Review of the largest fines of the Antimonopoly Committee of Ukraine (the AMC) 1

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1 Review of the largest fines of the Antimonopoly Committee of Ukraine (the AMC) 1 May 2016 January 2017 TEDIS Ukraine is the only direct distributor of the major manufacturers of tobacco products in Ukraine and has its own retail tobacco outlets. TEDIS Ukraine was fined for abuse of its dominant position through: Abuse of a dominant position 15,737,000 TEDIS Ukraine LLC Distribution of tobacco products setting a maximum price mark-up that can be applied by its purchasers, which, in turn, allowed it to increase its own margin; charging nearly identical prices to wholesale and retail customers which disadvantaged the competitive position of the wholesalers; charging wholesale prices to its retail customers at nearly the same level as the prices used in its own retail outlets thus reducing the competitiveness of third party retailers; and 16 December 2016 unilaterally limiting its customers sales volumes in the absence of any alternative sources of supply; however, the AMC decision does not explain in what way such limitations are imposed. Anti-competitive concerted practices 7,324,000 Zolotyi ekvator LLC, WOG Retail LLC, Okko naftoprodukt PE, Alliance Holding LLC, AMIC Ukraine CFI, SOCAR PETROLEUM LLC, and Retail sale of petrol and diesel The AMC found petrol retailers liable for unjustified parallel pricing behaviour based on the following findings: the retailers had the highest price levels in the market and almost similar prices on their display boards, although they had different purchase prices and supply conditions; also, they adjusted their displayed prices almost simultaneously; the AMC determined that the retailers limited the ability of consumers to make an informed choice and refrained from an open price 28 October This overview is prepared by Redcliffe Partners based on decisions issued by the AMC between May 2016 and January Approximate equivalent in EUR. 1

2 Parallel M LTD LLC competition as their final prices after discounts were different from the displayed prices ,000 Servier Ukraine LLC, Optima-Pharm, LTD LLC, BaDM LLC, Alba-Ukraine PrJSC, ASTA LLC, and Lyudmila-Pharm LLC Pharmaceuticals The AMC fined Servier Ukraine and its distributors for anticompetitive concerted practices based on the following findings: Servier Ukraine gave additional discounts to their Ukrainian distributors after winning public procurement tenders. However, the discounts did not decrease the price at which the products were sold as the amounts of the discounts were deducted from future purchases. Because of this, the AMC stated that this resulted in overpricing of pharmaceuticals sold through public tenders as compared to other sales channels where the discounts were applied directly in the invoice of the relevant sale September ,000 Alcon Pharmaceuticals LTD (Switzerland), Optima-Pharm, LTD LLC, BaDM LLC, Alba-Ukraine PrJSC, and Venta LTD LLC Pharmaceuticals In the Alcon case the AMC raised concerns in relation to pricing approaches in public tenders identical to those discussed above with respect to the Servier case. In both of these instances it is important to note that the AMC used a very narrow definition of the relevant markets and determined that since the products contained unique active ingredients they were per se incapable of substitution. 8 September 2016 Bid rigging 340,000 Torgoviy Dim Svit SR LLC, Teplo-Holding LLC, Energoosnova LLC, and Coal The companies were fined for bid rigging by way of "cover pricing" relative to three public procurement tenders based on the following findings: the companies were related entities with certain common ownership and management; yet these companies each participated in the same tenders without disclosing their related status in violation of the tender rules. 9 August All of these retailers are challenging the AMC decision in court, and it appears that they have valid arguments to challenge the AMC decision. 4 The AMC decision is currently being challenged by two distributors in court, and it appears that they have valid arguments to challenge the AMC decision. 2

3 Mining company Energoperspektiva LLC The companies were fined for bid rigging by way of "cover pricing" based on the following findings: 196,000 Euro Metal Invest LLC, and Inter GTV LLC Railway locomotives and rolling stock the companies belong to the same corporate group and both participated in the same tender without disclosing their related status in violation of the tender rules; it was identified that the companies exchanged information on their bidding proposals as evidenced by their bids containing (i) documents which were certified by the same notary, (ii) the same non-required documents, and (iv) the same certificates, etc.; 2 August 2016 in addition, the bid prices of Inter GTV, which won the tender, were substantially higher than its prices in the ordinary course of business. The companies were fined for bid rigging by way of "cover pricing" based on the following: 53,000 Industrial Development LLC, and ProK-84 LLC Shoes ProK-84 is a shoe manufacturer and Industrial Development, the winner of the tender, is a wholesale supplier of the shoes manufactured by ProK-84; it was determined that the companies exchanged information on their bidding proposals as evidenced by their bids containing (i) similar differences relative to the tender document templates and (ii) similar wording in the tender documents, etc.; 17 May 2016 also, the bid prices of ProK-84 were higher than the prices when selling similar products in the same period to Industrial Development, the winner of the tender. Unfair competition 17,000 Individual entrepreneur resident of Ukraine, and Postal services An individual entrepreneur resident of Ukraine and Ukrkurier were fined for spreading misleading information on the website of Ukrkurier stating that it is a national postal operator. 29 December

