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Competition & Antitrust
Following media reports on the difficulties involved with replacing managing agents (who are in charge of managing multi-apartment buildings), excessive management costs and the ousting of small managing agents from the market, the Competition Protection Agency has carried out market research on managing multi-apartment buildings. Such issues could indicate a restriction or distortion of competition in Slovenia or abuse of a dominant position of one or more managing agent companies.
In early 2019 the Competition Protection Agency (CPA) imposed a record fine of almost €54 million for a failure to notify a concentration (so-called 'gun jumping'). This is by far the highest fine imposed by the CPA for gun jumping (and in general). As precedent concerning the CPA's practice on gun jumping is scarce, this decision provides important insight into circumstances and criteria that the CPA considers when determining fines in this regard.
The Ministry of Economic Development and Technology is contemplating significant amendments to Slovenia's antitrust and merger control proceedings and has prepared a draft amendment to the Prevention of Restriction of Competition Act. However, the ministry has yet to communicate when the proposed amendments will be placed in the legislative proceeding of the National Assembly and it remains unclear when the draft amendment will come into effect and how it will be worded.
The European Court of Human Rights (ECHR) recently granted Produkcija Plus doo (Pro Plus) €52,500 in compensation after its right to be heard was violated during proceedings relating to a fine imposed for obstructing a dawn raid. The ECHR stated, among other things, that even though the Supreme Court had been required to review the facts on which the fine was based, the court had not heard the evidence requested by Pro Plus.
In 2017 the Competition Protection Agency initiated proceedings against Renault. The company was suspected of treating authorised mechanics and independent mechanics differently, which gave the agency grounds to believe that Renault had abused its dominant position. In response, Renault proposed remedies in an attempt to address the agency's concerns and eliminate the alleged anti-competitive effects on the market. The agency recently closed the proceedings and accepted the commitments.
Following an examination by the Competition Protection Agency regarding unfair trading practices in the food supply chain, the government drafted a proposal to amend and supplement the Agriculture Act. Parliament accepted the amendment on March 22 2018 and it will enter into force on April 19 2018. Nevertheless, all of the changes in relation to the food supply chain (with the exception of fines) will apply from January 1 2019.
The Competition Protection Agency recently published the results of a survey on unfair trading practices in the food supply chain, which the agency conducted among suppliers of food products, including producers, purchasers, processing companies and intermediaries. Despite the small number of responses, the agency obtained some useful information on the functioning of the Slovenian food market.
The Competition Protection Agency recently opened an antitrust proceeding against Renault. According to the agency, there are grounds to believe that Renault abused its dominant position on the market for the provision of technical information and technical training to authorised and independent mechanics of its vehicles. Considering that only one year has passed since the agency initiated proceedings against Hyundai Avto Trade doo, the automotive industry appears to be under scrutiny.
The Slovenian courts were recently asked to rule on companies' right to be heard during dawn raids by the Competition Protection Agency. As the Supreme Court's rationale has likely set a precedent for future cases, the agency must now apply a broader interpretation to the existing provision in the Competition Act regarding the right to be heard and include further details in its investigation reports.
In 2015 the Competition Protection Agency initiated proceedings against Hyundai Avto Trade doo and its authorised mechanics. Hyundai Avto Trade has now proposed remedies in order to address the agency's concerns and eliminate the alleged foreclosures on the market. The agency has invited all interested parties to provide comments, opinions and suggestions on the basis of the proposed remedies.
The Competition Protection Agency is resuming increased levels of activity. It recently initiated formal proceedings against three companies, on the basis of a distribution agreement relating to pharmaceutical products. Although there is no official prioritisation of industries when it comes to scrutiny of the market, it seems that pharmaceutical companies often find themselves under the spotlight of the agency.
The Competition Protection Agency has initiated proceedings against Hyundai Avto Trade doo and its authorised mechanics for allegedly concluding agreements on selective qualitative distribution which led to the foreclosure of independent mechanics and alternative distribution channels for spare parts. It remains to be seen whether the proceeding will have broader implications for the automotive industry.
The Competition Protection Agency recently found that Geoplin has been abusing its dominant position on the market for natural gas distribution to industrial customers since 2007 and ordered Geoplin to amend all of its agreements containing illicit provisions. The agency believes that the natural gas market will now open up and that industry should finally be able to buy natural gas at prices comparable to those in other EU member states.
