Antimonopoly legislation reform: AMCU's political (in)dependence

Antimonopoly legislation reform: AMCU’s political (in)dependence

Photo: ua.depositphotos.com / eric1513
13 February 2023
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Competent and independent antimonopoly authorities are a key tool for protecting economic competition in general and fighting oligarchs in particular. Today, several bills submitted for consideration in Parliament set procedures for appointing and removing AMCU  leadership. Will they be able to ensure the Committee’s political independence?

The antimonopoly legislation reform is part of Ukraine’s obligations toward the European Community on the path to integration with the EU and toward the International Monetary Fund. But above all, Ukraine needs this reform because competition ensures overall economic efficiency and the best possible goods and services for consumers. Bill 5431 is key to reforming the Antimonopoly Committee of Ukraine (AMCU) and implementing the first stage of legislative reforms on protecting competition. In the reform’s second stage, changes in (1) the conceptual apparatus (concerted actions and dominant position and its abuse); (2) obligation regarding concentrations; (3) procedures for appointing State Commissioners; (4) creating a separate antimonopoly court; and (5) ensuring the institutional independence of AMCU  are fundamental.

In our opinion, one of the first steps in reforming AMCU’s work should be ensuring the Committee’s political independence. According to IMF memoranda of 2020 and 2021, one of Ukraine’s primary obligations is to provide “transparency, competitiveness, and protection from political interference in appointing and removing AMCU  chair and State Commissioners.” In turn, the Council Directive (EU) 2019/1 of December 11, 2018, says Member States should ensure that clear and transparent rules and procedures for the selection, recruitment, or appointment of the leadership of national competition authorities are laid down in national law. Today, the Verkhovna Rada has four draft laws regarding the procedures for appointing AMCU  chair, their deputies, and State Commissioners. These are:

  • 2730, dated 01/14/2020, “On amending some laws of Ukraine regarding competition and antimonopoly reform” and alternatives bills (2730-1 and 2730-2, both dated 01/31/2020).
  • 2151, dated 09/17/2019, “On amending the law ‘On the Antimonopoly Committee of Ukraine’ as regards personnel of the Antimonopoly Committee of Ukraine.”
  • 3779, dated 07/02/2020, “On amending the law ‘On the Antimonopoly Committee of Ukraine’ as regards increasing the number of State Commissioners and securing the work of the appeals body” and alternative bill 3779-1 dated 20/07/2020, “On amending the law ‘On the Antimonopoly Committee of Ukraine’ as regards State Commissioners and aligning the law’s provisions with the Constitution of Ukraine.”
  • 4122, dated 09/18/2020, “On amending some pieces of legislation on antimonopoly policy, de-oligarchization, and ensuring fair competition.”

Which of these can ensure the antimonopoly authority’s political independence? In the Box, we will explain this independence and how to secure it. We will further look at the changes in appointment and dismissal procedures proposed by the bills submitted to Parliament.

AMCU’s independence 

Independence is an institutional structure minimizing politicians’ influence on a particular authority’s decisions (in this case, AMCU ). AMCU  (similar to the National Bank) should be a technocratic body looking after the public interest in the first place, not implementing some “party policy.” An essential component of independence is the procedures for appointing and removing AMCU  top officials. Therefore, they should be selected in an open competition, and there must be an exhaustive list of grounds for removing them. Besides, it is desirable that appointments and dismissals not depend on one person, e.g., the law should provide for the consent of Parliament to make such steps. It is the first (“external”) level of independence.

The “second level” of AMCU’s independence is its internal organization based on the principle of collegiality. It limits the AMCU chair’s influence on State Commissioners, enabling them to freely express and defend their professional judgments. In practice, the AMCU  chair and their deputies are only “first among equals.” They are State commissioners but also perform some additional organizational functions (today, AMCU  has the first deputy,  deputy, and five State commissioners). The chairperson cannot dismiss the authorized representatives, which can be done by the President, with the Prime Minister appointing them on the AMCU chair’s recommendation.

