(a) for the EU Party, the European Commission; and
(b) for Ukraine the Anti-Monopoly Committee of Ukraine.
2. "competition laws" means:
(a) for the EU Party, Articles 101, 102 and 106 of the Treaty on the Functioning of the European Union, Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EU Merger Regulation), and their implementing regulations and amendments;
(b) for Ukraine, Law No 2210-III of 11 January 2001 (with amendments) and its implementing regulations and amendments. In the event of conflict between a provision of Law No 2210-III and another substantive provision on competition Ukraine shall ensure that the former shall prevail to the extent of the conflict; as well as
(c) any changes that the abovementioned instruments may undergo after the entry into force of this Agreement.
3. Terms used in this Section are further explained in Annex XXIII.
Article 254. Principles
The Parties recognise the importance of free and undistorted competition in their trade relations. The Parties acknowledge that anti-competitive business practices and transactions have the potential to distort the proper functioning of markets and generally undermine the benefits of trade liberalisation. They therefore agree that the following practices and transactions, as specified in their respective competition laws, are inconsistent with this Agreement, in so far as they may affect trade between the Parties:
(a) agreements, concerted practices and decisions by associations of undertakings, which have the object or effect of impeding, restricting, distorting or substantially lessening competition in the territory of either Party;
(b) the abuse by one or more undertakings of a dominant position in the territory of either Party; or;
(c) concentrations between undertakings, which result in monopol- ization or a substantial restriction of competition in the market in the territory of either Party.
Article 255. Implementation
1. The EU Party and Ukraine shall maintain competition laws which effectively address the practices and transactions referred to in Article 254(a) (b) and (c).
2. The Parties shall maintain authorities responsible, and appropriately equipped, for the effective enforcement of the competition laws set out in paragraph 1 of this Article.
3. The Parties recognise the importance of applying their respective competition laws in a transparent, timely and non-discriminatory manner, respecting the principles of procedural fairness and rights of defence. Each Party in particular shall ensure that:
(a) before a competition authority of one of the Parties imposes a sanction or remedy against any natural or legal person for violating its competition law, it affords the person the right to be heard and to present evidence within a reasonable time to be defined in the respective competition laws of the Parties after it has communicated to the natural or legal person concerned its pro- visional conclusions as to the existence of the violation; and
(b) a court or other independent tribunal established under that Party's laws imposes or, at the person's request, reviews any such sanction or remedy.
4. Upon request of a Party, each Party shall make available to the other Party public information concerning enforcement activities of its competition laws and legislation related to the obligations covered by this Section.
5. The competition authority shall adopt and publish a document explaining the principles to be used in the setting of any pecuniary sanctions imposed for infringements of the competition laws.
6. The competition authority shall adopt and publish a document explaining the principles used in the assessment of horizontal mergers.
Article 256. Approximation of Law and Enforcement Practice
Ukraine shall approximate its competition laws and enforcement practices to the part of the EU acquis as set out below:
1. Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty.
Timetable: Article 30 of the Regulation shall be implemented within three years of the entry into force of this Agreement.
2. Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EU Merger Regulation).
Timetable: Articles 1 and Article 5(1) and (2) of the Regulation shall be implemented within three years of the entry into force of this Agreement.
Article 20 shall be implemented within three years of the entry into force of this Agreement
3. Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices.
Timetable: Articles 1, 2, 3, 4, 6, 7 and 8 of the Regulation shall be implemented within three years of the entry into force of this Agreement.
4. Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application of Article 81 (3) of the Treaty to categories of technology transfer agreements.
Timetable: Articles 1, 2, 3, 4, 5, 6, 7 and 8 of the Regulation shall be implemented within three years of the entry into force of this Agreement.
Article 257. Public Enterprises and Enterprises Entrusted with Special or Exclusive Rights
1. With respect to public enterprises and enterprises entrusted with special or exclusive rights:
(a) neither Party shall enact or maintain in force any measure contrary to the principles contained in Articles 254 and Article 258(1) of this Agreement; and
(b) the Parties shall ensure that such enterprises are subject to the competition laws referred to in Article 253(2) of this Agreement
insofar as the application of the above-mentioned competition laws and principles does not obstruct the performance, in law or in fact, of the particular tasks assigned to the enterprises in question.
2. Nothing in the previous paragraph shall be construed as preventing a Party from establishing or maintaining a public enterprise, entrusting enterprises with special or exclusive rights or maintaining such rights.
