Unfair Competition

Ukrainian Unfair Competition Laws

Unfair competition in Ukraine is regulated by the Antimonopoly Committee of Ukraine (AMC) and is aimed at restricting dishonest or fraudulent practices “which contradict rules, market, and other practices in business activity”, as per Article 1 of the Law On Protection against Unfair Competition (Law). The vast majority of unfair competition violations involve the newly-introduced of Article 15-1 of the Law. As an illustration, out of all unfair competition laws violations in 2012, 91% fell within the ambit of Article 15-1.

Article 15-1

In late 2008, Article 15-1 was introduced into the Law aimed at prescribing: “the dissemination of misleading information made by undertakings… via, amongst other, advertisements that contain incomplete, inaccurate, false statements”.

The idea is to prevent practices which may allow undertakings to gain an unfair advantage by luring customers into purchasing certain goods/services that they potentially otherwise would not. The AMC has even been successful in uncovering instances where multinationals have formulated their discount policies and other essential conditions in a very opaque manner, or even completely omitted them, so as to attract new customers or obtain an unfair advantage over their competitors.

The regulators take the view that all information concerning the true origin of products, method of production, source, quality, suitability for use, standards, specifications, must be clearly indicated on packages and product labels. The AMC is particularly wary of statements such as “the best”, “the most”, “the oldest”, “the most effective”, “no GMO”, “buy one get one free”.

What is of particular importance is that undertakings are increasingly using Article 15-1 of the Law as an attacking tool against their competitors by reporting any potential violations to the AMC. Their aim is to discredit a successful advertising campaign in the hope that the AMC would proscribe it.

Fines

Violators risk facing financial sanctions of up to 5% of their gross worldwide income (sales). The historical maximum fine in 2011 amounted to approximately UAH 1,6 million, a figure which, in 2012, was increased to UAH 3 million, and subsequently to UAH 7,6 million. In addition,there are indications that significant fines are yet to follow.

Companies wishing to avoid risks of fines can benefit from a procedure provided by the AMC by submitting their advertising materials for the authority’s expert review. Sayenko Kharenko were among the first to obtain the AMC’s clearance of an undertaking’s advertising campaign.

In case you need any specific advice on frequently asked questions please do not hesitate to contact Maksym Nazarenko.

  • how to receive a clearance for advertising campaigns, information displayed on packages and product labels as well as other forms of advertisements
  • fines and other sanctions, including the risks of having to recall the infringing goods
  • the risks of detection and prosecution
  • timing of review