SOME PROPOSALS FOR THE AMENDMENT OF THE PROTECTION OF COMPETITION ACT

In the middle of February a number of Members of Parliament led by Ivan Kostov and Martin Dimitrov introduced to the National Assembly a Bill for Amendment of the Protection of Competition Act. The bill has been sent to the Commission on Economic Policy, Energy and Tourism for discussion, after which it will be voted at first reading. rnThe current Protection of Competition Act is the third in a row entirely new law after 1990. The introducers of the bill contend that the present law does not achieve its goals and cite as evidence the constantly artificially high prices of most basic goods. The general direction of the amendments proposed can be summed-up in the following points: 1. The Law forbids abuse of monopoly power and dominant position in the market. A new definition is proposed for the term “dominant position”. Currently, dominant is considered the position which enables the company to hinder competition in the market. The new definition keeps this general phrasing but it makes provision for two legal assumptions which contain specific criteria. If a business’s share of the domestic market exceeds 40 %, then that market position is deemed dominant. The same holds true regarding businesses with an annual income of over BGN 5 million from the supply of goods and services by way of infrastructure networks, irrespective of the market share they hold. By “infrastructure networks” the law understands systems for the reception and transmission of signals, pipelines, cables and any other fixed installations through which goods and services are supplied to the customers. The proposed definition is a step in the right direction as it will facilitate the interpretation and application of the law. As a shortcoming of the Bill one can point out the lack of substantiation of the reasons underpinning the choice of the size of the aforesaid market share and the amount of the annual income, which will probably lead to further discussions on the topic in plenary sessions of the Parliament. 2. The Commission for the Protection of the Competition has the right to perform economic sector analyses – surveys aiming to establish whether there is a violation of the Law in a particular sector of the economy. Under the hitherto existing law only the Commission is granted the right of such surveys. The bill provides that in given circumstances the surveys will be obligatory. In sectors where there are businesses with monopoly power or dominant positions, it is obligatory to conduct surveys at least once a year. These surveys will have to conclude with a report which makes an evaluation of the competition environment and the sanctions and measures imposed on the offenders. The bill provides that a report with findings of a sharp increase in prices will be submitted to the National Revenue Agency for evaluation of whether there has been a violation of the tax and financial legislation. These changes engage the Commission for the Protection of the Competition more actively in the fight against law offenders and they also strengthen the interaction between the state institutions committed to the same battle. 3. Resolutions of the branch organizations which have as an objective or an intended result the violation, limitation or prevention of competition on the respective market are forbidden. According to the introducers of the bill these amendments will counter the possibility for companies to evade the ban on agreements between companies aimed at impacting unfavorably competition in the market, as well as the ban on resolutions of the associations of companies having adverse effect on market competition. rn4. The Commission is obligated to publish a quarterly bulletin and maintain a web page. It will also have to publish all its acts and resolutions in the bulletin and post them on the web page. This includes the decisions which establish abuse of monopoly power and dominant position, and also the methods for taking proceeding under the law. The amendments seek to achieve transparency in the work of the Commission on the Protection of Competition and to restrict businesses. rnIn conclusion, the bill offers some good decisions for improvement of the work of the Commission on the Protection of Competition and creates conditions for promoting confidence in its activity. Some of the texts need substantiation, but in its present form the Bill is a good basis which can be further developed in the course of the parliamentary discussions and votes at first and second readings.