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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.

 

An Energy Competition

28.11.2015

Oleksandr Fefelov, Attorney at Law, Head of Antitrust and Competition Practice at Ilyashev & Partners Law Firm
Source: The Energobiznes

–     Monopolist is the person occupying 35% of the market. But lately the AMCU declared that in the energy sphere market power is exerted by producers of electricity occupying 5-7% of the market. How do these two notions correlate?

–     Those that narrow the notion of monopolistic (dominant) position only to one factor (i.e. equaling or exceeding a 35% share at a certain commodity market) would be straightforward and wrong. In addition, the Law of Ukraine stipulates other additional criteria of evaluation if certain companies occupy such position or not. Such position may be occupied, for example, if the person’s market share is less that 35%, but at the same time they do not experience competition on the part of other market participants. The same notion of “market (monopolistic) power” is stipulated in the Methodology for determination of monopolistic (dominant) position of companies at the market, approved by the Decree of the AMCU No. 49-р as late as in 2002 which defines it as “the ability of a company (group of companies) to establish or seriously influence the term of turnover of goods at the market, oppose, eliminate or limit competition, particularly to raise the price or maintain it above the price which would exist in case of normal competition”. This notion is reasonably used by the AMCU in the process of determination of availability of monopolistic (dominant) position of companies at the certain commodity market.

–      What kind of resolution the AMCU may uphold upon the results of its investigation against DTEK?

–      It is hard to predict what decision the AMCU will uphold. As soon as establishment of prices (tariffs) for the electric energy, tariffs for its transmission and supply is the competence of the National Energy and Utilities Regulatory Commission (the NEURC) execution by the Committee of recommendations made by the AMCU may lift a number of questions related to the price-formation procedure. Also, the same as with the NEURC, the Committee may pass recommendations regarding DTEK related to transparent and, possibly, mutual establishment of the rules of the game at this market, which will be clear and understandable for the business participants, regulators, and the society.

 
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