Following our policy of supporting our current and potential clients on every stage of their activity in Ukraine, we would like to draw your attention to the following:

  • the main results of activities of the Antimonopoly Committee of Ukraine (hereinafter the "AMCU") in 2012 and its priorities for 2013;
  • AMCU's practice on the pharmaceutical market.

RESULTS OF AMCU'S ACTIVITIES IN 2012 AND PLANS FOR 2013

On March 12, 2013 the Head of AMCU Vasyl Tsushko held a meeting to review and approve AMCU's Annual Report 2012.

AMCU's First Deputy Chairman Rafael Kuzmin noted that AMCU had put an end to almost 30% more violations in 2012 as compared to 2011. About 50% of the violations were stopped by providing recommendations that ensured quick elimination of the identified violations. The size of economic benefit amounted to more than UAH 1 billion in 2012.

In addition, AMCU identified its priorities for 2013, including the following:

  • taking comprehensive measures aimed at the prevention, detection and suppression of violations of legislation on competition protection on the socially important markets,
  • drafting the Bill of Ukraine "On the National Program of Competition Development in Ukraine for 2014 – 2024 and improving cooperation with the Organization for Economic Cooperation and Development (OECD)," so that Ukraine may acquire the status of an associated member of the OECD Competition Committee.

The Head of AMCU Vasyl Tsushko stressed that active and fruitful cooperation with the deputies, committees of the Parliament of Ukraine, leading global competition authorities and international experts in the field of competition will improve the competitive environment in Ukraine.

It should be noted that during a press conference held in February 2013 on the results of AMCU's activities in 2012, Rafael Kuzmin said that the offices of the Antimonopoly Committee had intensified their work in all areas. In 2012 the results of AMCU's operational activities were, in particular, as follows:

  • termination of about 5.8 thousand violations of legislation on competition protection (which was 30% more than in 2011);
  • examination of more than 6.3 thousand applications and complaints about violations of legislation on the Protection of Economic Competition (which was 27% more than in 2011);
  • exceeding the 2011 number of fines imposed on violators of legislation on competition protection by more than 18 times.

In addition, AMCU's representative noted that in 2012 the Committee paid considerable attention to the area of medicinal products. In 2013, investigation into that market will also be a priority for the Committee.

INVESTIGATION INTO THE MEDICINAL PRODUCTS MARKET – AMCU'S PRIORITY FOR 2013

On March 12, 2013 AMCU's Cherkasy Regional Territorial Department held a round table discussion on the situation in the market of medicinal products.

During the event, AMCU's state commissioner Mykhailo Rusynsky said that investigation into the medicinal products market was one of AMCU's priorities for 2013. The mentioned investigation will be conducted among retail pharmacy chains, manufacturers, and importers (wholesalers) of medicinal products.

The participants discussed the issues of pricing; providing the population with medicinal products imported under the new rules for import licensing of such products, which came into effect on March 1, 2013; compliance with competition legislation in this market.

AMCU ANALYSES THE PHARMACEUTICAL MARKET

In February 2013 some mass media reported that the Head of AMCU Vasyl Tsushko had informed "about the medicinal products market being concentrated in the hands of four companies" during a meeting with market participants in Poltava.

AMCU's investigations into the pharmaceutical market showed that 70% of medicinal products were imported ones. According to Vasyl Tsuchko, AMCU found out an association of large suppliers and distributors sending their main profits into offshores.

The Head of AMCU said that "the price for medicinal products was formed not in pharmacies but at the state boundary". Therefore, AMCU intends to investigate the activities of suppliers.

AMCU OBLIGED PHARMACEUTICAL MARKET OPERATORS NOT TO OVERPRICE MEDICINAL PRODUCTS

In February 2013 AMCU's Khmelnytsky Regional Territorial Department sent binding recommendations to pharmaceutical retailers in connection with an increase in the incidence of acute respiratory viral infections. As recommended by AMCU, pharmacies had to refrain from acts or omissions, which may cause a rise in prices for antipyretic medicines.

Late in 2012 AMCU's Khmelnytsky Regional Territorial Department gave similar recommendations relating to prices for medicinal products for the prevention and treatment of colds. Upon review of the recommendations pharmacies assured the AMCU authority that prices for the mentioned category of medicines were stable.

As shown by AMCU's practice, AMCU's binding recommendations are quite an effective tool for preventing violations of legislation on competition protection as well as for keeping the market prices of medicines.

However, it should be noted that 3 years ago AMCU's offices took quite stringent measures and applied financial sanctions in connection with the fact that some pharmacies took advantage of excessive demand for antiviral medicines. The decisions adopted by AMCU at that time helped to stabilize the price situation and had an impact on the further moderate pricing policy of pharmaceutical institutions.

AMCU'S PRACTICE

1. Competition Violations (Dissemination of Misleading Information)

AMCU detected the following violations:

  • AMCU recommended a well-known pharmaceutical company not to disseminate misleading information when advertising syrups to treat coughs.

    AMCU established that the company disseminated inaccurate information about the age limit of a medicinal product for a particular age group. Thus, the commercial sounded: "Use the syrup to deal effectively with coughs, and for kids," and contained the words "Good for kids". However, the instructions for medical use contained age restrictions, according to which the medicine was not recommended for children under a certain age.

    Moreover, AMCU found that information about age restrictions (on the use of the medicine from a certain age) was specified in a much smaller font than the base information, and in a color that made it difficult to read.

    AMCU concluded that the company's actions, which consisted in the dissemination of inaccurate information, in particular, due to the chosen way of its presentation, contained signs of violation of competition legislation, as they could affect consumers' intentions regarding the purchase of particular medicines.
  • An individual entrepreneur was fined UAH 3 thousand for spreading false information on the conformity of products (cosmetics, dietary supplements) with international quality standards of pharmaceutical companies' GMP and certification in Ukraine.

2. Abuse of Monopoly

  • AMCU's Cherkasy Regional Territorial Department fined the regional state laboratory of veterinary medicine UAH 17 thousand for abuse of monopoly, as the laboratory had established an unreasonable cost of laboratory studies services required to issue veterinary certificates Ф -2. AMCU's Department concluded that the laboratory infringed on consumers' interests. However, it would have been impossible under the conditions of significant competition in the market.
  • AMCU recommended a business entity to stop activities that contained elements of monopoly abuse and factors that facilitated them. In particular, AMCU found out that prices the company set for medicines in pharmacies operating in the City Hospital and the Central District Hospital were higher than those in other retail establishments in the city due to higher trade margins. As a result, patients that were treated in those hospitals paid more than the population that bought the same medicines in the city.

3. Anticompetitive Concerted Actions

  • Two individual entrepreneurs and a private enterprise were fined UAH 13 thousand for bid rigging.

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