Article 258. State Monopolies
1. Each Party shall adjust state monopolies of a commercial character within five years of the entry into force of this Agreement, so as to ensure that no discriminatory measures regarding the conditions under which goods are procured and marketed exist between natural and legal persons of the Parties.
2. Nothing in this Article shall prejudge the rights and obligations of the Parties under Chapter 8 (Public Procurement) of Title IV of this Agreement.
3. Nothing in paragraph 1 shall be construed as preventing a Party from establishing or maintaining a state monopoly.
Article 259. Exchange of Information and Enforcement Cooperation
1. The Parties recognise the importance of co-operation and co-ordination between their respective competition authorities to further enhance effective competition law enforcement, and to fulfil the objectives of this Agreement through the promotion of competition and the curtailment of anti-competitive business conduct or anti-competitive transactions.
2. To this end, the competition authority of a Party may inform the competition authority of the other Party of its willingness to cooperate with respect to enforcement activity. This cooperation shall not prevent the Parties from taking independent decisions.
3. With a view to facilitating the effective application of their respective competition laws, the competition authorities of the Parties may exchange information including on legislation and enforcement activities, within the limits imposed by their respective legislations and taking into account their essential interests.
Article 260. Consultations
1. Each Party shall, at the request of the other Party, enter into consultations regarding representations made by the other Party, to foster mutual understanding or to address specific matters that arise under this Section. The requesting Party shall indicate how the matter affects trade between the Parties.
2. The Parties shall promptly discuss, at the request of either Party, any questions arising from the interpretation or application of this Section.
3. To facilitate discussion of the matter that is the subject of the consultations, each Party shall endeavour to provide relevant non- confidential information to the other Party, within the limits imposed by their respective legislations and taking into account their essential interests.
Article 261.
No Party may have recourse to dispute settlement under Chapter 14 (Dispute Settlement) of Title IV of this Agreement with respect to any issue arising under this Section, with the exception of Article 256 of this Agreement.
Section 2. State Aid
Article 262. General Principles
1. Any aid granted by Ukraine or the Member States of the European Union through state resources which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is incompatible with the proper functioning of this Agreement insofar as it may affect trade between the Parties.
2. However, the following shall be compatible with the proper func- tioning of this agreement:
(a) aid having a social character, granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned;
(b) aid to make good the damage caused by natural disasters or excep- tional occurrences.
3. Moreover, the following may be considered to be compatible with the proper functioning of this Agreement:
(a) aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment;
(b) aid to promote the execution of an important project in the common European interest (1) or to remedy a serious disturbance in the economy of one of the Member States of the European Union or Ukraine;
(c) aid to facilitate the development of certain economic activities or of certain economic areas where such aid does not adversely affect trading conditions contrary to the interests of the Parties;
(d) aid to promote culture and heritage conservation where such aid does not adversely affect trading conditions contrary to the interests of the Parties;
(e) aid to achieve objectives allowed under the EU horizontal block exemption regulations and horizontal and sectoral state aid rules granted in line with the conditions set out therein;
(f) aid for investment to comply with the mandatory standards of the EU directives listed in Annex XXIX to Chapter 6 (Environment) of Title V of this Agreement, within the implementation period provided for therein, and involving adaptation of plant and equipment to meet the new requirements, can be authorised up to the level of 40% gross of the eligible costs.
4. Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Section, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Parties.
Terms used in this Section are further explained in Annex XXIII.
Article 263. Transparency
1. Each Party shall ensure transparency in the area of state aid. To this end, each Party shall notify annually to the other Party the total amount, types and the sectoral distribution of state aid which may affect trade between the Parties. Respective notifications should contain information concerning the objective, form, the amount or budget, the granting authority and where possible the recipient of the aid. For the purposes of this Article, any aid below the threshold of EUR 200.000 per undertaking over a period of three years does not need to be notified. Such notification is deemed to have been provided if it is sent to the other Party, or if the relevant information is made available on a publicly accessible internet website, by 31 December of the subsequent calendar year.
2. Upon request by a Party, the other Party shall provide further information on any state aid scheme and particular individual cases of state aid affecting trade between the Parties. The Parties shall exchange this information taking into account the limitations imposed by the requirements of professional and business secrecy.
