You're reading: Mergers and monopolies are part of regular menu for this lawyer

Name: Mykola Stetsenko

Position: Partner and Founder at Avellum

Key point: Possibly more antitrust enforcement ahead

Did you know? He serves on the public council of Ukraine’s Antimonopoly Committee

Ukraine’s Antimonopoly Committee has an international reputation. And it’s not a good one.

Mykola Stetsenko, a partner and founder of Avellum Partners law firm, described frustration among big European law firms that “Ukraine is one of the few jurisdictions that is so problematic even for mergers” in which the Ukrainian component is tiny.

“You still have to ask for the Ukrainian monopoly committee’s approval,” he said.

Stetsenko’s story points to a central paradox of Ukrainian antitrust enforcement: how can the main regulator apparently be so obtrusive and active and yet operate in a country where monopoly seems to be a staple of doing business?

It’s a question still unanswered.

Mykola Stetsenko - Position: Partner and Founder at Avellum - Key point: Possibly more antitrust enforcement ahead    - Did you know? He serves on the public council of Ukraine's Antimonopoly Committee

Mykola Stetsenko
Position: Partner and Founder at Avellum
Key point: Possibly more antitrust enforcement ahead
Did you know? He serves on the public council of Ukraine’s Antimonopoly Committee (Courtesy)

Reaping big bucks

Stetsenko founded his firm in July 2009, just as the wave caused by the financial crisis was cresting in Ukraine.

“The financial crisis was at full speed,” Stetsenko said.

He saw an opportunity to work with the country’s biggest companies and large foreign law firms.

Avellum began to accumulate clients. In the first year, Stetsenko advised on a deal that saw TNK-BP, a Rosneft subsidiary, buy out Ukrainian gas station chain Vik Oil.

Stetsenko also worked on the initial public offering in London of Oleg Bakhmatyuk’s Avangard Group.

Bakhmatyuk has since fallen on rougher times as his businesses teeter on the verge of bankruptcy and endured fraud accusations from the National Bank of Ukraine over the failures of his VAB Bank and Finansova Initsiatyva.

Avellum also worked with billionaire Yuriy Kosyuk’s agricultural giant Myronivsky Hliboprodukt.

“By our first anniversary, we already had a few sizeable transactions under our belt,” Stetsenko said. “All of these transactions were multimillion-dollar transactions. Clients realized that we were a new young team that could deliver the highest-quality standards, both in terms of the expectations of our clients, international banks, and international law firms.”

Ukraine: Monopolized or just concentrated?

But back to Ukraine’s highly monopolized economy. Much of Stetsenko’s work revolves around antitrust concerns: Ukraine’s Antimonopoly Committee reviews many of the mergers that he works om to prevent competition-killing concentration.

In many ways, monopoly is the thinking man’s version of corruption: instead of bribing a public official for some short-term advantage, savvy businesspeople can manipulate entire sectors of the economy in their favor, reaping billions of dollars in benefits by preventing real competition.

“It inevitably leads to a small choice of products and services or a higher price,” Stetsenko said.

Dmytro Yablonovsky, a researcher at the Center for Economic Strategy, argues that the most egregious examples of market abuse in Ukraine occur in state-dominated sectors like energy and rail, but that monopolistic practices in the private sector inflict damage to Ukrainian consumers as well.

“In some cases we really have private company monopolies, but they are few,” Yablonovsky said. “What we see in many cases is companies that can, to some extent, affect the market through lobbying on regulations. This has an adverse effect on competition and on the economy.”

Ukraine’s Antimonopoly Committee gained a reputation for corruption that peaked during the administration of runaway former President Viktor Yanukovych.

One example, which began in 2011, was recently struck down by Ukraine’s High Commercial Court. Market research firm ACNielsen had been accused by the Antimonopoly Committee of colluding in a price-fixing scheme with other retailers. Though the company eventually prevailed, it spent years fighting off a claim filed by an official, Mykola Barash, who was fired by the Rada less than a month after the 2014 EuroMaidan revolution took place.

As the committee spent years focusing on cases that were later found to have no basis, monopolies in the aviation, energy and fuel sectors developed, leaving Ukrainians with higher prices and less opportunity.

Stetsenko argued that the committee has taken steps since Yanukovych’s ouster to improve the situation by introducing an amnesty for antitrust violations.

“Anyone who had violations of concentration approval in the past could come to the authority, pay a nominal fine, and get the approval,” he said.

His firm alone had worked on 10 such approvals for its clients.

Take it to the committee

To some, however, this is a free pass for anti-competitive practices.

But Stetsenko and Yablonovsky, the Center for Economic Strategy researcher, praised the Antimonopoly Committee’s work since the EuroMaidan Revolution, contending that it had become more transparent.

Stetsenko said the committee has stepped out of the way of business in recent years, lowering concentration thresholds that trigger automatic requirements for committee approval.

A worker carries a step ladder to change light bulbs in the session hall of the Supreme Court of Ukraine in Kyiv on April 5.

A worker carries a step ladder to change light bulbs in the session hall of the Supreme Court of Ukraine in Kyiv on April 5. (Volodymyr Petrov)

Stetsenko predicted that more expansive antitrust investigations are in the offing.

“If you dig deep into their reports, you’ll see that they have quite a few investigations,” Stetsenko said. “They actually force some monopolies to reconsider their pricing, but of course it takes time.”

Yablonovsky said that even though the committee has good intentions, it remains chronically underfunded. “They don’t have enough people to perform this analysis in a deep enough way,” he said.

Stetsenko implied that the Antimonopoly Committee has spent most of its time as an opaque, political tool.

“We can criticize them, but you have to realize that the system was built over the past 25 years,” he said. “It takes time to replace people.”