The new edition of Competition law of the Republic of Belarus No. 94-З of 12.12.2013 (hereinafter – the “Competition law”, “Law”) came into force on August 3, 2018.
The main questions that may arise are: why do we need a new edition of a recently adopted law in the absence of a significant amount of practice and what are the fundamentally new provisions of it?
We invite you to consider provisions of the new edition of the Law that are of most importance in our opinion.
General structure and key notions of the Law
Even physically, the Law has doubled in size – instead of 27 articles of the first edition, the new one contains 51. However, this is probably a very non-legal assessment. In its development the Law largely follows the EEU Treaty, focusing on the practice of the Russian Federation in the field of competition development (with some national peculiarities).
The new edition clarifies a number of important notions. For instance, the scope of the Law is expanded by means of clarifying the basic term “commercial entity”. With the new edition of the Law, the term will also include “non-profit organizations engaged in profit-generating activities” and “other natural persons which are not registered as individual entrepreneurs, but engaged in professional activities that bring them income which is subject to licensing in accordance with the laws”.
The notion of “economic concentration” has also been clarified and will now also encompasses transactions on transferring of property of commercial organizations and transactions with the rights in respect of such organizations if they comply with the thresholds and conditions established by Chapter 5 of the new edition of the Law.
For the first time, the term “goods procurement” has appeared in the Law. It covers all forms of the goods acquisition “on a competitive basis”, known to the law, including public procurement and construction procurement. A separate article establishing antimonopoly requirements for the goods procurements is also an innovation. The article prohibits any actions that may lead to the prevention, restriction or elimination of competition in the procurement process through the actions mentioned therein, for example, through the coordination of the participant’s activities by an organizer and (or) a customer; creating preferential conditions for the participant, if it is not provided by legislative acts and (or) resolutions of the Council of Ministers; providing access to information, when such access is not directly permitted. The Law provides that competition violations in procurement process are considered in the manner and within the terms established by the Law. Recently this issue was not within the competence of the Antimonopoly authority in respect of monitoring compliance with competition laws. The competence is limited to the appeal procedure of public procurement established by the laws on public procurement.
A notion of “public authority” has obtained a broader meaning. Now it also covers “temporary or permanent interagency groups that are granted authoritative powers by laws”. This provision will prevent anti-competition decisions taken at the interdepartmental level which previously could not be affected by antitrust instruments.
In the new edition of the Law an article describing the features of competition restriction appeared. Despite the absence of such rule in the Law previously, it accurately conveys the essence of the term contained in the subp. 15 par. 2 of the Protocol on General Competition Principles and Pules (Annex 19 to the EEU Treaty).
A separate article 8 is devoted to the definition of a “group of persons”. De facto the approach to the formation of a group of persons has remained the same except, however, the wording was clarified. There is one new feature in accordance with which a group of persons includes legal entities in which the same persons hold in total more than 50% of the total number of voting shares. The group of persons with an individual will now not only include spouses, parents, children and siblings (sisters), but also emancipated children, as well as grandparents.
Approaches to determination of dominance
The Law recognizes that dominant position is the position of commercial entity, the share of which in the relevant product market is 35% or more. It can also be determined by the antimonopoly authority if an entity with smaller share (but not less than 15%) has the ability to unilaterally exert a decisive influence on the conditions of circulation of goods in the product market.
New terms in the sphere of domination, such as monopsony position and monopsony low price (rate), the establishment and maintenance of which is a form of abuse of dominant position have appeared in the new Law. Article 18 directly stipulates the newly introduced right of a dominant subject to present to antimonopoly body the evidence that its actions may be considered permissible according to a procedure established for cases of admissibility of agreements and concerted actions containing signs of competition restrictions.
Article 19 stipulates that, in case the abuse of dominant position by a business entity is identified, the regulator may establish rules of non-discriminatory access to goods produced and (or) sold by such entity.
Competition-restricting agreements and concerted actions
The most important innovation in this part, in our opinion, is the introduction of a direct prohibition (per se) on concluding agreements between competitors (cartels), regardless of their impact on competition, if they lead or can lead to 4 consequences specified in part 1 of article 20 of the new edition of the Law. Namely: the establishment, maintenance, increase or decrease in prices; division of the product market; reduction or termination of production of goods or refusal (not provided for by legislative acts) to conclude contracts with certain sellers and consumers.