3. The Parties shall ensure that financial relations between public authorities and public undertakings are transparent, so that the following emerge clearly:
(a) public funds made available directly or indirectly (for example through the intermediary of public undertakings or financial institutions) by public authorities to the public undertakings concerned;
(b) the use to which these public funds are actually put into.
4. The Parties shall moreover ensure that the financial and organisational structure of any undertaking that enjoys a special or exclusive right granted by Ukraine or the Member States of the European Union or is entrusted with the operation of a service of general economic interest, that receives public service compensation in any form whatsoever in relation to such service, is correctly reflected in separate accounts, so that the following emerge clearly:
(a) the costs and revenues associated with all products or services in respect of which a special or exclusive right is granted to an under- taking or all services of general economic interest with which an undertaking is entrusted and, on the other hand, each other separate product or service in respect of which the undertaking is active;
(b) full details of the methods by which costs and revenues are assigned or allocated to different activities. These methods shall operate on the basis of accounting principles of causality, objectivity, transparency and consistency, according to internationally recognised accounting methodologies such as activity based costing, and be based on audited data.
5. Each Party shall ensure that the provisions of this Article are applied within five years of the entry into force of this Agreement.
Article 264. Interpretation
The Parties agree that they will apply Article 262, Article 263(3) or Article 263(4) of this Agreement using as sources of interpretation the criteria arising from the application of Articles 106, 107 and 93 of the Treaty on the Functioning of the European Union, including the relevant jurisprudence of the Court of Justice of the European Union, as well as relevant secondary legislation, frameworks, guidelines and other administrative acts in force in the European Union.
Article 265. Relationship with WTO
These provisions are without prejudice to the right of the Parties to apply trade remedies or other appropriate action against a subsidy or have recourse to dispute settlement in accordance with the relevant WTO provisions.
Article 266. Scope
The provisions of this Section shall apply to goods and to those services which have been listed in Annex XVI to Chapter 6 (Establishment, Trade in Services and Electronic Commerce) of Title IV of this Agreement, in accordance with the mutually agreed decision on market access, with the exception of subsidies to products covered by Annex 1 to the WTO Agreement on Agriculture and other subsidies covered by the Agreement on Agriculture.
Article 267. Domestic System of State Aid Control
To comply with the obligations of Articles 262 to 266 of this Agreement:
1. Ukraine shall in particular adopt national state aid legislation, and establish an operationally independent authority which is entrusted with the powers necessary for the full application of Article 262 of this Agreement within three years of the entry into force of this Agreement. This authority shall have, inter alia, the powers to authorise state aid schemes and individual aid grants in conformity with the criteria referred to in Articles 262 and 264 of this Agreement as well as the powers to order the recovery of state aid that has been unlawfully granted. Any new aid granted in Ukraine must be consistent with the provisions of Articles 262 and 264 of this Agreement within one year of the date of establishment of the authority.
2. Ukraine shall establish, within five years of the entry into force of this Agreement, a comprehensive inventory of aid schemes instituted before the establishment of the authority referred to in paragraph 1 and shall align such aid schemes with the criteria referred to in Articles 262 and 264 of this Agreement within a period of no more than seven years from the entry into force of this Agreement.
3. (a) For the purposes of applying Article 262 of this Agreement, the Parties recognise that during the first five years after the entry into force of this Agreement, any public aid granted by Ukraine shall be assessed taking into account the fact that Ukraine shall be regarded as an area identical to those areas of the European Union described in Article 107(3)(a) of the Treaty on the Functioning of the European Union.
(b) Within four years of the entry into force of this Agreement, Ukraine shall submit to the European Commission its gross domestic product per capita figures harmonised at NUTS II level. The authority referred to in paragraph 1 of this Article and the European Commission shall then jointly evaluate the eligibility of the regions of Ukraine as well as the maximum aid intensities in relation thereto in order to draw up the regional aid map on the basis of the relevant EU guidelines.
Chapter 1. Trade-Related Energy
Article 268. Definitions
For the purposes of this Chapter, and without prejudice to the provisions set out in Chapter 5 (Customs and Trade Facilitation) of Title IV of this Agreement:
1. "energy goods" means natural gas (HS code 27.11), electrical energy (HS code 27.16) and crude oil (HS code: 27.09);
2. "fixed infrastructure" means any transmission or distribution network, Liquefied Natural Gas facility and storage facility, as defined in Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity (hereinafter referred to as "Directive 2003/54/EC") and Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas (hereinafter referred to as "Directive 2003/55/EC");
3. "transit" means transit, as described in Chapter 5 (Customs and Trade Facilitation) of Title IV of this Agreement, of energy goods through a fixed infrastructure or oil pipeline;
4. "transport" means transmission and distribution, as defined in Directive 2003/54/EC and Directive 2003/55/EC, and the carriage or conveyance of oil through pipelines;
5. "unauthorised taking" means any activity consisting in unlawful taking of energy goods from fixed infrastructure.
