Advokatsko druzhestvo Stoyanov & Tsekova in cooperation with Schoenherr
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Competition & Antitrust
The Commission on the Protection of Competition (CPC) recently fined a snack distributor 4% of its annual turnover for the unfair solicitation of customers. The commission relied on its earlier practice to determine whether a promotional campaign launched by the distributor had infringed the Competition Protection Act. This decision is a helpful reminder that in order to avoid competition law violations, companies must carefully consider which prizes to offer in promotional campaigns.
The Commission on the Protection of Competition (CPC) recently issued a decision in which it penalised the funeral agency Elida MG EOOD (formerly Pokoy-1945 EOOD) for failing to comply with an earlier CPC decision. Such cases in which an undertaking fails to comply with a CPC decision and is therefore fined again are extremely rare due to the substantial pecuniary penalties which may be imposed on violators.
The Commission for the Protection of Competition (CPC) recently cleared the acquisition of Nova Broadcasting Group AD by Advance Media Group EAD, which is owned by the well-known Bulgarian businesspeople Kiril and Georgi Domuschievi. The CPC was adamant that the proposed acquisition would not cause anti-competitive effects in the TV distribution market because the two companies are not direct competitors; rather, they have a de facto vertical relationship.
The Commission for the Protection of Competition recently penalised Metro Cash & Carry for conducting an unfair comparative advertising campaign. Lidl Bulgaria EOOD had claimed that Metro's advertising campaign unfairly encouraged Lidl customers to shop at Metro instead. The case is a helpful reminder that companies designing advertising campaigns should carefully consider any direct or indirect references to their competitors, particularly if such references have negative connotations.
The Commission for the Protection of Competition (CPC) recently imposed a Lev840,340 fine on A1 Bulgaria for cancelling a partnership agreement with its main commercial representative, Handy-Tel EOOD. The CPC held that the cancellation had effectively violated Article 37a(1) of the Protection of Competition Act, which prohibits the abuse of a dominant position when contracting.
The Commission for the Protection of Competition (CPC) recently approved the acquisition of Rapido Express and Logistics OOD by its competitor Speedy AD. However, at the same time, the CPC penalised Speedy AD for failing to provide complete and accurate information in its concentration notification which the commission deemed materially and substantially important for evaluating the deal.
The Commission for the Protection of Competition (CPC) recently prohibited two concentrations in politically sensitive sectors (media and energy). The CPC's decisions were widely criticised for lacking valid economic arguments. Further, in both decisions the CPC limited its legal arguments to several paragraphs and failed to clarify how acquiring non-competitors (or at least non-major competitors) could strengthen the resulting group's dominant position and thus impede competition.
The Ministry of Tourism recently proposed the introduction of minimum prices for sites categorised as 'accommodation places'. However, the Commission for Protection of Competition (CPC) opined on the proposal's compliance with competition rules. The CPC highlighted the fact that accommodation prices depend on many factors other than category, which makes it practically impossible to set a minimum price for a category that would be adequate in every case.
The Act for Amendment and Supplementation of the Competition Protection Act was recently promulgated in the State Gazette. The new act follows the scope of the EU Damages Directive and applies to infringements of the Competition Protection Act regarding prohibited agreements and abuse of dominance.
The Commission for the Protection of Competition recently fined Laptop.BG for unfair practices in the form of contradicting genuine practices. An investigation was opened at the request of Golden Green Stone Group EOOD, the owner of online shopping brand eVarna, which claimed that a blogger had performed prohibited comparative advertising in favour of Laptop.BG, thereby damaging eVarna's reputation and consciously redirecting consumers to Laptop BG's online platforms.
The Competition Commission recently sent statements of objection for abuse of dominant position by three electricity distribution and supply companies. According to the commission, allegations were made that the companies had traded information regarding customers switching from the regulated market to the liberal market in order to purposely stall the necessary paperwork.
A recent competition breach by the Sofia Commodity Exchange AD resulted in a 0% fee for purchasers (ie, members of the exchange). The Supreme Administrative Court and the Competition Commission both held that the lack of fees had placed purchasers in a more favourable position, leading to unfair competition which contradicted good-faith practices. In addition to a fine based on the net turnover of sales, the commission ordered the immediate suspension of the exchange's breaching activities.
The Commission for the Protection of Competition (CPC) recently adopted an opinion on the draft act for the amendment of the Administrative Procedure Code. The CPC supports the introduction of electronic justice which, in its view, will increase the efficiency of the judiciary system and prevent unnecessary delays. However, it disagrees with the increase in state fees and the proposal that the state fee for cassation is to be defined as a percentage of the imposed penalty.
For the second time in less than five years the Commission for the Protection of Competition has opened investigation proceedings regarding prohibited agreements and concerted practices against the major fuel companies in Bulgaria and closed them without issuing penalties. An investigation was launched and the commission found that the retail price of some petrol companies in Bulgaria does not always follow the wholesale price and producers' prices.
