© Springer-Verlag Berlin Heidelberg 2015
Pierre Kobel, Pranvera Këllezi and Bruce Kilpatrick (eds.)Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social ResponsibilityLIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition10.1007/978-3-662-45753-5_30

30. Ukraine

Igor Svechkar 

Asters, Kyiv, Ukraine



Igor Svechkar

30.1 The Different Types of CSR Policies that Exist in Ukraine

CSR policies in Ukraine generally cover all aspects of activity under ISO 26000, including such issues as management, human rights, employment, environmental protection, fair business practices, consumer protection, etc., though only a limited number of these types became commonly used.

The results of a study covering the period 2005–2010 showed that labor and employment are the most common CSR practices for Ukrainian companies. The majority of CSR practices are mainly focused on remuneration, regulation of work hours, and nondiscrimination in employment.

Many companies, especially large corporations, also pay considerable attention to the policies dealing with responsibility towards customers and clients for the quality of their products and services.

Environmental and social projects, as well as many other types of policies, have not gained significant importance yet: only one-third of companies make social investments, half of the respondents do not have any environmental projects, only one-fourth has internal regulations (guidelines, rules, etc.) regarding CSR policies.1

The level of transparency in CSR issues is quite low. In Ukraine, in 2005–2010, only 38 companies published CSR reports (55 reports in total) prepared in COP, RI, and other formats.2 There was an insignificant increase in the number of CSR reports from 15 in 2011 up to 35 in 2012.3

Main legal concerns predominantly owe to the lack of special legal framework for CSR policies. There are no mandatory rules or standards as regards the CSR practices, their implementation, and reporting. As a result, lack of regulation creates substantial constraint on CSR development limiting transparency, possibilities for efficient control over CSR compliance, and eventually the incentive to adopt and follow a CSR policy.

30.2 The Ukrainian Legislation Sanctioning Breaches of Self-Imposed CSR Policy

Generally, there is no legislation that prevents or sanctions breaches of voluntarily adopted CSR policy.

Ukrainian laws do not provide for a liability for a breach of self-imposed CSR policy unless such breach also qualifies as a violation of some legal provisions and requirements. Sometimes, CSR closely neighbors with legal requirements or is instrumental to assuming by companies of additional legal obligations or becoming subject to higher standard legal requirements. For example, driven by a CSR policy, an employer that enters into a collective bargaining agreement may want to set in there a relatively high standard of remuneration, social protection, insurance, and guarantees for employees. In this way, CSR policy is implemented into a binding legal obligation of the business and its breach entails a liability for both the company and its management, including fines that may be imposed by relevant public authorities.

Another example of a binding CSR policy (and a possibility to enforce against a noncompliant business) is a rule or a standard, which is undertaken as mandatory CSR commitment by a business association—members of such association may request compliance with the relevant policy by other members based on the contractual framework of the association. Refusal to comply may serve as a ground for expelling the CSR offender from the association or even amount to unfair competition where the relevant code of conduct or a similar set of rules gained the status of fair trade practices.

In addition, a breach of CSR policy may constitute violation of consumer protection4 and competition laws.5 In particular, it is prohibited to engage in unfair business practices or unfair competition in the form of dissemination of misleading information to consumers or clients (e.g., false information about the manufacturer, production, and other applicable standards, as well as other information that may influence the choice of product or supplier by customers). It is not incompliance with the CSR policy itself that is actionable but rather a misleading reference to a certain CSR policy or standard that a company claims to follow, e.g., while promoting or advertising its products or services. Thus, the availability of legal remedies is quite limited: it is not possible to require a business to follow a self-imposed CSR policy, but rather where such policy is not followed, an aggrieved party (be it a customer or a competitor) may compel the business to stop referring to the CSR policy for marketing purposes and also claim damages caused by the misleading information (e.g., that contained in advertising or promotion materials that mention a CSR policy and associate the product or service with certain benefits that the compliance with such policy can bring). Public authorities may also sanction for relevant violations of consumer protection or competition laws.

There is no specific regulation on damages inflicted as a result of a CSR violation; thus, general civil law regulation applies.

