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Dear clients and cooperation partners,
We start the year with information about the most recent topicalities in application of competition law and expected trends in 2015.
Continuing the strategy of prioritising cases already under way, in 2015 the Competition Council will pay most of its attention and resources to cases related to prohibited agreements on prices, market or customer sharing, as well as restricting production and distribution volumes. The second priority of the Competition Council will be cases on abuse of a dominant position.
Likewise in 2015 the Competition Council will continue its ongoing practice in relation to market participants’ joint and several liability whereunder parent companies can be found jointly and severally liable for violations committed by their subsidiaries.
Similarly, the Competition Council will continue introducing the practice with regard to the matter of asset transferee liability. This became topical when the Competition Council monitored payment of penalties imposed on companies involved in a household appliance cartel. As a result of this monitoring, the Council detected that companies can avoid payment for violation by alienating their assets to directly or indirectly related companies. To solve this, the Competition Council has adopted European Commission practice whereunder in situations of substantiated suspicion of transfer of company assets to other legal entities to avoid payment of penalty, the Competition Council can bring a penalty collection claim against the company that took over those assets and liabilities.
This aspect should especially be taken into account by companies that are planning to buy shares or assets in other companies, even including assets of an insolvent company, because upon taking over a company or its assets and maintaining economic and functional succession, the buyer can also inherit the seller’s liability to pay a penalty imposed on the seller for violation of the Competition Law.
The news will also affect the public procurement sector in the context of prohibited anti-competitive agreements among market participants. According to previous practice, violations of prohibited agreements could not be referred to companies that were directly or indirectly mutually related (that is, were considered to be one economic unit). When they participated in the same procurement, the Competition Council did not consider them to be competitors, and thus could not impose a penalty for exchange of information (offers) or other violations of prohibited anti-competitive agreements.
In future, in cases where mutually related companies participate in the same procurement the Competition Council will consider them to be competitors within the scope of that particular procurement. Thus the situation now is that where the Competition Council receives information that the offers made by these companies are concerted, it will assess those activities as an anti-competitive agreement between competitors, that is, a cartel agreement. A similar assessment will be applied to offers submitted by so-called “family” companies, that is, companies that are mutually related through family members instead of legal ties. Once again, the Competition Council will see these companies as competitors, and if their offers are concerted then the institutions concerned will be allowed to impose a penalty for a cartel agreement: under the Competition Law the penalty can amount to up to 10% of net company turnover for the previous financial year.
Finally, the Competition Council has defined priorities for the following year, namely, those industries that will be studied by the Council within the framework of market supervision. So, the Competition Council plans to investigate the following industries in 2015:
- waste management;
- power engineering;
- financial services;
- production, wholesale and retail;
- TV and telecommunications;
- health care and pharmacy;
- transportation;
- public procurement (including in construction);
- IT services.
If you have any questions in relation to the above topicalities, the SORAINEN Competition Practice is always ready to assist you.
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