AMCU (#12 December 2014)

AMCU issued mandatory recommendations for PJSC Kyivstar 

The radio frequency resource that is provided to a telecommunication operator under a license is a component of certain telecommunication services within the telecommunications network. Under certain conditions of the market and introduction of new technologies, the available radio frequency resource becomes an important competitive advantage of each market participant.

Due to the significant concentration of the frequency resources and availability of the necessary bandwidth in each region, only PJSC Kyivstar will be able to introduce 3G services in almost all regions of Ukraine when the legislation provides an opportunity to introduce the new 3G technologies (UMTS) for the 900 MHz and 1800 MHz frequency bands. Due to the above and the plans to sell licenses for certain frequency bands, the AMCU believes that the voluntary waiver of PJSC Kyivstar to use a certain part of the radio frequency resource could enable comprehensive development of the market of mobile communications and introduction and development of 3rd and 4th generation radio technologies. Governed by provisions of Article 7 of the On Antimonopoly Committee of Ukraine Act, the AMCU issued its recommendations for PJSC Kyivstar to take the measures that are envisaged by legislation so as to ensure that the participants of the market of mobile communications have equal opportunities to provide services to their customers, particularly under the licenses for certain frequency bands for 3rd and 4th generation radio technologies.

AMCU issued its mandatory recommendations to JSC Ukrtelecom

Due to complaints by business entities (operators, telecommunications providers) regarding compliance by JSC Ukrtelecom with the legislation on protection of economic competition pertaining to the latter’s tariffs for direct lines between two end users in a local telephone network, the Antimonopoly Committee of Ukraine carried out a probe. The agency discovered that JSC Ukrtelecom approved its tariffs for the connection and use of direct lines for telecommunication operators and providers, by increasing them by 5-16 times.

JSC Ukrtelecom explained that a decisive factor to revise the tariffs was its analysis of the current market prices for services, including the services of local digital networks. According to the AMCU, its examination demonstrated that the services of local digital networks could not be viewed as a substitute for direct lines. JSC Ukrtelecom had a monopoly (dominant) position on the market of direct telephone lines between two end users in the local telephone network of Ukraine in the period of January-September 2014. Over the last eighteen months before the tariffs were changed there were negative dynamics of demand for direct lines and a positive dynamics of supply. In conditions of well-developed competition, these factors usually require that the market participants improve their pricing policy towards reduction.

In view of the above and pursuant to Article 46 of the On Protection of Economic Competition Act, the AMCU issued its mandatory recommendations to JSC Ukrtelecom, requesting it revise its tariffs for  direct lines between two end users in local telephone networks and to adjust them to the level that would have existed under conditions of significant competition on the market.

AMCU supports competition in the market of connections to gas supply networks

The AMCU has issued its mandatory recommendations for the National Commission, which regulates energy and utilities, requesting a halt to actions that have elements of violation of legislation on protection of economic competition in the market of connections to gas supply networks.

The AMCU reviewed 96 cases related to abuse of monopoly by gas distribution companies. It imposed fines totaling about UAH 2 million and terminated 176 violations by issuing its mandatory recommendations. Currently, 14 cases are being reviewed by the Committee. In May — June 2014, the AMCU conducted its scheduled on-site inspections to examine how gas distribution companies observe legislation on protection of economic competition on the market of connections to gas supply networks.

The Committee identified typical violations including missing terms to consider applications for connections (delays); delays with fulfillment of the agreements on connection; unjustified rejection of applications; setting unreasonable requirements in the technical specifications; inflated charges for connection services (non-standard connections), etc. Analysis, the violations are largely caused by imperfection of regulations on connections. The current regulations lack a procedure on the return of funds to customers, if such funds are attracted as a reimbursable financial assistance; the procedure of approval of the design documentation by gas distribution companies; criteria and rules of engaging construction and design entities to perform connections. In order to connect users, gas distribution companies need to obtain a number of permits, approvals, certificates that are required by legislation in the field of urban planning. If they comply with the requirements, the actual term for the standard service of connection would significantly exceed the term of 3 months, as established by the National Commission.

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