Appointing the AMCU chair

According to Article 85 of the Constitution of Ukraine, the AMCU chair is appointed by the Verkhovna Rada at the request of Ukraine’s Prime Minister. However, Article 9 of the law on the Antimonopoly Committee of Ukraine says the AMCU chair is appointed and removed by the President with the consent of the Verkhovna Rada of Ukraine. Therefore, the AMCU law should be brought in line with the Constitution. There should also be an open competition for the State Commissioner and AMCU chair positions. What do the bills propose?

As can be seen from Table 1, bill 2151 harmonizes AMCU  appointment procedures with the Constitution providing for an open competition. However, it does not include the process of forming a competition commission and holding a competition (which should be defined by the Cabinet of Ministers). Therefore, it is unclear what the businesses’ and the public’s involvement in the competition will look like in practice (however, the very idea of their participation is good). By contrast, even though bill 2730 describes the competitive selection process in much more detail, it does not eliminate the appointment procedure’s conflict with the Constitution. Bill 3779-1 introduces a constitutional appointment procedure but does not include the competition.

Table 1. The bill’s proposals regarding the appointment of the AMCU chair

law/bill competition competition commission appointed by
in force none* none the President, with the consent of the Verkhovna Rada
2730 open competition The President, the Verkhovna Rada, and the Cabinet of Ministers provide three members each; the bill provides for reputation requirements and the absence of conflicts of interests the Commission submits two candidates for consideration by the President; the President submits one candidacy to be approved by the Verkhovna Rada 
2730-2 the Cabinet of Ministers of Ukraine approves the process for selecting candidates for the post of chairperson the President, with the consent of the Verkhovna Rada
2151 open competition involvement of the business ombudsman, representatives of businesses, Parliament, the Government, the President, the media, etc. The Cabinet of Ministers appoints the commission members; the competition regulations are adopted by the Cabinet of Ministers the Verkhovna Rada, at the recommendation of the Prime Minister
3779-1 none none the Verkhovna Rada, at the recommendation of the Prime Minister
4122 none none the Verkhovna Rada

*Note. Currently, the law does not provide for recruiting state commissioners and the AMCU chair in an open competition. However, it contains particular requirements, e.g., candidates must be at least 30 years old, have legal or economic training, and have work experience in their field of at least five years during the last ten years.

There are considerable differences between the draft laws regarding removing the AMCU chair (Table 2). In particular, bills 2730 and 2730-2 reduce AMCU’s independence, allowing the dismissal of its chairperson “on general grounds.” The grounds for dismissal are set out in most detail in bill 2151. However, those grounds certainly have to also include a clause on violating the “anti-oligarchic” law regarding declaring any contact with oligarchs or their representatives. At the moment, it is unclear how exactly this provision will work. Still, it is included in all laws defining activities of the state bodies, which oligarchs can theoretically influence. In our opinion, this provision will do more harm than good, but it is a topic for another discussion.

Table 2. The bills’ proposals regarding removing the AMCU chair

law/bill grounds for dismissal who dismisses
in force
  • a crime has been committed
  • due to their health conditions
  • in case of violating the provisions of the law of Ukraine “On Preventing Threats to National Security Associated with the Excessive Influence by Persons Who Weld Significant Economic and Political Weight in Public Life (Oligarchs)” regarding submitting and complying with the deadlines for submitting a declaration of contacts
  • in addition, the law stipulates that the chairperson may not hold office for more than two consecutive seven-year terms
  • has the right to notify the Verkhovna Rada of their resignation 
the President, with the consent of the Verkhovna Rada
2730
  • general grounds under labor legislation
  • due to their health conditions
  • voluntary resignation
  • due to the expiration of the term of office;
  • in the event of gross violations of official duties or the commission of a crime
the President, with the consent of the Verkhovna Rada
2730-2
  • general grounds under labor legislation
  • due to their health conditions
  • voluntary resignation
  • in the event of a new State Commissioner being appointed to this position
  • in the event of gross violations of official duties or the commission of a crime
the President, with the consent of the Verkhovna Rada
2151
  • in the event of gross violations of official duties, confirmed by proper and admissible evidence or a crime;
  • resigning from the position voluntarily, in particular, due to their health conditions or retirement
  • resigning due to being in fundamental disagreement with respect to the act(s) of AMCU and providing a written opinion statement regarding the Committee’s actions
  • being appointed or elected to another position, with their consent
  • being declared missing or dead
  • terminating their Ukrainian citizenship or having permanent residence outside of Ukraine
  • has the right to notify the Prime Minister of Ukraine of their resignation.
the Verkhovna Rada, on the recommendation of the Prime Minister
3779-1
  • a crime has been committed
  • due to their health conditions
  • has the right to notify the Verkhovna Rada of their resignation
the Verkhovna Rada
4122
  • not specified
  • it is proposed to reduce the term of office to five years
the Verkhovna Rada

