News (#01-02 January-February 2016)

AMCU

Abuse of monopoly by New Systems AM LLC

A decision by the Antimonopoly Committee of Ukraine (AMCU) acknowledged that New Systems AM LLC inflated by 400% the cost of services for temporary storage of vehicles on the parking lot near Kharkov International Airport for airport service consumers and persons accompanying them. New Systems AM LLC occupies a monopolistic position on the respective market. By a decision adopted by the Committee, a fine amounting to about UAH 2.38 million was imposed on the named company, which was obliged to establish an economically justified cost of services provided.

 

Gazprom case under review

Yuriy Terentyev, the head of the AMCU, has given an update on the situation regarding the PJSC Gazprom case.

Under review by the Committee is the case of violation by PJSC Gazprom of law on the protection of economic competition being filed in accordance with a report by the Cabinet of Ministers of Ukraine.    The results concluded by the Committee show that PJSC Gazprom occupies a monopolistic position on the Ukrainian gas transportation service market. Thus, during 2011-2015 Gazprom regularly violated the terms and conditions of its contract with NJSC Naftogaz of Ukraine and ignored any demands to make the terms and conditions of cooperation economically substantiated and mutually beneficial, which led to the infringement by NJSC Naftogaz of Ukraine’s interests. Such acts on the part of Gazprom are considered to be violations of the On the Protection of Economic Competition Act of Ukraine, as abuse of monopolistic position on the Ukrainian trunk pipeline gas transportation service market, which are impossible with the existence of strong competition.       

At the end of November 2015 the Committee sent a report with preliminary conclusions to NJSC Naftogaz of Ukraine and PJSC Gazprom. Naftogaz agreed with the results of the Committee. But Gazprom, in its turn, didn’t give explanations or comments with regard to the report. 

The next step from the side of the AMCU is a decision on the abuse of monopolistic position by Gazprom. The Committee informed both Gazprom and Naftogaz on the time and date for consideration of the case.

 

Investigation of the electrical energy and steam coal markets

The Antimonopoly Committee of Ukraine has presented the preliminary results of the complex investigation of electrical energy and steam coal markets

Yuriy Terentyev, the head of the Committee, reported that information was obtained from more than 200 enterprises which produce electrical energy, extract and sell steam coal, from government authorities and market experts. Mariya Nizhnik, the deputy head of the Committee, emphasized that there is now a single wholesale electricity market in Ukraine. Supply and demand on this market are formed for one item, which is electrical energy, the technical characteristics of which do not depend on the method of production, the principles of forming production volume, the method of price formation.

Tatyana Kulishova, the head of the Main Board of the Committee, admitted that the wholesale market is characterized by a high level of administration and government regulation, which leads to the leveling of market mechanisms that are supposed to set the volume of sales of goods and prices on the basis of the market balancing supply and demand.

The results of the Committee’s investigation determine the monopolistic position of a number of companies.  On the generating market, as the sellers of the item “electrical energy”, the position is determined as dominant for the State Enterprise National Nuclear Energy Generating Company Energoatom, the companies of the DTEK group and the PJSC Ukrhidroenergo.

In addition, the position is determined as dominant for:

— the State Enterprise Energorynok on the market of generation and transmission of electrical energy (including dispatching) as a buyer, and on the wholesale electrical energy market as a seller.

— the State Enterprise National Energy Generating Company Ukrenergo on the electrical energy transmission market (including dispatching).

In the process of investigation the AMCU discovered a number of factors which hinder the promotion of competition on the wholesale market. The Committee developed its proposals regarding necessary measures aimed at promoting competition to be taken by the Ministry of Energy and Coal Industry of Ukraine, National Energy and Utilities Regulatory Commission and the Council of Wholesale electricity market within their remit.      

 

 

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