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Trends of digital services market development discussed at forum DEC 2017

The importance and influence of the media cannot be overestimated. More and more often, market players are not playing fair. These and many other issues in the field of electronic communications were discussed during the Forum DEC 2017 (Days of Electronic Communication) in Odessa where Nina Kucheruk, Head of Litigation and Arbitration, represented Jurimex.

During her speech, the Jurimex lawyer noted that entities resort to different methods to achieve competition advantages compared to their competitors, particularly, unfair methods of competition. One of the areas where market participants use these unfair methods is television where you can often find offers of free services or services at low prices, including prices below their actual cost.

The Jurimex representative stated that activities that aim to unfairly "lure away" customers and displace competitors must qualify as unfair competition, and the person carrying out such activities must be brought to justice. However, today a significant part of legal acts governing these issues is outdated and does not cover all the existing problems. Moreover, at present there is no adequate and effective legal regulation (in particular, legal prohibition of "unfair" activities carried out by software service providers). For example, the Law of Ukraine "On Telecommunications" prohibits the establishment of dumping prices by telecommunication providers and the practice of cross-subsidization whereas there are no prohibition laws concerning the software service providers.

The fact that the Law of Ukraine "On Protection from unfair competition" is outdated can be proved by a limited list of clearly defined types (forms) of unfair competition. This narrowed list allows the market participants to safeguard against unfair competition provided that they can prove the unfair actions of their competitors.

Nina Kucheruk pointed out that an effective method of combating unfair competition would be to introduce the relevant changes to the current legislation, in particular, by prohibiting dumping, setting discriminatory prices etc. In many countries of the world (China, Mongolia, etc.) dumping is expressly prohibited by law. Such prohibitions are justified as the said actions not only violate the freedom to carry out entrepreneurial activities, but also negatively affect the development of an industry. Furthermore, among the negative consequences of the introduction of price dumping and providing of free services is the displacement of existing competitors and impediment for the new ones to enter the market as well as damage not only to software service providers but also to content holders.

The issue of long-term marketing campaigns being a common way to attract new customers require legislative regulation. Certainly, the permanent nature of such campaigns constitutes the expression of unfair competition.

At the end of her speech, Kucheruk mentioned that the absence of legal regulation of the issue of unfair competition among software service providers leads to difficulties in the protection of "fair" market participants. This problem can be addressed by introducing appropriate changes to the current legislation providing for the prohibition to provide software services on a free of charge basis (except as provided by law) and to set dumping prices and establishing "time limits" of marketing campaigns. In addition, the Law of Ukraine "On Protection from unfair competition should be amended by including the actions listed above into the list of unfair competition types.

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