AnalYSis
AnalYSis
Fall 2017 / Issue 55
Competition Authorities Scrutinizing Sales & Distribution Agreements
We ’ ve all witnessed an increase in competition authorities ’ activities across Europe . Recently , the European Commission started probing an alleged German car cartel . At the same time , investigations revealed that European truck producers breached EU antitrust rules . For 14 years truck prices were fixed and the cost of complying with stricter emission rules were passed onto consumers by the cartel . As a result , a record € 2.93 billion fine was imposed on the truck manufacturers . Greek competition authorities also fined six cosmetics manufacturers € 19 million for price fixing . Industries including fuel distribution , cement manufacturing and telecommunications have been carefully scrutinized by Romanian and Bulgarian competition protection bodies .
It goes without saying that similar actions can be expected from the Macedonian Competition Commission , as Macedonia looks to launch the EU Membership negotiations . In fact , we ’ ve already seen some signs of this . The local legislation has already been largely harmonized with EU acquis , and the same legislative tools and mechanisms for determining competition breaches are already at the disposal of the Macedonian authorities . Plans to further amend Macedonian leniency legislation and increase awareness of whistle-blowers immunity rights have both been steps in this direction . The fines stipulated in Macedonian law for
Kiril Papazoski , Attorney-at-law , Papazoski and Mishev Law Firm anticompetitive agreements are quite severe , reaching up to 10 % of a company ’ s previous annual turnover . Considering the complexity of the matter , the severity of potential fines and the lack of established legal practice in the field , companies should conduct a diligent review of their agreements , policies and practices to reduce their risk exposure in this area .
Macedonian legislation stipulates that agreements intended to distort competition and those that succeed in doing so are prohibited . In particular , agreements which : directly or indirectly lead to price fixing or the deliberate manipulation of any other trading conditions ; limit or control the production , market , technical development or investments ; share the market or supply sources ; apply different conditions in similar transactions with partners , thereby placing them in a less favorable competitive position ; and / or condition the conclusion of the agreements with the acceptance of supplementary obligations by the other parties .
The law provides that these restrictions do not apply to intragroup agreements and to agreements which are essentially agency agreements ( where under the agent does not undertake any risks and rewards other than the ones associated with the work as a commissionaire ). Companies with small market shares are also not subject to competition measures ( e . g ., companies with < 10 % market share in horizontal agreements or < 15 % in vertical agreements ). However , serious competition breaches – even by smaller players – would still be subject to closer scrutiny and administrative action . The block exemption is also available if the undertakings concerned have less than 30 % market share and their agreement doesn ’ t contain any serious competition implications ( e . g ., selective distribution systems , non-compete > 5 years ).
Special rules exist for companies with dominant market positions . There is no strait-jacket criteria to determine such dominance , and it is always viewed in the actual economic context . The burden of proof for dominant positions lies with the relevant authorities , however 40 % is the minimum threshold set by Macedonian Competition Law . Examples of dominant abuse sanctioned by competition authorities can be various loyalty
16 AmCham Macedonia Magazine