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Anti-oligarchic reform: what does the Parliament prepare?

Ukraine’s approach towards joining the European Union dictates to perform the “homework” to our authorities and society as quickly as possible. Of course, they should do it anyway, without any external prompts.

Independent decisive movement forward is one of the foundations of sovereignty. Of course, this sovereignty was demonstrated by our Armed Forces. It is possible and necessary to fight for the future in the rear, mainly through effective reforms. The efforts to speed up European integration processes should be made today already.

In June, Ukraine, as a candidate for the EU, received the seven most crucial Recommendations, the implementation of which is a prerequisite for negotiations on Ukraine’s accession to the European Union.

The first is the anti-oligarchic reform, and the Cabinet of Ministers has prepared a detailed Action Plan for the reform’s implementation. The essence of this reform is to limit the influence of oligarchs in the social, economic, and political spheres.

What can be “the most anti-oligarchic” step for Ukraine now? First, it is necessary to fix the “broken” antimonopoly legislation. And precisely to this request, the Government and the MPs give their answer in the form of draft laws 5431 and 5432.

The former aims to improve the Antimonopoly Committee’s work (at least, the authors think so). The latter is to change the procedure for bringing administrative responsibility for violating competitive legislation.

Considering the high probability of adopting draft laws in the coming months (if not weeks), we offer their brief overview.

Spoiler alert: despite the positive novelties, there are plenty of reasons to be alarmed.

First empowerment, then political independence (but not for sure)

The central claim of the expert environment to the proposed Law on the Antimonopoly Committee (AMC) boils down, first of all, to the excessive President’s influence on the leadership of the Committee.

The Antimonopoly Committee has many things in common with the courts, and one of these similarities is the ability and obligation to say “No!”. To anyone, even the head of state. A competitive market is his Bible, and monopolies and external influence on competitive policy are mortal sins.

Unfortunately, for some reason, the authors decided otherwise. The explanatory note says so: first – an increase of institutional capacity, and then (with other draft laws) – ensuring institutional independence.

Let’s forget for a second that under such conditions, it is difficult to believe in the performance of the second part. Undoubtedly, the joint responsibility of violators, an increase in salaries, or the possibility of involving the police in inspections will help the AMC to perform its work better. Still, the monopolistic influence of the head of state (or anyone else) on the staffing of the Committee will nullify these and other innovations.

Draft Law No. 5431 does not in any way change the procedure for appointing the head, deputy head, and state representatives of the AMC – all candidates are selected or approved by the President with the participation of controlled institutions (the Parliament or the Prime Minister), and only the President can dismiss them.

No contests, no effective criteria for screening out random people – nothing. Of course, in such conditions, we can’t talk about the independence of the AMC, particularly from the oligarchs, whose negative influence the Committee, by definition, is called to fight against.

I want – I consider the case, I don’t – I’m not considering it

The provisions of the current Law “On the Protection of Economic Competition” allow the case not to be considered if the violation “does not have a tangible impact on the conditions of competition on the market.”

The Law does not explain what impact on competition is “intangible”; even a flagrant violation may go unreacted.

So, draft law No. 5431 not only fails to eliminate this problem but also exacerbates it – the AMC will be able to ignore the violation if it “does not correspond to the priorities of its activity established by the AMC.” How to prevent the establishment of priorities taking into account the “wishes” of the oligarchs is not mentioned in the text, and therefore there are zero safeguards.

“Get sick” – and help the oligarch

For the central and territorial structures of the AMC, the quorum for the start of work has always been classic – most members have to be gathered. We do not know what dictated this, but for the work of the administrative board of the AMC (no, it is not a ceremonial body), the authors of draft law No. 5431 propose a 100% quorum.

Do you think such an approach will not create a temptation to “help” a friendly financial and industrial group by simply not coming to the meeting of the administrative board?

And how can the collegium should work according to such requirements?Its members can really get sick, go on business trips, get stuck in traffic jams, go on vacation. We are not even talking about possible abuses but about the complete paralysis of the work of the collegium for perfectly understandable reasons, which for all other collegial bodies, have never been reasons to stop work unless the idea of making the body incapacitated is pursued due to mandatory consensus.

Openness is mandatory, but if you really want to…

Consideration by the Antimonopoly Committee of high-profile cases on granting permission for concerted actions, concentration, and violation of competitive legislation for obvious reasons arouses increased public interest. Therefore, one of the fixed policies of AMC’s work is openness.

But even here, there were some pitfalls, which allowed the Committee to work transparently only in 99% of cases, but sometimes – to hold closed hearings if an open hearing “may harm the interests of the state, persons participating in the hearing of the case, and other persons or prevent further consideration of the case.”

There are no clear criteria for determining such potential harm. And therefore, anything can be recognized as a threat. And they will admit, taking into account the precedents of hiding information by various criminals under the guise of war (2014), covid (2020-2021), and war again (2022-2023).

Administrative punishments remind “shooting sparrows from a cannon”

Administrative fines for violation of competitive Law are an empty value. It is funny to read that the abuse of a monopoly position in the market (some of its forms) will cost the violator UAH 510.

The need to do something about it is obvious. Unfortunately, the developers of the draft law (this time No. 5432) decided to replace one extreme with another. Implementation of their “scale of responsibility” will allow businesses to be fined UAH 255,000 not only for severe misdemeanors but also for failure to provide the Antimonopoly Committee with a specific certificate or for committing minor “obstruction” of AMC.

A classic corruption risk is a massive difference between the minimum and maximum fines. In draft law No. 5432, this record amounts to UAH 170,000.

Irony aside, the comments on draft laws are not an end in themselves. The goal is not to criticize but to warn and call for corrections to be made in the documents.

Can these and other flaws be corrected before the final vote? Of course, it is possible and necessary – everything is in the hands of specialized committees (economic and Law enforcement) and dedicated MPs.

Nothing stands in the way of promptly developing, registering, and supporting, in priority order, a fair competitive procedure for the formation of the leadership of the Antimonopoly Committee – this is not a matter of the Regulations but of political will. Or the unwillingness to ensure accurate, open-market, meritocratic, and competitive capitalism in the country, and not “wild,” which is the crucial difference between just big and oligarchic business.

The whole of Europe and not only is closely watching how the European integration recommendations are implemented by the leadership of Ukraine both according to the letter of the Law and according to the spirit. And although it is not directly written anywhere, our European future depends on the state’s ability to eradicate corruption.

Mykhailo Serebryakov, NGO «Together Against Corruption» Executive Director, for the Ukrainian Pravda