Competition law enforcement in Slovenia
What were the Competition Protection Agency’s main activities in 2021 and what are its priorities in 2022?
Those who are interested in European Commission (EC) competition law enforcement are reviewing a recently published Report on Competition Policy 2021, comprising an overview of the EC’s main activities in competition law enforcement and policy. Around the same time, the Slovenian Competition Protection Agency (CPA) finally published its annual report for 2021 (available in Slovenian language).
What were the CPA’s main activities in 2021?
The majority (24) of the CPA’s decisions were issued in merger control proceedings, while only two infringement decisions due to restrictive agreements were adopted as well as one decision finding unfair trading practices in the food supply chain.
No particularly complex merger control decisions have been issued. All merger notifications were cleared and clearances were issued in phase I. Merger notifications were filed in various sectors, from the automotive, beverages and banking/financing sectors, to the media, medical and real estate sectors.
The CPA joined the EU-wide trend of imposing fines for gun jumping. One decision to impose fines was adopted for failing to notify within the legally prescribed 30-day deadline after entering the SPA and for exercising rights from a merger before a merger clearance was issued. The fine was set at EUR 151,378.06 for the company (presumably about 0.3% of the buyer’s annual net turnover) and to EUR 10,000 for the responsible person of the company. It will be interesting to see if the fine is upheld by the court (if the company or the responsible person filed a lawsuit) since the court reversed some similar decisions regarding fining in 2021 and only issued a warning to the company/responsible person instead of a fine, presumably due to mitigating circumstances on the side of the company/responsible person. In another court case from 2021 related to gun jumping, the court reduced the fine from EUR 3,7 millionto EUR 1,56 million. The later remains the highest final fining decision in Slovenia for gun jumping to date.
In the area of restrictive agreements, the CPA issued one decision accepting the commitments provided by the parties in an infringement proceeding due to a suspected cartel. The suppliers of liquified petroleum gas (LPG) in cylinders basically committed to facilitate returns of empty LPG cylinders and thus allegedly encouraged LPG cylinders users to switch their suppliers more easily.
In another case of restrictive agreements, the CPA issued an infringement decision against certain dealers of Renault cars in which it found that the dealers were acting in agreement and/or via a concerted practice by adjusting their offers, setting the prices, sharing the market and exchanging commercially sensitive information in public procurement tenders for the repair and maintenance of Renault-branded motor vehicles and for the supply of spare parts. According to the CPA decision, the cartel was in place for more than 10 years and a request for leniency by one of the parties apparently helped the CPA investigate the cartel. The infringement decision is not yet final. If upheld by the courts, it could be a convenient case for antitrust damages claims, in particular for the Republic of Slovenia, which appears to have suffered damage (i.e. due to the police’s extensive Renault car fleet).
Another notable CPA activity related a sector inquiry in the field of motor fuels. This is an area of the CPA’s interest since it was reviewed in a sector inquiry back in 2017, but likely attracted additional attention due to deregulation of retail prices of all motor fuels in October 2020. The CPA again acknowledged that the market is highly concentrated and with high entry barriers, and that the deregulation of retail prices allowed companies to reap higher margins. Even though the CPA noted that retail prices were being changed often simultaneously, no prohibited restrictive agreement or concerted practice was identified. The CPA held that the retail market for the sale of motor fuels was very transparent and believes that it was such transparency on the market and swift adaption to any price changes among competitors that likely contributed to parallel pricing. This sector will likely remain in the CPA’s spotlight, in part due to the envisaged merger of the second and the third largest motor fuels suppliers, which is currently subject to an in-depth investigation by the EC.
The CPA was also active in monitoring unfair trading practices in the food supply chain under the Agriculture Act, where it also has the power to impose fines of up to 0.25% of annual turnover of the infringing company for unfair trading practices and infringements with respect to the compulsory contents of written contracts with the suppliers of agricultural and food products. In 2021, another first fining decision was issued against a large Slovenian retailer of fast-moving consumer goods. The CPA held that the retailer had significant market power and exploited two of its food suppliers by failing to enter into a written business agreement with them. A fine of EUR 98,061.97 was imposed on the company and EUR 10,000 on each of the two responsible persons at the company. The CPA also conducted two separate sector inquiries researches – one about the market of production and sale of fresh fruit and fresh vegetables and the other on the pork meat market.
