News (#1-2 January-February 2021)



EU competition authorities pursue investigation into Google advertising practices

EU antitrust regulators have requested advertisers to provide information on Google practices with regard to advertising technologies.

Over the past three years, Google, which is the worlds largest search engine on the Internet, has been hit with fines totaling EUR 8.25 billion for blocking competitors in online stores, Android smartphones, and online advertising.

It currently faces two EU investigations into its advertising practices that focus on technologies and data.

Google and Facebook collectively control more than half of the global advertising sales market. Both companies are currently subjects to legal action in the USA in relation to their agreement dated 2018, which granted customers of Facebook advertisers the opportunity to place ads on the Google publishing partners network.

Google claimed it was cooperating with the European Commission, whose 13 page questionnaire sent to advertisers contained questions about the impact of using the default setting Enable Google Display Network, introduced in 2018 for Google Ads search campaigns.

The Commission stated that the questionnaire was part of its probe into data use by Google.

Oil & Gas

Ukraine increased oil imports in 2020 by more than 50%

Ukraine increased imports of oil and petroleum feedstock by 57.5% in 2020 compared to 2019, up to 1.245587 million tons.

Imports of feedstock came to USD 409.167 million in 2020, which is 1.5% less than in 2019.

Feedstock originated from Azerbaijan worth USD 265.076 million (64.78% of total), USA USD 98.445 million (24.06% of total), Libya USD 45.555 million (11.13% of total), other countries USD 0.091 million (0.02% of total).


Tour operators now obliged to indicate cost of tours in UAH

The Antimonopoly Committee of Ukraine is demanding that tour operators cease indicating the cost of their tours in USD with the subsequent conversion into UAH at their own exchange rate, which is usually much higher than the NBUs official rate and that on the interbank market.

The studys findings evidenced that such actions had signs of violation of the Law On Protection against Unfair Competition by way of dissemination of misleading information.

A number of well-known Ukrainian companies became subjects to the investigation: Pegas Touristik LLC, Tez Tour LLC, Join Up LLC, Travel Professional Group LLC, Annex Tour Travel Company LLC, TTVK LLC, Compass Ukraine LLC, Alf Tour Operator LLC, Coral Travel LLC, and Muzenidis Travel Ukraine LLC.

According to Ukrainian legislation, any information provided by a tour operator (travel agent) must contain reliable information about the terms of the agreement on tourist services. The legislation also clearly states that the only statutory means of payment is hryvnia. If the monetary equivalent is indicated in foreign currency, the amount of payment must be determined at the official exchange rate of such currency as of the day of payment.

By posting information about the tour cost using their own exchange rate, which is different from that of the NBU and of the interbank market, on their websites and subject to non-availability of the price in UAH, tour operators may influence customers intentions to purchase travel services. Therefore, such actions of tour operators can significantly influence the intentions of citizens to purchase a tour from one of these companies, which is quite a significant advantage on the competitive tourist services market.

At the time of decision-taking, two tour operators Coral Travel LLC and Musenidis Travel Ukraine LLC responded quickly to the problem and halted the provision of inaccurate information on their websites. Thus, the recommendations were divided into two parts.

The first one related to these two companies and contained the requirement to take measures to eliminate the consequences of violations of the legislation on protection against unfair competition by providing consumers with complete, accurate, and reliable information about the cost of a tour product exclusively in the national currency of Ukraine, as well as to inform customers about their services in a non-misleading way.

Other companies were given the following recommendations:

to halt posting inaccurate information about the cost of tour product on websites, where the tour operator uses its own exchange rate and/or in case of non-availability of an indication of the cost of such services in the Ukrainian currency the hryvnia (UAH);

to inform consumers in a non-misleading way.

Within the ten days given for termination of the offense, all these tour operators converted their prices into UAH.

Banking & Finance

The World Bank will grant USD 300 million loan to Ukraine

The World Bank has approved a loan of USD 300 million to Ukraine as additional funding to counter COVID-19.

The additional funding will help to secure Ukraines Guaranteed Minimum Income (GMI) Program to prevent about 1 million Ukrainians from falling below the poverty line because of the COVID-19 pandemic.