Appointing and removing AMCU’s State Commissioners (from which the first deputy and deputy chairperson are elected)

As can be seen from Tables 3 and 4, the procedures for appointing and dismissing State Commissioners (one of whom is the AMCU chair) are similar to those proposed for the chairperson. However, bills 2730 and 2730-2 introduce additional (in our opinion, unnecessary) restrictions on State Commissioners. Therefore, it is unclear why the law needs to specify the number of commissioners with economic or legal training and why it is impossible to elect commissioners having different training but relevant work experience. (Notably, about half of Ukraine’s workforce work in jobs unrelated to their educational background). Bill 2151 generally proposes to elect commissioners only from among those who already have AMCU experience, which significantly narrows the pool of potential candidates and turns AMCU into a “thing in itself,” i.e., a closed system. It is challenging to implement reforms in closed systems, even if they are needed. However, a positive feature of draft law 2151 is the transfer of powers to dismiss state officials from the President to the Verkhovna Rada, which will enhance the Committee’s independence.

Table 3. The bills’ proposals regarding the appointment of the AMCU State Commissioners

law/bill competition competition commission appointed by
in force none none the President, on the Prime Minister’s recommendation based on the AMCU chair’s proposal
2730 open competition; additional requirements: at least five State Commissioners with legal training and at least two with economic training. the President, the Verkhovna Rada, and the Cabinet of Ministers provide three members each the Commission submits two candidacies for consideration by the President; the President submits one candidate to be approved by the Verkhovna Rada 
2730-2 there must be at least five State Commissioners with legal training and at least two with economic training. none; the Cabinet of Ministers adopts the selection procedure the Verkhovna Rada, on the Prime Minister’s recommendation based on the AMCU chair’s proposal
2151 open competition similar to that for the position of the AMCU  chair; additional requirements:

high professional and moral qualities, positive work experience in the system of the Antimonopoly Committee bodies of at least three years, including in managerial positions of at least two years; good command of the state language

a commission engaging a wide range of persons appointed and defined by the Cabinet of Ministers the Verkhovna Rada, on the Prime Minister’s recommendation based on the AMCU chair’s proposal
3779-1 None; it is proposed to increase the number of State Commissioners from 8 to 12 none The CMU, on the Prime Minister’s recommendation 

Table 4. The bills’ proposals regarding the dismissal of the AMCU State Commissioners

law/bill grounds for dismissal who dismisses
in force
  • due to their health conditions
  • voluntary resignation;
  • in the event of gross violations of official duties; the entry into force of a conviction by a court of law of a criminal offense
The President
2730 similar to the grounds for removing the chairperson (Table 2) The President
2730-2 similar to the grounds for removing the chairperson (Table 2) The President
2151 similar to the grounds for removing the chairperson (Table 2) The Verkhovna Rada, on the Prime Minister’s recommendation based on the AMCU chair’s proposal 
3779-1 none The CMU, on the Prime Minister’s recommendation

Conclusions

None of the bills are perfect since they contain both positive and controversial proposals. We hope that while working on this reform, Parliament will be able to draft a bill that (1) will align the appointment procedures with the Constitution; (2) make dismissal more difficult by requiring parliamentary consent; (3) introduce an open competition for the State Commissioner and chairperson positions with the participation of the public; and (4) the candidate evaluation criteria will include not their formal training but relevant work experience.

With the support of

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