Antimonopoly Committee punishes oil traders
On October 14, the Antimonopoly Committee of Ukraine levied a record fine on Dnipropetrovsk’s Avias and Sentoza Oil: UAH 98.7 million. Both gasoline- trading companies, running 12 and 34 filling stations respectively and sharing a total of 50% in the local fuel market, were accused of having made a price-fixing deal to keep fuel prices up in Dnipropetrovsk oblast. AMCU failed to prove conspiracy between the companies’ management, but it feels sure that they were into an agreed pricing policy.
AMCU Chairman Oleksiy Kostusev informed that he had confronted unprecedented resistance in the course of investigation, adding that AMCU officials were not even allowed to check company records. After law enforcement authorities stepped in, their people also had problems getting past security guards. Mr. Kostusev said that the investigation received an impetus only after Mykola Shvets, head of the local state administration, had been replaced by Volodymyr Yatsuba. The new governor later stated he was not going to put up with fuel overcharges (UAH 2.2 per liter of A-95 gasoline, against Ukraine’s average UAH 2.05, and UAH 1.6 per liter of diesel fuel {against UAH 1.4}, as of September 1). Interestingly, fuel prices in Dnipropetrovsk oblast had plummeted prior to the AMCU October 14 meeting.
The record fine levied attracted the attention of economists and politicians. People’s Deputy Oleh Tsariov of Dnipropetrovsk oblast, addressing the AMCU meeting, approved the authorities’ approach to fuel overcharges in general but pointed to the importance of the industrial-financial group, of which both companies were members: “It’s an extremely important group backed by a powerful bank.” He added that it was necessary to work out a special mechanism of levying and collecting fines without damaging the regional economy. Kyiv business periodicals, it should be noted, have long associated Sentoza Oil with the largest Dnipropetrovsk bank.
The companies at issue made no official comments. The AMCU October 14 meeting was attended by an Avias executive, but the journalists present received no answers to their questions. “We admit nothing. We simply carried out the agreements,” he told one of AMCU officials before the meeting and this author was within earshot to use his pocket tape recorder. This makes it possible to predict the future scenario. The companies are very likely to contest the AMCU decision in court; the amount payable as a fine is too large to avoid legal proceedings. The more so that the industrial-financial group involved is known for skilled lawyers.
Indeed, AMCU does not stand much of a chance of proving conspiracy between the two companies in court. Petro Ambrozevych, head of the AMCU investigations department, says conspiracy was deduced from monitoring the dynamics of the filling stations’ prices. In addition, one of the companies had the other one checked by its controlling body. But all this will not be a problem for an experienced defense counsel. Under Ukrainian law, the AMCU can press conspiracy charges only when in possession of direct evidence. Verkhovna Rada recently deliberated a bill recognizing an economic analysis of a pricing policy as direct evidence, but it did not collect the required number of votes.
It is also possible, however, that the outcome will be determined by politicians rather than jurists. The Ukrainian market remains extremely politicized. As it is, the AMCU decision has attracted the interest of the Presidential Administration’s economic department. Its head, Pavlo Haidutsky, feels sure that there was a conspiracy in Dnipropetrovsk, although he admits that the evidence in the AMCU hands is rather weak. Meanwhile, some sources indicate that the AMCU could receive a stack of documents detailing the regional oil market’s performance, although the need in such documents will depend on the political situation in Ukraine.
