Antitrust Policy in Ukraine

Article excerpt

ANTITRUST POLICY IN UKRAINE*

ROGER ALAN BONER** & WILLIAM E. KOVACIC***

INTRODUCTION

Since the early 1980s over twenty formerly communist and socialist countries have adopted new antitrust laws as a component of market-based economic reforms.1 The emphasis on antitrust law as a focal point for reform has aroused considerable controversy. As a matter of principle, many observers have warned that establishing antimonopoly systems in the transition process will inhibit economic growth or divert attention away from more important reform priorities.2 As a matter of practice, many transition economies with antitrust systems have struggled with limited success to effectively implement new competition statutes.3

One of the most exciting and promising of the modern competition policy experiments is unfolding in Ukraine, which enacted its basic antitrust statute, the Law of Ukraine on Limitation of Monopolizm and Banning of Unfair Competition in Entrepreneurial Activities (Law on Monopolism), in February 1992. Ukraine's efforts to apply the Law on Monopolism, together with a series of amending statutes and implementing decrees,4 represent significant and successful institutional innovations in an extraordinarily difficult political and economic environment.

To accomplish the transition from a central planning to a decentralized market economy, Ukraine must overcome a daunting Soviet legacy of invasive government regulation, extensive state ownership, a collapsing physical infrastructure, high levels of industrial concentration, and poorly developed or non-existent legal and commercial institutions.5 The stakes in Ukraine's efforts to surmount these obstacles are high. The collapse of communism and the process of economic and political liberalization have imposed staggering hardships on many Ukrainian citizens. Failure to generate substantial economic growth could have grave consequences for Ukrainians and countries with a strong interest in the emergence of an economically and politically independent Ukraine.6

Ukraine's experience with antitrust policy as a central component of a transition strategy is important in several respects. It shows the role that strong institutions can play by ensuring that market-oriented reforms create and strengthen competition. Ukraine's adoption, refinement, and implementation of antimonopoly laws illuminates how other countries can remove privately- imposed impediments to competition and discourage destructive and inefficient government intervention in the economy. Moreover, Ukraine's experience suggests that antimonopoly systems can enhance the rule of law by promoting public administration techniques that increase the legitimacy and accountability of decision- making by state agents and institutions.7

This Article examines the development of an antitrust system in Ukraine in five parts. It begins, in Part II, by describing major features of the economic and political environment in which Ukraine's antimonopoly institutions have taken shape. Part III describes Ukraine's antitrust enforcement mechanism and its main enforcement institution, the Antimonopoly Committee (AMC or Committee). It also discusses the development of an effective apparatus for devising and implementing pro-competitive policies and legal standards. Part IV presents the basic Ukrainian antimonopoly statute and describes enforcement under its principal provisions. Part V focuses on antitrust measures and initiatives relating to the restructuring of Ukraine's economy, including the AMC's role in privatization, natural monopoly oversight, and merger control. Part VI contrasts the antitrust policies of Ukraine with those of developed nations in the West and transitional economies in central and eastern Europe.

II. THE UKRAINIAN ECONOMIC AND POLITICAL ENVIRONMENT

Market reforms often are designed to decentralize economic opportunity and commercial decision-making. …

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