4 Ukrkurier LLC The AMC determined such statements to be misleading, given that a national postal operator has certain special rights and powers which other postal operators do not have. 5,000 ETRUS Ukrainian- Polish JV LLC (Ukraine-Poland) Soft drinks ETRUS placed pictures of oranges and lemons and indicated "with natural juice" on the labels of its orange and lemon soft drinks when in fact they contained apple juice and flavourings only. Although correct and complete information on the soft drinks composition was placed elsewhere on the packaging, the AMC stated that such labelling was capable of misleading consumers by creating a false impression as to the composition of the product. 11 May ,000 Simferopol wine-cognac factory LLC Alcohol The Simferopol wine-cognac factory was fined for using unregistered design for its rum products that caused confusion with the Captain Morgan brand of Diageo Scotland Limited. 20 December

5 Type of violation Amount of fine(s) 5 Who was fined? Description of violation Decision date Ukrainian concentrations without the prior approval of the AMC 109,000 6,000 Brociti Investments Limited (Cyprus), Infox LLC and Individual-resident of Ukraine Epitsentr K LLC The parties were fined for the acquisition of control over KUB-GAS through the appointment of a member of the supervisory board of KUB- GAS without the prior approval of the AMC. Epitsentr K was fined for the acquisition of more than 50% of the shares of Vinnytsia Agro-Industrial Group without the prior approval of the AMC. 27 December June ,000 Individual-resident of Ukraine An individual-resident of Ukraine was fined for the acquisition of more than 50% of the shares of Oleksandrivka Breeding Factory PE without the prior approval of the AMC. 29 December 2016 Foreign-to-foreign concentrations without the prior approval of the AMC 12,000 9,000 KWS SAAT SE (Germany) VESTEL TICARET ANONIM ŞIRKETI (Turkey) KWS SAAT SE was fined for the indirect acquisition of more than 50% of the shares of KWS MOMONT S.A.S. without the prior approval of the AMC. VESTEL TICARET ANONIM ŞIRKETI was fined for the acquisition of the assets of the SHARP CORPORATION without the prior approval of the AMC. 10 November October ,000 John Deere Shared Services, Inc. (USA) John Deere Shared Services, Inc. was fined for the acquisition of more than 50% of the shares of Hagie Manufacturing Company LLC without the prior approval of the AMC. 13 October 2016 Solvay S.A. (Belgium) Solvay S.A. was fined for the indirect creation of a joint venture together with GranBio Investimentos S.A. without the prior approval of the AMC. 29 December 2016 "Amnesty" cases for concentrations without the prior approval of the AMC 6 (per each violation) Lenovo Group Limited (Hong Kong) Anheuser-Busch InBev S.A./N.V. (Belgium) Lenovo Group Limited was fined for the acquisition of more than 50% of the shares of Motorola Mobility Holdings LLC without the prior approval of the AMC. Anheuser-Busch InBev S.A./N.V. was fined for the: - indirect acquisition of more than 25% of the shares of Banks Holdings Limited; - indirect acquisition of more than 50% of the shares of BVBA Bierhandel Nuytten; and 8 December December Approximate equivalent in EUR. 6 Companies can submit corrective merger filings under the amnesty procedure subject to a fixed fine of EUR until 15 March 2017 for transactions which were completed before 15 September

6 Type of violation Amount of fine(s) 5 Who was fined? Description of violation Decision date - indirect acquisition of assets without the prior approval of the AMC. Concern Galnaftogaz PJSC Concern Galnaftogaz was fined for the acquisition of assets of Ivest Region without the prior approval of the AMC. 18 August 2016 Failure to provide information to the AMC or submission of inaccurate or incomplete information 15,700 5,000 Venta LTD LLC Simferopol Wine- Cognac Factory LLC Venta LTD was fined for provision of incomplete information to the AMC (fines for 4 separate instances of provision of incomplete information). 27 December 2016 The Simferopol wine-cognac factory was fined for provision of incorrect information to the AMC. 20 December 2016 Dolya & Co., Ltd LLC Dolya & Co., Ltd was fined for failure to meet a deadline for provision of information to the AMC. 27 September 2016 This publication does not necessarily deal with every important topic or cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. Redcliffe Partners LLC, 75 Zhylyanska Street, 01032, Kyiv, Ukraine 6