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Publication date: 23.04.2024
I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.
A monopoly is a market situation where only one seller controls the production and sale of a certain product or service. In a monopoly position, this seller can set prices and volumes of production without competing with other market participants. This can lead to higher prices for consumers and limited choice. A monopoly can arise from a variety of factors, including exclusive rights to produce or sell, control over important resources or technology, or economies of scale. In some cases, monopolies may be created by the government to regulate the market or to provide certain public services, such as postal services or electricity.
Legislative regulation:
Antimonopoly legislation in Ukraine is intended to regulate activities on the markets in order to ensure competition and prevent monopolistic behavior. The main legal acts in this area are the Law of Ukraine "On Protection of Economic Competition", adopted in 2001. This law establishes the general principles and mechanisms of competition regulation in Ukraine, as well as the powers and functions of the Antimonopoly Committee of Ukraine (AMCU), the body responsible for the implementation of antimonopoly policy.
Monopoly position on the market:
A business entity is considered monopolistic or dominant in the product market if it has significant control over this market, which allows it to influence prices, production volumes, sales conditions, etc. without significant competition. Here are some signs that may indicate a monopoly (dominant) position on the product market:
High market shares: The business entity controls a significant market share of the product or service, which allows it to dictate the terms of the deals. As a general rule, a situation will be considered monopolistic if the market share of one business entity is 35% or more and such an entity does not prove that it is subject to significant competition. If the competitors have small enough shares in the market and the business entity does not experience significant competition for the dominant position in this regard, the situation can also be considered when the share of such an entity in the market is 35% or less.
Limited competition: There is no or limited competition in the market due to high entry barriers that make it difficult for new entrants to enter the market.
Control over pricing policy: A business entity can set prices for its goods or services without significant influence from competitors.
Technological advantages: Possession of unique technology or patents can give a business entity an advantage over competitors.
High Margin: A business entity can have a high profit margin because it can set prices for its goods at a higher level than in the presence of competition.
Abuse of monopoly position:
Here are some types of abuse of a monopoly position under this law:
Setting unacceptably high prices or setting unacceptably high profit levels: Monopolists may not set prices or profit levels that are disproportionately high compared to production costs and market conditions.
Blocking access to the market or artificially restricting competition: Monopolists do not have the right to prevent other business entities from entering the market or competing with them.
Application of discrimination: Monopolists do not have the right to apply different conditions or prices to different buyers without objective reasons.
Use of unfair methods in competition: Monopolists may not use unfair methods to enter the market, such as misinformation or false advertising.
Liability for abuse of monopoly position:
In the case when a business entity determines actions that, according to the current legislation, can be qualified as abuse of a monopoly position, then liability is provided for this in the form of a fine, the amount of which is 10% of the income from the sale of products, works, or services for the last year , which preceded the one in which this type of liability is applied. If the amount of illegally obtained profit is higher than 10% of the income, the amount of the imposed fine should not exceed three times the amount of illegally obtained profit.
A lawyer for business in matters of monopolistic position:
It is extremely important that when scaling a business, the requirements of the law on monopolies and monopolistic status are taken into account, and a business protection lawyer will act as a kind of safeguard that will prevent problems in this direction. A business lawyer will analyze the current legislation, build a business scaling strategy in such a way that it fully meets the requirements of the law. Also, a legal services for business will not allow cases of abuse of a monopoly position and, accordingly, unjustified prosecution of a business.
