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Amendments made to the Competition Law – new requirements for the public sector

2019-07-01

During the last Parliament session of March, the Competition Law (CL) amendments were supported during the third and last reading. The amendments mirrored the Competition Council’s (CC) long efforts to enlarge the existing mechanisms in their arsenal in combating the CL violations by public persons. This initiative of the CC is rooted in more than thirty violations of the CL by public persons and their corporations, and in that separate institutions have historically earned reinforced and repeated attention from the CC.

The amendments made to the CL prohibit public persons to hinder, limit or deform competition with their actions, which, among others, can be manifested as 1) discrimination of market participants by providing them with different competition factors; 2) providing corporations with advantages, which the public person is directly or indirectly involved in; 3) actions, as a result of which the market participant is forced to leave the market or their entry into or participation in the market is hampered with. 

The new CL regulation will be applicable to cases, where the CL violation has not been caused by a forbidden agreement or malicious use of the dominant status but rather other actions by the public person which negatively influence or could influence competition. The regulation adopted by the amendments will be applicable to direct actions and decisions taken by the public person, as well as their adopted regulations. Consequently, from now on the public person will have to carefully examine all possible consequences of their actions and its possible influence on competition, to ensure that their action ensures a free and fair competition. 

The CL amendments will not introduce a double regulation, and the norms brought by the amendments will be applicable only to those cases, where it will not be possible to apply CL special norms about the prohibition of malicious use of the dominant status. Namely, in cases where the person will be considered a market participant, Article 13 of the CL about the prohibition of malicious use of the dominant status will be applicable. In cases, where the public person will not fit the definition of a market participant, because they do not perform economic activities, the newly amended CL regulation will be applicable. 

Sanctions for the inability to correctly apply the newly amended CL regulations include conducting negotiations with direct and indirect administrations and public corporations, initiating an infringement case and making a decision on the infringement and imposition of a fine on public corporations in the amount of up to three percent of the net turnover of the last financial year. 

CC, as one of their priorities for 2019, has set the strengthening of the competition culture among public figures. Therefore, it is predicted that, from January 1, 2020, when the CL amendments take full force, CC will not hesitate to put their new rights to use, by checking the public sector’s conformity with the regulations introduced by the CL amendments. Moreover, as for the industries that the CC will be checking first, some can be named, for example utilities, pharmacies, cultural events and the timber industry. 

Those subjects, which, according to the CL amendments, are subjected to the regulation, are advised to evaluate their previous and future actions through a prism, which is introduced by the new CL amendments. This evaluation should be based on recognised and authoritative sources, which lay down the principles on how to evaluate the actions taken by the public sector and their conformity with competition rights.

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