Yanukovych-era digital TV monopoly fined for abuses
A digital TV monopoly left over from the era of ex-President Viktor Yanukovych has caught the eye of anti-trust authorities and lawmakers.
The Antimonopoly Committee of Ukraine on Dec. 4 fined Zeonbud, the nation’s monopoly digital TV provider, Hr 44 million (less than $2 million) for abusing its position on the market, according to Yuriy Terentyev, the anti-trust agency’s head.
Three ruling coalition lawmakers the previous day registered a bill in parliament to nationalize the obscure company, whose ultimate owners are unknown, and whose ownership structure leads from Cyprus to Belize and the British Virgin Islands – all offshore tax havens with varying degrees of secrecy.
Zeonbud intends to appeal against the fine, according to a news release it published on Dec. 4. Meanwhile the telephone number for the company’s press service is not in service.
“We believe that the Antimonopoly Committee of Ukraine formally approached the consideration of the case without considering the facts of the case and the evidence provided by the company,” Zeonbud said in a statement.
Artificial and natural monopolies have existed in almost every industry of Ukraine’s economy since the nation gained independence in 1991, robbing taxpayers of billions of dollars through mis-management and unfair competition practices, and distorting markets. They’ve periodically operated in the grain and natural gas trade, in the allocation of flight routes, in rail transportation and telecommunications.
As a signatory of the Geneva 2006 treaty, Ukraine was supposed to make the switch from analog to digital TV by 2015 along with 103 countries.
So, in 2010, during the first year of Yanukovych’s presidency, the television and broadcasting regulator accepted bids to make the upgrade in exchange for four DVB-T2 (MPEG-2) standard licenses good for 10 years. They were four 28 national, and four regional channels.
Apart from Zeonbud, another cryptic company, Kyiv-based Mobilnyi Kanal, bid for the lucrative rights to develop a digital TV network from scratch – the winner stood to earn at least $2 billion over the duration of the concession.
The terms of the tender were demanding. For example, bidders had to provide proof that they had received a bank guarantee worth Hr 1 billion, or $125 million at the time, to build the network. Zeonbud, which had little experience in this field, secured its guarantee from the State Export-Import Bank of Ukraine.
On Dec. 8, 2014 Zeonbud won the tender, and paid nearly Hr 8 million – or Hr 1.9 million each – for the four digital TV licenses.
The TV regulator subsequently made TV networks competitively reapply for digital broadcasting licenses. Mysteriously, the government regulator also forced digital TV bidders to sign legally-binding contracts with Zeonbud as a precondition for applying for the digital broadcasting licenses.
In turn, Zeonbud set non-negotiable rates for TV broadcasters, regardless of their channels’ audience size. It eschewed any personal contact with TV companies, opting instead to communicate via electronic or postal mail through a post office box when concluding contracts or agreements.
In October, prosecutors opened a case against TV regulators, “whose actions led to the monopolization by Zeonbud of the digital television market,” according to Interfax Ukraine news agency.
The anti-trust body labeled Zeonbud a monopolist on Dec. 23, a decision that the Kyiv Appellate Administrative Court upheld on June 18.
