AMCU drops UAH 1.1 bn fine for Philip Morris group of companies

National Police criminal case initiated Kyiv

Complainee: The Antimonopoly Committee of Ukraine (AMCU)
Complaint in brief: Back in 2016 the Business Ombudsman Council received a complaint from  Philip Morris group of companies regarding challenged excessive tax audit charges and the subsequent failure of the State of Ukraine to respect an amicable agreement with the American, Swiss and Ukrainian  Philip Morris offices to cancel the additional charges of UAH 635 million.
In early 2020, the company had to again complain to the BOC but with another aspect of the case. This time the complaint related to a case launched by the AMCU concerning the alleged receipt of state aid by the company as a result  of  cancellation of additional tax charges  under the mentioned amicable agreement.  The company faced a fine of UAH 1.18 bn. The company asked the Ministry of Justice to start negotiations on settling the dispute and to establish an Interdepartmental Working Group (IWG). However, IWG meetings were only formal and did not resolve the investor’s situation. The BOC then launched its own investigation.
Actions taken: The Council concluded that the AMCU took an unsubstantiated decision to open a case in connection with the alleged receipt of state aid by the investor. Moreover, the state aid element was missing in the relevant relationship, namely there was no fact established that the company had in any way been supported by state resources as a result of the performance under the amicable agreement. Therefore, the BOC recommended that the AMCU discontinue the consideration of the state aid case given the absence of the fact that Philip Morris received state aid.
The Council became engaged with the IWG chaired by the Deputy Minister of Justice, where it upheld the company’s position. The BOC started monitoring the implementation of the recommendation issued to the AMCU in the complainant’s case.
Result achieved: Despite a long awaiting period, the AMCU followed the Council’s recommendation and closed the state aid case. A fine of UAH 1.18 bn. was dropped.

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