The approach to vertical agreements has also been slightly specified. Per se vertical agreements (with the exception of vertical agreements permitted under article 22 of the Law) that can lead to setting resale prices (except for maximum resale prices) or which prohibits the buyer to sell goods of the seller’s competitor (with the exception of trade under a certain means of seller’s individualization) are prohibited. In accordance with the new edition of the Law a business entity also has the right to provide to the antimonopoly authority evidence of the fact that agreements in question may be recognized as permissible under article 22 of the Law.
In the new edition of the Law the rules that establish a prohibition of unfair competition are placed in a separate Chapter instead of being stated in one article (previously, these rules were stated in article 16 of the Law). Certain forms of unfair competition are regulated by separate articles now. In addition, article 31 of the new edition of the Law directly declares that other forms of unfair competition, in addition to those directly named in Chapter 4, are prohibited as well. In fact, approaches to the prohibition of unfair competition have been preserved. A little more detailed and clear regulations are established with respect to prohibitions related to illegal use of objects of intellectual property, causing confusion (article 29), and to the acquisition and use of rights to such objects (article 28).
Chapter 5 of the new edition of the Law is dedicated to economic concentration. This, in our opinion, makes working with the Law easier. Earlier we had to check whether the Law is applicable to corporate transactions by comparing separate provisions of the Law – the subp. 1.12 p. 1 of article 9 in respect of the competence of the antimonopoly authority in matters of economic concentration, articles 17 and 18 in respect of “thresholds” for revenue and value of assets, when the consent to the transaction of the antimonopoly authority is required. Similar comparisons need to be drawn when dealing with cases of cross-border transactions and determining the scope of application of the Law under paragraph 3 of article 4 of it. In the new edition all the necessary information is placed in a single chapter of the Law.
In respect of rules essential for business, it is worth noting the following: thresholds established by Law, in excess of which the parties intending to make a deal with shares, property, rights in respect of commercial organizations (article 34) or reorganization (article 33), which are recognized as economic concentration under article 32 of the new edition of the Law, are obliged to apply to the antimonopoly authority for obtaining consent to the transaction, have doubled. In fact, this means that with the Law entering into force much less “corporate” transactions are made with the consent of the Antimonopoly authority. According to the general approach, transactions of economic concentration made in respect of organizations (by organizations) the balance asset value of which at the latest reporting date does not exceed 200,000 base values or the amount of sales revenue at the end of the previous reporting year does not exceed 400,000 base values, are not subject for consent.
New powers of the antimonopoly authority
Article 14 of the new edition of the Law that defines the powers of the antimonopoly authority, has been expanded to include new powers, for instance:
– the power to consider appeals on antimonopoly violations in the course of procurement, including the power to adopt an order to take actions aimed at elimination of such violations;
– the power to issue a warning about the need of: termination of anticompetitive behavior; revocation or amendment of legal acts containing signs of antimonopoly violations; elimination of the causes and (or) conditions that contribute to the violation of antimonopoly laws;
– the power to issue orders on: termination of the rules of non-discriminatory access to goods; restoration of the situation that existed before the antimonopoly violation; approval of the rules of trade practice;
– the power to issue orders to state bodies and their officials to stop any violations of the antitrust legislation.
The article also defines the types of claims filed by the competition authority in the framework of competition protection more clearly.
The right of the antimonopoly authority to send a written warning about the impermissibility of actions (omissions), that may lead to an antimonopoly violation to the official of a business entity or state body, has also been introduced. In this case, any public statement of such person about the planned action or other information received by the antimonopoly authority that indicate a possible violation may serve as the basis for issuing a warning.
The executed warning of the antimonopoly authority, issued after the beginning of the proceedings and before the decision on the violation, is a ground for the termination of the initiated proceedings.
Procedure of considering antimonopoly cases
For the first time in the Belarusian law procedural rules on establishing the presence (absence) of antimonopoly violations are stipulated directly in the Law governing all the issues of the proceedings from filing the application to considering it and rendering the decision of the antimonopoly authority. The entry of the new edition of the Law into force made the process of applying to the antimonopoly authority quite formalized, placing the burden of providing the justification of the facts and circumstances in question, on the applicant.
Based on the article placed in “The Jurist” journal, February, 2018