News (#10 October 2019)


EU court saved transit of Russian gas through Ukraine – Poland

The European Supreme Court has revoked the EU decision which allows Russian energy company Gazprom to transport more gas using the OPAL gas pipeline connecting the Nord Stream pipeline with Germany. This is stated in the report drafted by the Polish company PGNiG.

The court concluded that “the decision in question was taken in violation of the principles of energy collective responsibility.” The court upheld the arguments filed by Poland that the European Commission, when adopting such a decision, violated the principles of the EU, since it failed to study the impact of such a decision on Poland’s energy security, PGNiG claimed.

It is noted that the decision of the European Commission allowed for the exclusive use of the German OPAL gas pipeline by Gazprom, and such permission was granted to Gazprom by the German energy regulator.

From 2013 Gazprom could use just 50% of OPAL’s capacities; in 2016, it was allowed to operate 90% of them.

The decision by the European Commission allowed Gazprom to increase pumping through OPAL by 10.7 billion cubic meters a year. Ukraine and Poland opposed this because of the possible loss of revenues from the transit of Russian gas supplied to Europe.

The OPAL pipeline capacity is 36 billion cubic meters per year, and it connects Nord Stream with the gas transmission system of Central and Western Europe. OPAL is owned by WIGA Transport Beteiligungs, a joint venture between the German Wintershall Dea (50.02%) and Gazprom (49.98%).


Fine imposed on Roche Ukraine by AMCU annulled

The Antimonopoly Committee of Ukraine accused Roche Ukraine LLC, importer of medicines and foreign manufacturer of anticompetitive concerted practice and imposed a fine of UAH 9.1 million on it. This was due to public procurement held in 2012–2016, in which the official distributors of Roche Ukraine took part. The AMCU concluded that because of the company’s bonus system, Ukrainian distributors could sell medicines to public healthcare institutions at an inflated price without lowering the sale price by the amount of the bonus. In February 2019 a court of first instance upheld the decision of the AMCU. The company then appealed.

The Economic Court of Appeal found that the contractual conditions contained no prohibitions, instructions or recommendations related to the use of the bonus and to the competitive behavior of the parties. Therefore, the distributor adopted its decision on subsequent resale and resale prices on its own accord, and the distributors’ competitive behavior was not limited by the agreement concluded with the supplier.

A reminder that Roche Ukraine is a subsidiary of Swiss F. Hoffmann-La Roche Ltd.


Supreme Court altered position and forbade State Enforcement Service to enforce sale of Prominvestbank

On 16 September the Supreme Court of Ukraine upheld the petition filed by the Russian state-owned Vnesheconombank (owner of Prominvestbank, Ukraine) and suspended the decision of the Kyiv Court of Appeal, which allowed the sale of the Ukrainian subsidiary of the Russian state-owned bank at the request of Ihor Kolomoysky.

Therefore, the Supreme Court prohibited the sale of 99.77% of Prominvestbank shares to be conducted on the PFTS Stock Exchange. This sale was intended to meet the requirements of companies owned by Ukrainian oligarch Ihor Kolomoysky, who wished to receive compensation for assets he lost following the annexation of Crimea by Russia through the sale of the Russian-owned bank.

The auction to sell the bank shares was scheduled for September 20, 2019. It was the second auction, so the bid price was reduced by 25%.


Privatbank subsidiary fined EUR 1 million in Latvia

The Latvian financial market regulatory authority imposed a fine on PrivatBank in the amount of EUR 1.02 million for violating the requirements of local legislation on money laundering.

The regulator found a number of violations during the bank audit that revealed serious deficiencies in the control system of AS PrivatBank related to customer transactions.

In particular, FCMC found that in some cases the bank did not conduct sufficient verification of the origin of funds in customers’ accounts and did not terminate cooperation with them on time.

Moreover, the subsidiary of PrivatBank was obliged to submit a plan of measures to the regulatory authority that would eliminate the violations found to have caused the fine to be imposed. The bank was also obliged to carry out independent verification of the internal control system.


Triolan provider fined  UAH 3.7 billion

The Kyiv District Administrative Court refused to uphold a claim filed by Triolan. Money to the State Fiscal Service of Kyiv to cancel the imposition of a fine in the amount of UAH 3.7 billion for violating the provisions on the conducting cash transactions in the Ukrainian hryvnia.

The text of the decree states that the subsidiary of the Internet service provider Triolan carried out the transfer of monetary funds in national currency through software and technical self-service devices without any registers of settlement transactions.

As a result of the tax audit conducted in March 2019, it was found that for the period from 1 January 2016 to 22 February 2019, the total amount of cash receipt transactions (as recorded in the cash register) came to UAH 738.6 million.

According to the Law On Use of Payment Transactions Registers in the Sphere of Trade, Public Catering and Services, when providing relevant financial services the use of cash registers is obligatory, which means Triolan.Money violated the law.

In its turn, the company emphasized that the relevant legislation sets no requirements for the use of cash registers when carrying out the activities related to the transfer of monetary funds. However, the court did not take this argument into consideration.


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