Article 269. Domestic Regulated Prices
1. The price for the supply of gas and electricity to industrial consumers shall be determined solely by supply and demand.
2. By way of derogation from paragraph 1 of this Article, the Parties may impose in the general economic interest (1) an obligation on under- takings which relates to the price of supply of gas and electricity, (hereinafter referred to as "regulated price").
3. The Parties shall ensure that this obligation is clearly defined, transparent, proportionate, non-discriminatory, verifiable and of limited duration. In applying this obligation, the Parties shall also guarantee equality of access to consumers for other undertakings.
4. Where the price, at which gas and electricity are sold on the domestic market, is regulated, the Party concerned shall ensure that the methodology underlying the calculation of the regulated price is published prior to the entry into force of the regulated price.
Article 270. Prohibition of Dual Pricing
1. Without prejudice to the possibility to impose domestic regulated prices consistently with paragraphs 2 and 3 of Article 269 of this Agreement, neither Party or a regulatory authority thereof, shall adopt or maintain a measure resulting in a higher price for exports of energy goods to the other Party than the price charged for such goods when intended for domestic consumption.
2. The exporting Party shall at the request of the other Party provide evidence that a different price for the same energy goods sold on the domestic market and for export does not result from a measure prohibited by paragraph 1 of this Article.
Article 271. Customs Duties and Quantitative Restrictions
1. Customs duties and quantitative restrictions on the import and export of energy goods and all measures having equivalent effect shall be prohibited between the Parties. This prohibition shall also apply to customs duties of a fiscal nature.
2. Paragraph 1 shall not preclude quantitative restrictions or measures having equivalent effect, justified on grounds of public policy or public security; protection of human, animal or plant life or health, or the protection of industrial and commercial property. Such restrictions or measures shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties.
Article 272. Transit
The Parties shall take the necessary measures to facilitate transit, consistent with the principle of freedom of transit, and in accordance with Article V.2, V.4 and V.5 of GATT 1994 and Articles 7.1 and 7.3 of the Energy Charter Treaty of 1994, which are incorporated into and made part of this Agreement.
Article 273. Transport
As regards transport of electricity and gas, and in particular third-party access to fixed infrastructure, the Parties shall adapt their legislation, as referred to in Annex XXVII to this Agreement and in the Energy Community Treaty of 2005, in order to ensure that the tariffs, published prior to their entry into force, the capacity allocation procedures and all other conditions are objective, reasonable and transparent and shall not discriminate on the basis of origin, ownership or destination of the electricity or gas.
Article 274. Cooperation on Infrastructure
The Parties shall endeavour to facilitate the use of gas transmission infrastructure and gas storage facilities and shall consult or coordinate, as appropriate, with each other on infrastructure developments. The Parties shall cooperate on matters related to trade in natural gas, sustainability and security of supply.
With a view to further integrate markets of energy goods, each Party shall take into account the energy networks and capacities of the other Party when developing policy documents regarding demand and supply scenarios, interconnections, energy strategies and infrastructure development plans.
Article 275. Unauthorised Taking of Energy Goods
Each Party shall take all necessary measures to prohibit and address the unauthorised taking of energy goods transited or transported through its area.
Article 276. Interruption
1. Each Party shall ensure that transmission system operators take the necessary measures to:
(a) minimise the risk of accidental interruption, reduction or stoppage of transit and transport;
(b) expeditiously restore the normal operation of such transit or transport, which has been accidentally interrupted, reduced or stopped.
2. A Party through whose territory energy goods transit or are transported shall not, in the event of a dispute over any matter involving the Parties or one or more entities subject to the control or jurisdiction of one of the Parties, interrupt or reduce, permit any entity subject to its control or jurisdiction, including a state trading enterprise, to interrupt or reduce, or require any entity subject to its jurisdiction to interrupt or reduce the existing transport or transit of energy goods, except where this is specifically provided for in a contract or other agreement governing such transit or transport, prior to the conclusion of a dispute resolution procedure under the relevant contract.