This is the second additional funding within the project framework since the approval of USD 150 million on 30 April 2020.

The new funding is expected to help to fund Ukraines response to COVID-19 social security emergencies through the introduction of quick money transfers to individuals and households who have lost their jobs or sources of income as a result of the pandemic.

Moodys raised the ratings of 8 Ukrainian banks

The international rating agency Moodys raised the ratings of Privatbank, Oschadbank, Ukreximbank, TAScombank, PJSC Sberbank, Bank Vostok, and Bank Pivdenny under the new methodology without changing the stable forecast from Caa1 to B3. The rating of Raiffeisen Bank Aval was raised to B2.

The ratings of these banks correspond to Ukraines current rating (stable B3), therefore an increase in their rating is unlikely due to the absence of an increase in the sovereign rating.

At the same time, banks credit capacity ratings may be decreased if their financial performance, in particular asset quality, capitalization, and profitability, worsens significantly.

NBU retained discount rate at 6% per annum

The Board of the National Bank of Ukraine decided to retain the discount rate at 6% per annum. It is the lowest discount rate in the history of independent Ukraine.

Any change in the discount rate is an important signal for banks to set interest rates on deposits and loans.

It affects the cost of loans the National Bank grants to commercial banks. The higher it is, the more expensive refinancing loans are for banks, and the more expensive are the loans offered by the latter, and so fewer borrowers take out loans.


EU refused to certify Nord Stream-2

Det Norske Veritas GL, the Norwegian company that was supposed to certify the Nord Stream-2 gas pipeline following its completion, refused to provide this service after new US sanctions came into effect.

The American sanctions, which took effect on 1 January, following the adoption of the US Defense Budget by the US Congress, prohibit foreign companies from rendering testing, inspection, and certification services in relation to the pipeline. They are given 30 days to withdraw from the project, otherwise they will become subject to US sanctions.

DNV GL will halt all inspection activities related to the Nord Stream 2 pipeline system in accordance with the sanctions for as long as these sanctions are effective.

Det Norske Veritas GL is a partner of the currently operating Nord Stream pipeline and Nord Stream-2 pipeline, which are under construction. The first gas pipeline has been certified by DNV GL annually since 2012. DNV inspection procedures are aimed at minimizing the project risks to human life, property, and the environment.

Inspection and certification of the pipeline are mandatory on the Danish section, the construction of which has not yet begun. The Russian pipelay crane vessel Fortuna, supported by other Russian vessels, is expected to begin construction of the Danish section in mid-January 2021.


Louis Vuitton acquired jewelry company Tiffany

LVMH holding announced the completion of acquisition of jewelry company Tiffany & Co worth USD 15.8 billion and appointed new management.

The acquisition is expected to strengthen LVMHs position in the jewelry business and extend its footprint in the USA.

LVMH announced its plan to acquire Tiffany in 2019. Then they claimed a slightly larger amount of the transaction USD 16.2 billion. At the same time, the process of merging the companies stopped when the pandemic began.

This autumn, LVMH claimed its withdrawal from the deal. In response, Tiffany filed a lawsuit demanding that the company fulfill their preliminary agreement. LVMH and Tiffany negotiated a new agreement in October 2020.

Fiat and Peugeot merger created one of the largest carmakers in the world

Fiat Chrysler and Peugeot have completed the process of merging into the Stellantis auto group, which has become the worlds fourth-largest carmaker. The value of the deal is estimated at USD 52 billion.

Stellantis shares went public in Milan and Paris on 18 January and on 19 January in New York.

Stellantis plans to cut annual costs by EUR 5 billion without any unwanted halting of part of its manufacturing operations. Analysts expect that following the merger, the company will be able to improve its performance in China and boost sales, which lag far behind its manufacturing output.

The Ukrainian Journal of Business Law

Subscribe to The Ukrainian Journal of Business Law right now and enjoy the most relevant issues on doing business in Ukraine on your device or in print.

All this for just USD 9.99 a month.


Subscribe now