The CPA also acts as a so-called advocate of public interest in legal protection in public procurement procedures, and can file for legal protection if it determines that the public interest is jeopardized in CPA’s area of activity. Under those powers, the CPA filed three requests for the review of individual public procurement procedures and was successful with one such request. In its successful review, a contracting authority upheld the CPA’s views that the tender requirements were set in an unobjective manner and thus artificially narrowed down the scope of potential tenderers.
From an overview of the CPA’s activities in 2021, it is clear that the CPA maintained its traditional scope of work, focusing mostly on merger control, with an increased focus on gun jumping. In addition, the CPA put efforts into detecting and sanctioning cartels. Companies in the food supply chain should be wary of increased monitoring by the CPA in this area, and should put sufficient efforts into ensuring compliance with the Agriculture Act.
What can the companies expect about its enforcement in 2022 based on the CPA’s latest annual report?
Unfortunately, the CPA remains silent regarding more substantive information. A clearer indication of the key areas of its focus in 2022 is missing. In fact, the section on the CPA’s priorities remains almost largely copy-pasted from its previous annual report and thus mainly generic.
The CPA thus reiterates its intention to treat the gravest infringements of competition law (restrictive agreements and abuses of dominance) as its highest priorities. Informing the public about its leniency programme is defined as another area of focus. Two infringement proceedings are expected to be completed in 2022 and at least one sector inquiry is planned. Currently, a sector inquiry of the wheat purchase market is outstanding and an infringement proceeding due to a suspected cartel on this market was initiated in February 2022. So far, this is the only new infringement proceeding in 2022.
The CPA also claims to strive to finish pending proceedings by legally prescribed deadlines, but allegedly faces difficulties due to the insufficient responsiveness of the entities requested for information. If a company receives such a request, it should treat it seriously since the CPA has announced fines if companies fail to cooperate.
Obtaining court orders for inspections is another of the CPA’s focus areas, so the risk of inspections is realistic.
The CPA also highlights the significance of effective misdemeanour proceedings for competition law infringements established in administrative proceedings. In Slovenia, the CPA has no power to fine a company for an infringement in a unitary proceeding (contrary to the EC, for example), but in separate misdemeanour proceedings that usually follow the final administrative infringement decision. In practice, years often pass before a fine is actually imposed on an infringing company. It remains to be seen if “efficient misdemeanour proceedings” will result in earlier fining.
Allegedly, the CPA is also planning to respond more swiftly to competition law complaints and to requests for clarification of compliance. Thus, contrary to certain other competition protection authorities in the EU, the CPA still fails to publish general guidelines on competition law topics. The raising of awareness regarding compliance with competition law could be more efficient and farther-reaching if such public guidelines were issued rather than responding to questions individually.
The CPA is also planning to keep a close eye on the new Prevention of Restriction of Competition Act, if it progresses in the legislative procedure. The ECN+ Directive is planned to be implemented, at a minimum, and the CPA is a keen proponent of unitary infringement proceedings to be implemented in the new act.
With regard to supervision over unfair trading practices in the food supply chain, where the CPA is an enforcement body, the CPA is planning to monitor actions by smaller buyers of agricultural and food products (and no longer just food products) more closely.
Finally, with respect to merger control, the CPA is expecting about 20 mergers to be notified in 2022. It has already been seen that the aforementioned number was underestimated, as nearly 30 mergers had already been notified by mid-2022 according to the CPA’s website, indicating vibrant M&A activities in Slovenia this year. The CPA emphasised that it watches the media carefully for any unnotified mergers, so we advise companies to pay special attention to potential notification obligations and make that notification in due time (30 days post signing) to avoid a fine of up to 10% of annual turnover.
Even though rather generic, such an outlook for 2022 is welcome and provides additional insight into the CPA’s plans for competition law enforcement in Slovenia. Hopefully, the CPA will gradually gain enough confidence to be more specific in its forecasts.