The Competition Protection Commission recently fined Kaufland Bulgaria EOOD for abuse of stronger bargaining power regarding its supplier, Keti-94 OOD. This is the second commission decision relating to abuse of bargaining power – a concept introduced into Bulgarian legislation in July 2015. The commission found Kaufland's breach to be severe and imposed a 7% fine generated from Kaufland's turnover on the market for sales of low-priced alcohol.
The Commission for Protection of Competition recently conducted a sector analysis of the competition environment in Bulgaria's insurance market. The main purpose of the report was to provide insight into the insurance market and specify potential competition issues. It is expected that strategies, programmes and plans to improve the insurance environment will be adopted in the future by the relevant bodies.
The Commission for the Protection of Competition has fined Siemens EOOD for abuse of stronger bargaining power. Given the abstract wording of the term 'abuse of stronger bargaining position' in the Competition Protection Act and the lack of any methodology or instructions regarding its application, the commission's decision should be considered as initial guidance on how it will interpret the term in future.
The National Assembly has elected a new Competition Protection Commission panel. Despite the old panel's mandate coming to an end, the commission has showed an impressive level of antitrust activity. In May 2016 the commission issued several statements of objection against key players in the electricity production, wholesale and distribution markets, as well as opening an investigation into prohibited practices against a number of retail chains.
The Competition Protection Commission recently issued a statement of objection to Energo Pro Grid AD for abuse of its dominant position. The commission's investigation focused on Energo Pro's refusal to connect Kayko OOD's production site to the electricity distribution grid. However, in a press release, the commission did not clarify why Energo Pro's refusal to connect Kayko is considered to be unjustified.
The Competition Protection Commission recently issued a statement of objection against Aurubis Bulgaria AD and Aurubis AG. The commission has accused Aurubis of abuse of its dominant position in the Bulgarian market for the production and sale of sulphuric acid and for discriminating against its Bulgarian customers in favour of international clients.
The Competition Protection Commission (CPC) recently fined Uber BV and Rasier Opеrаtions BV for unfair trade practices committed through their provision of the UberX service and ordered them to cease the unfair practices. The CPC decision established that both companies had offered taxi services that failed to comply with the legal requirements for taxi transport, giving them an unfair advantage over their competitors.
The Competition Protection Commission recently announced that it had opened a pharmaceutical sector inquiry. According to the announcement, the subject of the inquiry is the retail trade of pharmaceuticals which are paid (fully or partially) by the National Health Insurance Fund. If the commission finds any individual anti-competitive behaviour, it will open antitrust proceedings against the undertakings involved.
The Competition Protection Commission recently issued a statement of objection to Bulgarian Telecommunication Company (BTC) for abuse of dominant position. Proceedings were commenced based on BTS's unilateral cancellation of an agreement for termination of telecommunication networks. BTC has the right to oppose the statement of objection within 30 days.
The Competition Protection Commission recently initiated an inquiry into Bulgaria's insurance sector, which will define competition problems and the reasons for them. The commission will publish its findings, which should be used as a platform for public discussion of the identified problems.
Following a complaint by the Ministry of Finance, the Competition Protection Commission opened an investigation against three companies suspected of involvement in a bid-rigging cartel. During dawn raids at offices of two of the companies, the commission discovered information relating to price formation which gave it reason to suspect that the companies had entered into a prohibited agreement.
The Competition Protection Commission has fined Bulgargaz over €11 million for abuse of dominant position. Bulgargaz conducted different exploitative practices, including forcing clients to extend the term of their contracts without the option to negotiate the contract provisions.
The Competition Protection Commission recently accused Bulgaria's three energy distributors of abuse of dominant position. According to the commission, the companies determined and imposed unjustified high prices for access to their low-voltage distribution networks for television, internet and telephone services, thus restricting competition on the relevant markets.
The Competition Protection Commission recently presented a statement of objection to Bulgargas EAD. The commission claimed that Bulgargas had abused its dominant position in the natural gas supply market by imposing unfair trade conditions in the contracts for public supply. It held that Bulgargas's market behaviour was exploitative towards its customers.
The Competition Protection Commission recently fined Energy Pro Grids AD – the electricity distribution company for Northeastern Bulgaria – for abuse of dominant position. The commission held that Energy Pro Grids' conduct impeded competition on the upstream renewable energy electricity market.
The Competition Protection Commission recently imposed a penalty on Energy Pro Grids AD for disproportionate management of production capacities. The commission found that Energo Pro was obliged to limit electricity production when so ordered by the system operator. However, Energo Pro allocated the limitations using non-transparent and discriminatory criteria, putting other electricity producers at a disadvantage.
The Competition Protection Commission recently closed two files and imposed fines on the suppliers and distributors of sunflower oil for end consumption in Bulgaria. Both files were opened in a sector inquiry, during which the commission found retail price maintenance provisions in some distribution agreements.
The Competition Protection Commission recently launched a sector inquiry into the Bulgarian electricity market, following protests from citizens about high electricity prices. The aim of the inquiry is to analyse the legal framework of the electricity sector and its application, as well as the structure and organisation of each level of the electricity distribution chain.
