23-04-2013

Antitrust Regulations / Cartels / Abuse Of Dominant Position

Authors

  • Armer Juka, Attorney at Law
    Associate at Haxhia & Hajdari Attorneys at Law

Anti-competitive behaviors are prohibited by the Albanian legislation under law no. 9121, dated 28.7.2003, as amended. Articles 4 and 9 of the law provide, respectively, for the prohibition of anti-competitive agreements and abuse of dominant position. Both articles include a list of per se violations of the competition legal framework.

The purpose of the law

The aim of the law, as expressed in article 1, is the protection of free and effective competition in the market, through the determination of the conduct rules of the undertakings, and the competent institutions responsible for the implementation of the regulatory framework.

Which is the scope of application ratione personae of the Albanian competition law?

Competition law applies to both private and public undertakings as long as they affect or might affect the relevant market. The fact that an undertaking doesn’t have a commercial establishment in the Albanian territory doesn’t exclude the application of competition law if the anti-competitive effects of its behavior are experienced on the Albanian territory. Competition law applies as well to public entities to the extent that these entities are engaged in a commercial activity. Finally, the decisions of whatever form adopted by group of undertakings, whether constituting a legal person, such as business associations, or not, are found in the scope of application of the law on protection of competition.

How is the relevant market defined?

The relevant market comprises all those products which are considered as substitutable by the consumers by reason of their characteristics, their prices and their intended use, and which are offered and demanded in a geographic area presenting identical conditions of competition. In most cases, the relevant geographic market will be the entire Albanian territory.

Antitrust regulation - Cartels

According to article 4.1 of the law, all agreements which have as their object or effect the prevention, restriction or distortion of competition in the market are prohibited and, in particular, those, which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply; (c) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

It is to be noted that the wording of the provision constitutes a literal translation of article 101 of the TFEU.

Exemption

Under articles 5, 6 and 7 of the law, the provisions of article 4.1 may be declared inapplicable in three cases: through individual exemption decision (article 5), through block exemption regulation (article 6), and in case the agreement falls under the de minimis rule (article 7).

De minimis rule

To begin with article 7, it provides that article 4.1 may be declared inapplicable to those agreements which do not appreciably restrict competition in the relevant market, if the cumulative market share of the participating undertakings does not exceed 10% of the relevant market if the undertakings are actual or potential competitors and 15% if they are not. Upon this article, the Competition Authority approved in 2011 the “De minimis regulation”which provides for the criteria that must be met and the provisions which must not be included in the agreements in order to benefit from the de minimis exemption.

Block exemption

Article 6 allows for the exemption of certain categories of agreements from the prohibition laid down in article 4.1. Under this provision, the Competition Authority approved three regulations on the block exemption of certain categories of research and development agreements, specialization agreements, and licensing agreements for the transfer of technology. All these three regulations are completely approximated to the European Union acquis. The Competition Authority has also approved a sector specific regulation on the exemption of agreements in the motor vehicle sector. In principle, the de minimis rule and block exemptions contain a detailed analysis of the criteria that must be met and the provisions that must not be included in an agreement in order for this agreement to fall outside the scope of application of article 4.1. Accordingly, the undertaking should make a self-assessment if the criteria laid down in those regulations are fulfilled.

Individual exemption

Under article 5 of the law, however, the article 4.1 prohibition may be declared inapplicable if four cumulative conditions are met. Two of the conditions represent positive requirements: First, the agreement contributes to improving the production or distribution of goods or to promoting technical or economic progress; Second, a fair share of the resulting benefit must profit to the consumer. In addition, in order for the agreement to be exempted, two negative requirements should be met: First, the agreement does not impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; Second, the agreement does not appreciably restrict the competition in respect of the products in question. It is to be underlined that, under article 48 of the law, the Competition Authority is the only competent body to decide for the granting of exemptions according to articles 5, 6 and 7. If, for the category and de minimis exemption, there is, in principle, no need to submit a notification of the agreement to the Competition Authority, the question arises over the sanction of an omission by the undertakings concerned to notify the Authority about an agreement. According to article 49, “pursuant to article 5 of the law, the undertakings or the group of undertakings notify to the Authority the agreements and their later modifications”. As per the Albanian legal interpretation, the present tense of the verb ‘notify’ must be understood as an imperative obligation upon the undertakings concerned. But an attentive examination of the final provisions of the law, dealing with the sanctions to the non-observation by the undertakings of their obligations under this law, shows that there is no penalty for the failure to notify by the undertakings. Only if the investigation of the Competition Authority comes to the conclusion that there was a violation of the antitrust regulation, there is a fine foreseen. As a conclusion, undertakings must notify relevant agreements every time that these agreements may affect competition or, if falling under the block or de minimis exemption, these agreements contain nonetheless particular terms and conditions that may cause their exclusion from the exemption regulations.

