We decided to launch the section #antitrustexplain. We hope it will be useful for journalists, civil servants and politicians, young lawyers and economists who want to better understand the essence, causes and consequences of current events in the field of competition regulation.
The first publication is about the initiation by the AMCU a lawsuit against Mironivsky Hliboproduct (MHP, the Ukraine’s largest agricultural produce company) over acquisition of Skott Smeat.
According to a press release from the Committee, the Committee learned about the agreement from information in the media. This is actually the problem, as the law requires the AMCU to obtain permission before closing the agreement. The purpose of this requirement of the law is to prevent the creation of monopolies or other anti-competitive consequences.
Of course, not all agreements need to be agreed with the Committee, but only those whose participants exceed certain financial indicators. According to the AMCU, this could have been the case with MHP and Skott Smeat.
Lawyers call such violations violations with formal composition. That is, the responsibility arises for the very fact of not submitting an application to the Committee, and for the essence of the agreement or its consequences for competition.
Who will be responsible? It depends on the structure of the agreement. In standard cases, when shares or stakes in the company are purchased, the buyer is responsible – in this case MHP.
What sanctions will be applied? The maximum limit of penalties is 5% of the turnover of a group of companies. In practice, fines range from UAH 500,000 to UAH 50 million. Can the AMCU cancel the agreement? The AMCU has the power to sue to terminate the agreement if it adversely affects competition. However, from a practical point of view, such a development is unlikely.
How can events develop further? It is likely that the AMCU will establish the fact of failure to file an application and set a fine. At the same time, MHP and Skott Smeat can simultaneously apply for a permit from the AMCU and, albeit belatedly, obtain a permit from the Committee.
What interesting analysis questions may arise during a competitive transaction analysis? The key issue in the analysis of agreements is the definition of market boundaries. As the parties to this agreement sell mainly poultry and beef, the question of the degree of interchangeability of different types of meat should arise.