3. The Parties agree that a Party shall not be held liable for an interruption or reduction pursuant to this Article where that Party is in an impossibility to supply, transit or transport energy goods as a result of actions attributable to a third country or an entity under the control or jurisdiction of a third country.
Article 277. Regulatory Authority for Electricity and Gas
1. A regulatory authority shall be legally distinct and functionally independent from any public or private entity, and sufficiently empowered to ensure effective competition and the efficient functioning of the market.
2. The decisions of and the procedures used by a regulatory authority shall be impartial with respect to all market participants.
3. An operator affected by any decision of a regulatory authority shall have the right to appeal against that decision to an appeal body which is independent of the parties involved. Where the appeal body is not judicial in character, written reasons for its decision shall always be given and its decisions shall also be subject to review by an impartial and independent judicial authority. Decisions taken by appeal bodies shall be effectively enforced.
Article 278. Relationship with the Energy Community Treaty
1. In the event of a conflict between the provisions of this Section and the provisions of the Energy Community Treaty of 2005 or the provisions of the EU legislation made applicable under the Energy Community Treaty of 2005, the provisions of the Energy Community Treaty of 2005 or the provisions of the relevant EU legislation made applicable under the Energy Community Treaty of 2005 shall prevail to the extent of such conflict.
2. In implementing this Section, preference shall be given to the adoption of legislation or other acts which are consistent with the Energy Community Treaty of 2005 or are based on the legislation applicable to this sector in the EU. In the event of a dispute as regards this Section, legislation or other acts which meet these criteria shall be presumed to conform to this Section. In assessing whether the legislation or other acts meet these criteria, any relevant decision taken under Article 91 of the Energy Community Treaty of 2005 shall be taken into account.
3. Neither Party shall utilise the dispute settlement provisions of this Agreement in order to allege a violation of the provisions of the Energy Community Treaty.
Article 279. Access to and Exercise of the Activities of Prospecting, Exploring for and Producing Hydrocarbons
1. Each Party (1) has, in accordance with international law including the United Nations Convention on the Law of the Sea of 1982, full sovereignty over hydrocarbon resources located in its territory as well as in its archipelagic and territorial waters in addition to sovereign rights for the purposes of exploring and exploiting hydrocarbon resources located in its exclusive economic zone and continental shelf.
2. Each Party retains the right to determine the areas within its territory as well as in its archipelagic and territorial waters, exclusive economic zone and continental shelf to be made available for the exercise of the activities of prospecting, exploring for and producing hydrocarbons.
3. Whenever an area is made available for the exercise of these activities, each Party shall ensure that entities, as regards access to and exercise of these activities, are treated on an equal basis.
4. Each Party may require an entity, which has been granted an authorisation for the exercise of the activities of prospecting, exploring for and producing hydrocarbons, to pay a financial contribution or a contribution in hydrocarbons. The detailed arrangements of such contribution shall be fixed in such a way so as not to interfere in the management process and decision-making of entities.
Article 280. Licensing and Licensing Conditions
1. Parties shall take the necessary measures to ensure that licences, through which an entity is entitled to exercise, on its own behalf and at its own risk, the right to prospect or explore for or produce hydrocarbons in a geographical area, are granted following a published procedure and invite potentially interested applicants to submit applications by means of a notice.
2. The notice shall specify the type of licence, the relevant geographical area or part thereof and the proposed date or time limit for granting a licence.
3. Article 104 and Article 105 of this Agreement shall apply to the licensing conditions and the licensing authorisation procedure.
Chapter 12. Transparency
Article 281. Definitions
For the purposes of this Chapter:
1. "Measures of general application" include laws, regulations, judicial decisions, procedures and administrative rulings of general application and any other general or abstract act, interpretation or other requirement that may have an impact on any matter covered by this Agreement. It does not include a ruling that applies to a particular person; and
2. "Interested person" means any natural or legal person that may be subject to any rights or duties under measures of general application, within the meaning of Article 282 of this Agreement.
Article 282. Objective and Scope
1. Cognisant of the impact which their respective regulatory environment may have on trade between them, the Parties shall establish and maintain an effective and predictable regulatory environment for economic operators doing business in their territory, especially small ones, due account being taken of the requirements of legal certainty and proportionality.