Typical Requirements for Vertical Concerted Actions Came into Effect
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.