The Competition Protection Agency has released the findings of its study of the food sector. Among other things, it noted that while private labels have significant benefits for consumers, it is still unclear whether they will cause long-term harm. The agency concluded that there is a need for further monitoring and ongoing assessment of market practices in order to prevent potential restrictions to competition.
In accordance with the Protection of Restrictions of Competition Act, the Competition Protection Agency may impose a fine of up to 10% of a company's annual turnover for infringements. However, no guidance regarding how the precise amount for a fine should be calculated exists. Therefore, the agency is free to impose a fine of between 1% and 10%, which gives the agency far too much leeway and has caused much legal uncertainty.
Parliament has enacted a new regime in relation to antitrust inspections of the Competition Protection Agency. The agency is now required either to seek a court order or obtain consent from the undertaking under investigation (and its respective employees). However, it is unclear whether or how the new regime protects the privacy of employees.
The Competition Protection Agency has increasingly used unannounced investigations (dawn raids) in recent years to secure evidence of potential competition law breaches. Determining how undertakings should react to such inspections is therefore of increasing importance. The agency has shown in public announcements that it intends to interpret the undertakings' general duty to cooperate rather broadly.
October 2013 was a busy month for the Competition Protection Agency, which issued two long-awaited antitrust decisions. The first concerned an investigation against four pharmaceutical wholesalers for cartel activities in contravention of the Treaty on the Functioning of the European Union, while the second concerned abuse of a dominant position in the telecommunications sector.
Following its instigation of an antitrust procedure against distributors of natural gas earlier this year, the Competition Protection Agency recently carried out an inspection at the business premises of Geoplin, the biggest supplier of natural gas in Slovenia. The investigation is allegedly focused on Geoplin's potential abuse of its dominant position by preventing clients from switching to alternative suppliers without (substantive) costs.
The Constitutional Court recently declared that the dawn raid regime introduced by the Competition Protection Agency is not in line with the Constitution. Inspections carried out by the agency under the existing regime are of a broad nature and represent an invasive intervention into undertakings' privacy, in relation to both business premises and communications. The court has granted Parliament one year to update the law.
The start of 2013 was marked by the long-awaited introduction of a new antitrust authority, the Competition Protection Agency. The agency's enforcement priorities will focus on the markets that have the greatest influence on the national economy and those in which it receives the highest number of complaints. The agency has already instigated its first antitrust matter, in proceedings against distributors of natural gas.
The recently published act amending the Competition Act serves to reorganise the main bodies of the still-awaited Competition Protection Agency. However, the agency still has not been officially entered into the Commercial Court Registry and is not yet fully operational. The agency is rumoured to become fully operational by the end of the year, when it will also become an independent user of the national budget.
The Slovenian merger control rules are set out in the Prevention of Restriction of Competition Act 2008, which replaced the 1999 act of the same name. The act sets out substantive and procedural rules governing merger control; in terms of the latter, it is supplemented by the General Administrative Procedure Act. In addition, the contents of the compulsory merger notification form are set out in a government regulation.
The act amending the Competition Act was recently published in the Official Gazette. The new act will bring about the long-awaited reorganisation of the Competition Authority (currently organised as an administrative body within the Ministry for Economic Affairs) as an independent agency. The authority will be governed by the Agency Council, the Competition Council and the agency director.
The Competition Protection Office recently initiated ex officio merger control proceedings against the Federation of Slovenian Retired Persons' Societies. According to the office, the federation had acquired control over Vzajemna Zdravstvena zavarovalnica dvz, a Slovenian mutual health insurance company, but failed to notify the concentration within the statutory 30-day time limit.
In August 2008 the Competition Protection Office found that five Slovenian electricity distributors had breached competition rules by way of a simultaneous price rise. Recently an interesting epilogue was added to the decision: a private initiative led by a Slovenian economist has set a precedent for the future private enforcement of damages in cases of antitrust violations where the harm caused is substantial but widespread.
The status of the Competition Protection Office has been the subject of recent lively public debate. Since its establishment in 1994 the office has been organized as a department within the Ministry for Economic Affairs. However, a new development may be on the cards as the Ministry for Economic Affairs recently adopted a proposal for an Act on the Establishment of the Slovenian Agency for Protection of Competition and Consumers.
According to public speculation, one of the participants in the alleged cartel between a number of Slovenian construction companies - currently under investigation by the Slovenian Competition Protection Office - applied for immunity from a fine in exchange for certain disclosures which reportedly enabled the office to conduct effectively a series of recent dawn raids at the premises of the companies.