Last year saw an increase in legislative activities concerning competition law in several central and eastern European (CEE) and south-east European (SEE) countries. The non-EU member countries in the region continue to harmonise their competition law regimes with international standards applicable in most jurisdictions in the EU. This should facilitate the competition law assessment for undertakings active in numerous jurisdictions across Europe.
What will impact companies active in CEE and SEE countries the most, however, is that the current legislative developments seek to enhance the level of competition law enforcement. There seems to be a shift in focus from merger control to other competition law aspects (cartels and abuse of dominance). It is expected that undertakings in this region will more regularly have to deal with interventions or investigations by the competition authorities. Practices, which currently may not be uncommon in the market, may in future have to be reassessed as to their compatibility with competition law.
The Competition Act (CA) 2010 will enter into force on 1 October this year. CA 2010 will broaden the investigative powers of the competition authority and will correct a range of practical shortcomings in the current legislation.
Most notably, the authority will be empowered to autonomously impose fines for the infringement of competition law. This is an important change because under the current regime, the authority needs to take recourse to misdemeanour courts to impose such fines. Fines for hardcore restrictions can generally range from 1%-10% of a concerned undertaking’s aggregate annual turnover. However, the level of fines may be increased to compensate for any unjust enrichment resulting from the competition law infringement.
Furthermore, the competition authority is vested with powers to carry out dawn raids. The competition authority may, on a judicial warrant, search business premises, land and vehicles. In addition, under certain conditions, it is possible to conduct a search of the business premises of undertakings not directly involved in the proceedings or other premises for which there is reasonable grounds to conclude that specific evidence is to be found on such premises.
CA 2010 will introduce a leniency programme with a clear set of conditions for immunity and the reduction of fines for whistleblowers in cartel cases.
On 1 November last year, the Serbian Competition Act (CA) 2009 came into effect, which introduces several substantial changes to the application of competition law in Serbia. To strengthen the enforcement of competition law, the authority (under Serbian law) is vested with an unprecedented combination of investigatory and punitive powers.
As in Croatia, the power to impose fines for competition law infringements is moved from the misdemeanour courts to the competition authority, since the prior regime did not prove effective. The maximum amount of fines that can be imposed remains unchanged at 10% of the responsible party’s annual turnover. However, the minimum amount of 1% of the responsible party’s turnover has been abolished. In addition, procedural penalty payments (for failure to provide information, observe interim measures or notify a concentration) ranging between €500 and €5,000 per day (up to a maximum of 10% of the responsible party’s annual turnover) have been introduced.
The investigatory powers of the competition authority have expanded under CA 2009, in particular with respect to the possibility of carrying out dawn raids. Compulsory searches of businesses, vehicles and private homes may be carried out on the basis of a decision by the competition authority. Searches of private homes, however, may also require a judicial warrant. Statements can be taken by officials on the spot during the raid and premises may be sealed.
What may benefit undertakings active in Serbia is that CA 2009 increases the merger control thresholds. This is likely to reduce the number of concentrations that require a merger control notification in Serbia.
Bosnia and Herzegovina
As in Serbia, the amendments to the Bosnian Competition Act (BCA) 2009 (which entered into effect on 21 October) have brought about a welcome improvement to the merger control regime. The applicable thresholds were increased and a (cumulative) local turnover test was introduced. In practice, it is expected that a large number of concentrations (which – due to the low thresholds of the previous regime – required notification, even though they did not have an effect on the local market), will in future fall outside the scope of BCA 2009.
BCA 2009 corrected a practical shortcoming in the effective enforcement of merger control rules. The authority may now impose fines for a breach of the suspension obligation in the amount of up to 10% of the total annual turnover of the undertaking concerned.
The Albanian competition authority recently enacted the regulation ‘on fines and leniency’ that establishes a new leniency programme. It also contains rules on the calculation of fines for competition law infringements.
The new provisions on leniency aim to harmonise Albania’s leniency programme with the relevant EC rules and address the authority’s past difficulties in detecting cartels. The regulation sets out the criteria and procedure for granting immunity from fines or a reduction thereof for cartel offenders.
The new regulation also determines the calculation of fines, which can range up to 10% of the offender’s annual turnover. The new provisions include detailed rules on how fines are to be calculated, including a classification of infringements according to duration and seriousness, as well as setting out aggravating and mitigating circumstances.
Also, in Slovenia, a new leniency programme was introduced, which came into effect from 1 January 2010. The relevant regulation (on the procedures for the application for immunity from fines and reductions of fines in cartel law infringements) contains detailed guidelines on how to apply for immunity from fines or for a reduction of fines, including the required content of applications and information on the procedural framework.