Evaluation of the dominant position

There is no definition of dominance in the Albanian competition law. Article 8 provides only for a certain number of elements that may help in establishing the dominant position of an undertaking. As elaborated by the EU case-law, article 8 includes:

  • Market share of the undertaking concerned and that of the other competitors;
  • Barriers to the entry in the market;
  • Potential competition;
  • Economic and financial power of the undertakings;
  • Economic dependency of customers and suppliers;
  • The countervailing buyer power;
  • The development of the undertakings’ distribution network and the possibilities of expliotation regarding the sources of the products;
  • The economic ties with other undertakings;
  • Other characteristics of the relevant market such as: the homogeneity of the products, the transparency of the market; the uniformity of the costs and the size of the undertakings; the stability of the demand or of the free production capacities.

Definition of abuse of dominant position

Article 9 prohibits any abuse with the dominant position by one or more undertakings. Such abuse may consist in:

  • Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
  • Limiting production, markets or technical development;
  • Applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
  • Making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Albanian Competition Authority

The Albanian Competition Authority is the main administrative body for the implementation of the legal framework on protection of competition. Regarding the recent privatized and liberalized sectors, the sector regulators such as ERE (Energy Regulatory Entity) or AKEP (Postal and Electronic Communication Authority) have also the burden, in collaboration with the Competition Authority, to enforce competition law in these specific markets. The Competition Authority is composed of the Commission and the Secretariat. The Commission is the decision-making organ of the Authority composed of 5 members appointed by the Parliament for five years. The Secretariat is the administrative organ of the Authority assigned with the duty to enforce the law under the direction and authority of the Commission.

The administrative procedures

Except if provided otherwise by the law, the investigations of the Authority have to comply with the Administrative Procedures Code. The Competition Authority is entitled to request any kind of information or document it deems necessary for its investigation. The refusal to abide by the decision of the Authority is punishable by fine. The Secretariat of the Authority, upon written mandate of the Commission, has the right to carry out inspections, to examine commercial books, to seize and put under sequester any document. Court authorization is required in order to carry out inspections in private residences of directors, managers etc. Prior to the final decision of the Authority, the concerned undertaking has the right to be heard on every issue raised by the investigation. The final decision is subject to appeal before the Tribunal of Tirana. The investigation of the Authority is double-phased: preliminary and comprehensive investigation. Investigations can be initiated ex officio, upon a request of the Parliament or any Regulatory Body, or upon a complaint of a third party, such as competitor, supplier or customer. If, during the investigation process, it appears to the Authority that it exists a serious and irremediable risk of violation of competition, the Competition Authority is entitled to adopt interim measures, consisting in:

  • Termination of or entering into a contract;
  • License granting;
  • Obligation to act or not to act in a certain manner;
  • Any other measure necessary to eliminate the anti-competitive effects.

Decisions and sanctions adopted by the Competition Authority

If the Competition Authority detects a violation to the antitrust regulation, pursuant to article 45 of the law, it may decide to:

  • Cease the violation by imposing behavioral remedies;
  • Impose structural measures, following the proportionality principle;
  • Render obligatory the commitments offered by the undertakings;
  • Impose fines against the violating undertakings pursuant to article 74 of the law.

The fine cannot exceed 10% of the turnover of the undertaking for the previous fiscal year, taking into consideration the duration and the gravity of the infringement. If the economic benefit of the violating undertaking can be measured, then the fine cannot be less than this benefit. Individuals may be fined up to an amount of LEK 5 million (circa EUR 36,000.00).

Private enforcement

Pursuant to article 65 of the law, the person that is victim of anti-competitive behavior may file a claim before the Tribunal of Tirana, and seek:

  • Elimination or prevention of restriction to competition; in such a case, the tribunal may decide, especially, that the agreements are entirely or partially invalid or that the undertaking causing the restriction to competition can enter into an agreement with the victim undertaking, in accordance with the general commercial practices;
  • Damages for the losses suffered in compliance with the Civil Code provisions.

It should be noted that, in case the respondent party files a request for exemption of the agreement before the Competition Authority, the tribunal has to suspend the trial until a final decision is rendered by the Competition Authority.

Leniency

Pursuant to article 77 of the law and Competition Authority’s regulation on Fines and leniency, the undertaking which collaborates with the Authority for the discovery of an infringement or submits evidence representing a significant added value may, respectively, benefit from full immunity or partial reduction of fines. The procedure and criteria established in the Regulation approved on 11.09.2009 are in line with the European Commission approach.

GREEK LAW DIGEST REPUBLIC OF ALBANIA MINISTRY OF INTEGRATION Union of Chambers of Commerce and Industry of Albania
Nomiki Bibliothiki ALBANIA INVESTMENT DEVELOPMENT AGENCY Foreign Investors Association of Albania
     

 

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