The Bulgarian competition authority (the Commission for Protection of the Competition or the CPC) has prepared and published a proposal for a draft law for amendment of the Competition Protection Act. The main purpose of the amendments is to implement into the national legislation certain provisions of Directives 2019/1 and 2019/633 that have not been yet fully transposed. Directive 2019/1 essentially introduces powers, remedies and measures, and procedural mechanisms for the national competition authorities aimed at ensuring more effective and efficient competition enforcement on a national level. Respectively, Directive 2019/633 addresses certain anti-competitive B2B practices in the agricultural and food products supply chain. In addition, the CPC proposes various other changes that have no direct connection with the purposes and the spirit of the said two EU directives.
By and large, the effective national law has already implemented the relevant provisions of the directives. The CPC has had for a lasting period of time the powers and the instruments set out in that EU legislation. Arguably, the national competition authority has not succeeded in the effective enforcement of those rules in the entire spectrum of the competition policy, from the liberalization of the local markets closed to competition and creation of a level-playing field, through the imposition of timely and adequate sanctions and remedial, structural and behavioral, measures on infringers (especially for grave violations such as cartels, bid rigging, abuse of dominance) to the prevention of anticompetitive practices.
As an illustration, we offer two examples. The amendments relating to leniency introduce more detailed rules but little is substantially novel. Absent, a thorough analysis (including opinions of all stakeholders) it is unlikely that the changes will have noticeable practical implications. In fact, the lenience regime in Bulgaria (in effect for over a decade now) has spectacularly failed to start and produce results. To put it plainly, it is yet to take its first breath (an application followed by an investigation and completed with a decision) after the delivery back in 2008.
Further, the CPC suggests that the entire Chapter 7a (Abuse of a Stronger Bargaining Position) be repealed and replaced by a new Chapter 7b Unfair Trade Practices in the Agricultural and Food Supply Chain. In the motives to its legislative proposal, the Commission simply and clearly admits that the Chapter 7a regime has been an apparently unsuccessful experiment that, among other negative effects, has literally wasted a significant portion of the CPC’s limited resources. In the CPC’s own words: “the 2015 amendments in the law (the CPA) and respectively their application did not lead to any substantial actual results in relation to the elimination of the existing unfair trading practices in the relations between the commercial outlet chains and their suppliers …. In the period July 2015 – 2019 the CPC opened total 26 Chapter 7a cases … [but] only 5 related to relations between commercial chains and their suppliers … [and] only one case related to the agricultural and food supply chain.” Two important take-aways here: (1) if passed into law, the change will mean that the new regime will be limited to a specific sector – agriculture and food supply chain (as opposed to the current regime that applied without restrictions across sectors, e.g. electricity, see Case FastPay HD vs CEZ Bulgaria) and (2) the CPC own data shows that in the past nearly 5 years it had only one case in that sector that has been closed with a penalty decision (note: a judicial appeal is pending).
As already said, the proposed amendments are diverse and beyond the scope and purposes of the two EU directives. Another important change is the new rule concerning the allocation of costs. In cases, opened on a complaint of a third interested party, where the CPC has found that the alleged conduct did not constitute an infringement, or where the case has been closed due to a withdrawal of the complaint, the complainant(s) will be liable to reimburse the costs incurred by the defendant in relation to that case (provided that the defendant has requested from the CPC in the course of the proceedings such reimbursement).
In the current political environment and the general elections due in the spring of 2021, in our view, it is plausible that the Government would submit the CPC’s draft law proposal and the Parliament would pass the corresponding amendments in the national competition law with minimal revisions. Thus in early 2021 those broad and multidimensional amendments will likely enter into force. Of course, we will closely monitor the legislative process and keep you posted with our comments and advice.