30.2.1 Subjects Entitled to Enforcement of Breaches of Conduct Codes Enforcement by the Antimonopoly Committee of Ukraine

As mentioned, CSR policies are enforceable by regulatory authorities to the extent they constitute a breach of relevant legal provisions. For example, noncompliance of an employer with a CSR obligation undertaken towards an employee (e.g., a commitment to provide accommodation) entails administrative liability that may be imposed by the relevant regulatory authorities supervising compliance with labor laws.

Should the breach of CSR policy amount to unfair competition, the relevant laws may be enforced by the Antimonopoly Committee of Ukraine (the “AMC”). In particular, based on a complaint by a competitor or a consumer or on its own initiative, the AMC may wish to check whether the statements made by a business regarding its compliance with the CSR policy, such as environmental protection or production standards, are true. If these statements are untrue and are potentially misleading for customers in their choice of goods, the AMC may impose fines and compel the business to discontinue dissemination of misleading information. In order to ensure the enforcement of its decisions, the AMC may also resort to court. Such practice is not commonly used yet; however, there have already been some cases that confirm a possibility of its further development. For example, AMC viewed pharmacy’s claim to be a “social pharmacy” in the advertisement materials as misleading toward consumers because it suggested more affordable prices or some social services that the pharmacy in fact did not offer. Having considered these actions as unfair competition, the AMC prohibited to use this motto and impose a fine on the relevant chain of pharmacies. Enforcement by Consumers

The Law of Ukraine “On Protection of Consumer Rights” ensures to consumers the right to get true and complete information about the products and production technologies that should enable them to make conscious, competent, and free choice. The Law prohibits unfair business practice, including any activity (actions or inaction) that misleads the consumer. Therefore, should the company claim compliance with certain CSR standards and fail to do so, the consumers, which were misled by these statements and influenced in their choice of products, can seek enforcement and claim damages. As noted above, consumers cannot compel the CSR offender to comply with the CSR policy.

Damages are awarded by Ukrainian courts. In order to claim damages, the affected consumers should prove misconduct by the company and substantiate the amount of damages and the direct causation between the misconduct and the damages sustained. In practice, it may be uneasy to explicate the second and the third components in a way satisfactory for the court.

Consumers may also apply to the relevant regulatory authorities charged with supervision over compliance with consumer protection laws. While the enforcement powers of the authorities do not extend to damage claims, the fact that they have found a company to be in violation of the law is usually precedential for the courts and significantly contributes to the chances of the consumer to succeed in the damages suits. Enforcement by Competing Businesses

A competitive business may bring an action under unfair competition laws. This would ideally involve filing a complaint with the AMC, which explains how the untrue CSR statement by the offender adversely affected the relevant competitor (increased customer churn rate, etc.) and lodging a follow-on damage suit. The first step is covered by the above discussion, while we are generally unaware of CSR-based lawsuits brought by competitors.

Alternatively, a competitive business may go directly to court and ask the court to both consider whether there was an offense and, if so, award damages. Enforcement by Suppliers

Suppliers to and purchasers of the goods or services of the offending business may bring lawsuits against it based on general provisions of the Civil Code. To succeed, they will need to prove causation of damages resulting from the failure to follow the publicized CSR policy by the offender.

In application to purchasers, the central point of the relevant assessment by the court would again be the extent to which following by the offender of the CSR policy was decisive for the purchaser’s choice to contract. Another relevant consideration would be the impact of a misleading CSR statement on the purchaser’s own business and the “downstream” effects that may be inflicted by the untrue statement made by the offender in the first instance.

As it comes to suppliers, it appears that their claims against the CSR offender would not stand really good chances to be supported by the court, unless a supplier is able to prove that having been following the CSR policies the offender would certainly purchase from this particular supplier (e.g., because of the unavailability of alternative sources of supply of the CSR-compliant products, considerable purchasing needs of the offender, etc.). Though even where the supplier would be capable of proving these facts, Ukrainian courts may still be unwilling to award damages, perhaps with the exception of cases where a competitive bidding process was involved.

Unlike competitors, suppliers and purchasers may not have a sufficient cause for complaint with the AMC. In practice, however, this should not prevent them from complaining, and the AMC, acting in public interest, is likely to bring the case forward on its own initiative.

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