described below, which are allowed and do not require getting a prior AMC approval, the Typical Requirements also list vertical concerted actions, which are assumed to be anticompetitive and require the AMC approval in order to be carried out. 

Therefore, vertical concerted actions are allowed and do not require the AMC approval if:

  • the appropriate market shares held by the supplier or buyer do not exceed 30% on the markets they sell or purchase the goods or services on;
  • subject to the preceding paragraph:
    • concerted actions are carried out between an association of undertakings and its members, with the condition that all its members are retailers of goods and if no individual member of the association has a total annual turnover for the preceding fiscal year exceeding EUR 25 million;
    • concerted actions contain provisions which relate to the provision or use by the buyer of intellectual property rights (under certain conditions); and/or
  • concerted actions are carried out between contractor and subcontractor (in certain cases).

Vertical concerted actions are not allowed and require a prior AMC approval (with some exceptions) if they:

  • are carried out between competing undertakings;
  • include hard-core restrictions (for example, restrictions relating to the determination of sale price, territory or customer group);
  • include a non-compete obligation concluded for the duration of more than 5 years or for an indefinite period;
  • include any obligations forcing the buyer, after termination of the agreement, not to manufacture, purchase, sell or resell goods or services;
  • include any obligations forcing the members of a selective distribution system not to sell the brands of particular competing suppliers; and/or
  • are performed by different (unrelated) undertakings in parallel networks, and such networks cover more than 50% of an appropriate market.

If there is any doubt as to whether certain vertical concerted actions will be considered as prohibited and such that may require a prior approval from the AMC, the competition legislation provides the possibility for participants of such concerted actions to refer to the AMC for recommendations as to the nature of such actions.

By Oksana Simonova, Partner, and Olga Mikheieva, Senior Associate, Baker McKenzie Turkey

Ukraine Knowledge Partner

Avellum is a leading Ukrainian full service law firm with a special focus on finance, M&A, and dispute resolution. Our goal is to be the firm of choice for our clients with respect to their most significant business transactions. We bring the most advanced Western legal techniques and practice, which, coupled with our first-hand knowledge, broad industry experience, and unparalleled level of service, will help our clients achieve best results in their business endeavours. We work seamlessly in integrated teams with premier US, UK and European law firms in course of multijurisdictional transactions. The team consists of 26 highly qualified attorneys, including three partners – Mykola Stetsenko, Glib Bondar, and Dmytro Marchukov, who are actively involved in every transaction. Avellum is recognised as one of the leading law firms in Ukraine by various international legal directories and Ukrainian legal editions (Chambers, Legal500, IFLR1000, Ukrainian Law Firms, and others).

Firm's website: www.avellum.com

 

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