The Competition Protection Commission recently fined Energo-Pro Sales AD for abuse of its dominant position after it terminated the electricity supply to a water utility due to non-payment of due amounts for electricity used. The commission stated that the extreme measure of terminating supply should not have been taken, given the social importance of the services provided by the utility.
The Commission for the Protection of Competition recently announced that it had extended the scope of the ongoing sector inquiry into the supply and distribution of gas in the production, trade, transmission and electricity supply markets. The commission will analyse the level of transparency in price formation and identify possible vertical restraints.
The Competition Protection Commission recently adopted guidelines regarding corporate compliance programmes. The commission encourages businesses to implement compliance programmes to avoid the risks of non-compliance with competition law. However, a compliance programme will not be considered as a mitigating factor when calculating the penalty for competition law infringement.
The Competition Protection Commission recently imposed the highest penalty in its history for prohibited agreements between the distributor of Hyundai in Bulgaria, Industrial Commerce OOD, and authorised Hyundai/Industrial Commerce dealers. The penalties were imposed at a maximum amount allowed by the Competition Protection Act.
The Competition Protection Commission recently announced the findings of its inquiry into the vertically related markets of wheat, wheat flour and mass wheat bread. Its investigation revealed that while increases in the wholesale price of flour were related to increases in the price of wheat, the respective increases did not always correspond, suggesting a prohibited agreement.
In a recent decision the Competition Protection Commission approved proposals for commitments from some of the largest retail chains in Bulgaria which had previously been suspected of prohibited practices. The commission found that the proposals contained specific measures which may prevent the restriction of competition in the relevant markets.
The Competition Protection Commission has adopted a regulation on remedies for the restoration of effective competition when it has serious doubts about whether a notified transaction may establish or strengthen a dominant position and opens an in-depth phase of the merger control proceedings. With the adoption of the regulation, the commission aims to make merger control proceedings more transparent.
The Competition Protection Commission recently adopted, for the first time, guidelines regarding the exchange of information between competitors. In addition, the commission lists in the guidelines examples of the unlawful exchange of information on the basis of its own practice, the practice of the European Commission and that of member states' anti-monopoly authorities.
The Competition Protection Commission recently announced that a statement of objection had been submitted to three Bulgarian travel agencies for infringement of the cartel prohibition under Article 15, Paragraph 1 of the Competition Protection Act. The three companies are accused of having manipulated the public procurement procedure for the provision of airline tickets for business trips.
Following an investigation into the hotel sector in which it considered market characteristics including supply and demand, price dynamics, the market shares of hotels within each category in different municipalities, the contractual relationships between hotels and tour operators and the role of trade associations, the Competition Protection Commission has held that operators in the sector have not engaged in anti-competitive behaviour.
The Competition Protection Commission has completed an inquiry into the Bulgarian fuel sector. The investigation focused on commercial relationships between participants in the market for the production, import and sale of gasoline and diesel. The inquiry also aimed to identiy legal and administrative barriers to market entry which arose under the Bulgarian legal framework.
The Competition Protection Commission has initiated two new sector inquiries. As a reaction to a dramatic increase in fuel prices, the commission recently started sector inquiries into the market for the production and realisation of gas oil and diesel. It has also initiated an investigation into the inter-related grain, wheat flour and bread markets following an increase in bread prices.
According to the Competition Protection Commission, the Bulgarian milk market suffers from similar problems to the equivalent markets in other EU member states. Following a recent investigation, the commission cited the conclusions of the European Commission and its recommendation that these problems be solved by implementing changes to EU common agriculture policy and the applicable national and EU competition laws.
In July 2009 the Competition Protection Commission initiated procedures against the largest retail chains in Bulgaria for suspected prohibited practices. The procedures were opened after the commission received several indications from the Bulgarian Confederation of Employers and Industrialists that the chains were engaged in anti-competitive activity.
Since the beginning of 2010 the Commission for the Protection of Competition has issued 25 clearance decisions on notification and five decisions in which it imposed penalties for non-notification and premature implementation of concentrations. Among others, the commission approved two concentrations in the supermarket retail sector and one in the mobile telecommunications sector.
The Commission for the Protection of Competition has increased its activity in the field of sector inquiries. This development in commission policy was expected, since the new Law on the Protection of Competition was adopted at the end of 2008 to regulate in more detail the commission's power to conduct sector inquiries.
The Commission on the Protection of Competition adopted the Rules on the Examination of Proposals for Commitments under the Law on the Protection of Competition. The new competition act stipulates that investigations have two phases. At the end of the first phase, if there is sufficient evidence of an infringement, the commission will prepare a statement of objections and start an in-depth investigation.
During 2007 and 2008 the Commission for Protection of Competition conducted six cartel investigations in different sectors. Following five of the investigations the commission imposed fines for price fixing and the exchange of sensitive commercial information. Two of these decisions have been upheld by the courts and are now binding.