The Slovenian Competition Protection Agency’s stricter punitive policies

Recently, reports on high fines, imposed by the Slovenian Competition Protection Agency (»CPA«), have increased in the media for competition law violations and for obstructing investigations in this particular field. In the past, the CPA imposed fines (if at all) on the lower end limit as envisaged by the previous Prevention of Restriction of Competition Act from 1999. On the contrary, the recent sanctioning policy developments point to an entirely different direction.

In December 2013, the Slovenian Competition Protection Agency fined the company, Geoplin d.d., for obstructing an investigation in the amount of almost EUR 1 million (0.2% of the annual turnover in the previous business year out of a maximum of 1% for such violation) and the Medical Chamber of Slovenia to EUR 238,000 (6% of the annual turnover in the previous business year out of a maximum of 10% for such violation) for resale price maintenance of healthcare services. However, the most eye-catching is the CPA’s decision this summer to fine the company PRO PLUS d.o.o. in the amount of EUR 4.9 million, which constitutes almost 10% of its annual turnover in the preceding business year. Although the decision is not yet final, it is a sign of the continuation of the trend introduced by the CPA. While we have recently witnessed rather conservative practice with respect to competition law infringements as well as with respect to the sanctioning policy., the Agency has increased its activity and, in particular, adopted a stringent sanctioning policy. As evident from the publication on its website, the Slovenian Competition Protection Agency established that PRO PLUS d.o.o. had abused its dominant position on the television advertising market by concluding exclusive arrangements with advertisers in television programmes (100% advertising share) or offering conditional loyalty in order to defer them from advertising with competitors. This excluded them from the market or limited their access to the market and hence market growth. The website indicates that when determining the level of the fine, the CPA considered the gravity and duration of the infringement, its market impact and geographical scope and, in particular, the fact that PRO PLUS d.o.o. had carried on with the violation until the administrative decision establishing the abuse of dominance was issued.

Increased activity of CPA and a stricter sanctioning policy are clear indications to market players that future infringements of competitive law in the form of restrictive agreements and abuses of a dominant position will be awarded special attention and severe sanctioning within the scope of the powers conferred on the CPA. Therefore, the awareness of the significance of competition law among managers and executives in Slovenia is expected to still further increase in the medium- and long-term. Although the mentioned change of policy may cause a certain degree of insecurity for market players in the light of a lack of own CPA guidelines, the imposition of higher fines and, consequently, the increased significance of competition law in practice is certainly welcome and could contribute significantly to the wellbeing of the Slovenian consumer over the medium- and long-term.

In addition, detection and strict sanctioning of infringements of the competition law is a vital precondition for the “leniency” programme to finally become effective in practice. Although the “leniency” programme was transposed into the Slovenian legal order already in April 2008, it has, as at today, not had had any major effects in practice. The essence of the mentioned programme is the possibility to completely avoid or significantly decrease the fine for cartel participants if they submit complete reports on existing cartels and fully cooperate with the CPA. However, the omission of the fine only applies to the first party with respect to a particular cartel and the degree of fine »discount« falls in the order of reports. The fundamental purpose of the mentioned instrument is to destabilise inherently unstable cartel structures by encouraging cartel participants to hand over self-reports, meaning that the amount of the expected fine is a key factor for the success of the established programme.