Competition Watchdog Fines Distributor

Photo: Taco Tuinstra

Ukraine’s Anti-Monopoly Committee (AMCU) on March 17 fined Ukraine’s largest tobacco distribution company, Tedis, $9.8 million for noncompliance with an earlier ruling, reports the Kyiv Post.

In December 2016, the AMCU fined Tedis $16 million for abusing its monopoly position in 2013–2015, when the distributor’s market share reached 99.4 percent. The company was also instructed to restore competition in the tobacco market.

Tedis plans to appeal, calling the decision “absolutely groundless.” The company says it paid $11.5 million in 2017 and $4.5 million in 2020 and complied with all the other requirements of the committee.

Tedis’s monopoly first caught the eye of AMCU in 2014, when cigarette retailers started to complain about the lack of competition in the tobacco distribution market. A report by the Redcliffe Partners law firm published in January 2020 showed that by 2015, there were 22 tobacco products distributors on the market, but only one was actually selling them—Tedis.

Tedis entered Ukraine in 2010, when the market had more than 50 cigarette distributors. Gradually, Tedis began to acquire other distributors, taking a bigger share of the market. At the time, AMCU approved the acquisitions.

Within a few years, Tedis dominated the market, selling products of Philip Morris International (PMI), Japan Tobacco International, Imperial Tobacco and British American Tobacco (BAT). According to the Redcliffe Partners report, those tobacco companies, together with Tedis, restricted market access of other players.

In 2019, AMCU fined Tedis and four tobacco producers $265 million for creating a monopoly—one of the biggest fines in Ukraine’s history. Tedis never paid because Ukraine’s Supreme Court in February 2021 exempted Tedis from paying the fine.

Tobacco firms appealed the ruling but lost their initial cases. The American Chamber of Commerce in Ukraine expressed concern about the fairness of the trial.

In August 2020, PMI paid UAH1.18 billion ($66.07 million) for its share in the case. In February 2021, a Ukrainian court upheld BAT’s appeal of the fine.