AMCU obliges Ostchem Group to separate assets of nitrogen chemistry within 9 months
The Antimonopoly Committee of Ukraine (AMCU) on Thursday took a decision on forced separation of nitrogen chemistry assets of Ostchem Group owned by businessman Dmytro Firtash and impose a fine of UAH 107 million on NF Trading Ukraine.
"To apply a forced separation, which must be carried out within nine months from the date of issue of the decision, to business entities of PrJSC Severodonetsk Azot, PJSC Azot, PrJSC Rivneazot for violations," AMCU's head Yuriy Terentyev reads the resulting part of the case during the meeting.
The committee established that these companies, along with the wholesale trading company NF Trading Ukraine LLC, abused their monopoly (dominant) position in the market for the primary sale of nitrogen mineral fertilizers during 2014-2017.
According to Terentyev, systematic resale of natural gas at inflated prices within the group that is the main raw material in the production of fertilizers was recognized as a violation of the legislation on protecting economic competition, which led to the establishment of unreasonable cost of their production and, as a result, to overstatement of the cost of sold fertilizers.
Another violation is that the plants from March to June 2017 (the spring field season) stopped the production of nitrogen mineral fertilizers, which led to the shortage of goods to farmers.
"The 'reason' for shutting down the plants was a deliberate failure to make settlements for gas supplies and even non-collection of gas already paid by the group from storage facilities. At the same time, prepayment for the production of fertilizers was taken from buyers," said the head of the AMCU.
He added that since fertilizers were sold outside the group through the trading company NF Trading Ukraine, the maximum possible fine in the amount of UAH 107 million was imposed on it in accordance with current law.
"The Antimonopoly Committee of Ukraine believes that if the three main domestic manufacturers of nitrogen mineral fertilizers competed with each other, and did not act as one entity – the Ostchem group, abuse would be impossible," Terentyev said.
Therefore, according to him, taking into account the duration and significance of the violation, its negative impact on the state agrarian market and in order to effectively stop the abuse of monopoly position, the group's plants have been sanctioned by forced separation, which must be carried out within nine months from the date of issue of this decision.