The European Antitrust Review 2014 Section 3: Country chapters

Macedonia

Regulatory overview

The governing legislation in the Republic of Macedonia regarding the competition matters is the Law on the Protection of Competition (Official Gazette of the Republic of Macedonia No. 145/2010 and No. 136/2011) and the Law on the Control of State Aid (Official Gazette of the Republic of Macedonia, No. 145/2010). The laws are created on the basis of the EU competition law and state aid law, encompassing standard competition law institutes: restrictive agreements and practices, abuse of dominant position and control of concentrations, as well as the regulation of the state aid.

The mandate of the Commission for the Protection of Competition is also set out by the governing laws, which also prescribe certain specific procedural rules, beside the rules on general administrative procedure. However, the sector-specific legislation contains certain specific rules and regulations, such as:

  • banking regulations (specific merger thresholds that concurrently have to be approved by the National Bank);
  • telecommunication rules;
  • public health norms (regulation of the drug prices);
  • the media laws (prohibited media concentrations); and
  • other local regulations.

The governing sector laws are:

  • telecommunication/media law – the Law on Electronic Communications (Official Gazette of the Republic of Macedonia No. 13/2005,14/2007,55/2007, 98/2008, 56/2009, 83/2010, 171/2010, 13/2012, 59/2012, 123/2012, 23/2013) and the Law on Broadcasting Activity (Official Gazette of the Republic of Macedonia No. 100/2005, 19/2007, 103/2008, 152/2008, 6/2010, 51/2010, 145/2010, 97/2011. 13/2012, 72/2013);
  • energy – the Law on Energy (Official Gazette of the Republic of Macedonia No. 16/2011, 136/2011, 75/2013); and
  • banking – the Law on Banks (Official Gazette of the Republic of Macedonia No. 67/2007, 88/2008, 42/2009, 90/2009, 67/2010, 26/2013).

The decision-making authorities

The Commission for the Protection of Competition

The Commission is the main administrative body in charge for the protection of the competition, respectively enforcement of the Law on the Protection of Competition and the Law on the Control of State Aid.

The legal framework provides for the Commission to be the only competent body that handles these issues. The procedure in front of the Commission starts by filing a request for starting a misdemeanour procedure. It ends with a decision by the Misdemeanour Commission in which the Misdemeanour Commission determines the existence of a breach of the provisions of the Law, or refuses the request. This decision can further be revoked by filling an action to the Administrative Court. The Administrative Court passes a judgment regarding the validity of the decision of the Misdemeanour Commission, which can be appealed in front of the Supreme Administrative Court. The decision of the Supreme Administrative Court is final and enforceable.

The Commission consists of a president, Blagoj Churlinov, and four other members; a general secretary; the Misdemeanour Commission; and several other sectors. The Misdemeanour Commission, which is in charge of the decision-making process, consists of a president and two members, who pass the decisions as a council. Unfortunately, the enforcement capacity of the Commission for protection of the competition is not sufficient, which implies lack of ex officio activities.

Sector regulators

With regard to the particular sectors, there are certain competition law related competences reserved for state bodies in charge of regulating certain sectors. Such institutions are: the National Bank, the Agency for Electronic Communications, the Broadcasting Council and so on. These regulators usually work in coordination with the Commission by cooperating and monitoring the conditions in a particular sector or deciding on related issues.

Restrictive agreements and practices

Restrictive agreements and practices are defined in article 7 of the Law on Protection of Competition. This provision is in line with article 101 of the TFEU.

All agreements concluded between undertakings, decisions of associations of undertakings and concerted practices which have as their object or effect the distortion of competition shall be prohibited, and in particular those which:

  • directly or indirectly fix the purchase or selling prices or any other trading conditions;
  • limit or control the production, market, technical development or investments;
  • share the market or the sources of supply;
  • apply dissimilar conditions to equivalent or similar transactions with other trading partners, thereby placing them in less favourable competitive position; or
  • make the conclusion of the agreements subject to acceptance of supplementary obligations by the other contractual parties, which by their nature or according to the commercial customs are not connected with the subject of the agreement.

With regard to restrictive agreements, in the Macedonian legal framework, the system of block exemption and individual exemption apply. If a block exemption is not available to the parties, they may apply to the Commission for an individual exemption. Such exemption shall be granted if it fulfils the criteria prescribed in the article 7 paragraph 3: decisions of associations of undertakings and concerted practices that contribute to the improvement of the production or distribution of goods or services or to the promotion of technical or economic development, provided that the consumers have proportional benefit thereon, and which do not impose restrictions that are not necessary for the attainment of these objectives on the undertakings concerned and do not afford such undertakings the possibility of eliminating the competition in respect of a substantial part of the products or services concerned.

The law also contains the ‘de minimis’ rule, which is applicable in situations where the total market share does not exceed 10 per cent for horizontal agreements or 15 per cent for vertical agreements. If it is not possible to determine whether the agreement is horizontal or vertical, the threshold of 10 per cent applies.

The Commission dealt with restrictive agreements in many cases, including several of them being for price fixing in the pharmaceutical sector, concerted practice and prohibited agreements in the electronic communications, especially in the telecoms and media sector, among others. Some of the aforementioned cases are final, but most of them are still in court procedure.

Abuse of dominant position

The abuse of dominant position is regulated in articles 10 and 11 of the Law on the Protection of Competition. An undertaking is considered to have a dominant position if it it does not have competitors on the relevant market, or, compared to its competitors, it has a leading position on the relevant market, and especially in relation to:

  • the market share and position;
  • the financial power;
  • the access to sources of supply or the market;
  • the connection with other undertakings;
  • the legal or factual barriers for entry of other undertakings to the market;
  • the ability to dictate the market conditions taking into consideration its supply or demand; or
  • the ability to exclude the other competitors from the market by directing towards other undertakings.

The threshold required for the rebuttable presumption of a dominant company to kick in is a market share of at least 40 per cent on the relevant market.

As far as the law is concerned, the definition of abuse provided in article 11 of the Law is the same as stated in article 102 of the TFEU.

The Commission has been active in pursuing different kinds of dominance abuse infringements, such as exclusivity arrangements, margin squeeze, tying, pricing practice and so on. The sectors under particular observation were telecommunications, financial services, waste disposal and the food and drink industry, among others.

Control of concentrations

Thresholds

The Notification regarding the concentration shall be submitted to the Commission if:

  • the joint aggregate turnover of all participating undertakings, generated by selling goods or services on the world market, exceeds €10 million in Denar countervalue according to the exchange rate valid on the day of preparing the annual account, gained in the business year preceding the concentration, and where at least one participant has to be registered in the Republic of Macedonia;
  • the joint aggregate turnover of all participating undertakings, generated by selling goods or services in the Republic of Macedonia, exceeds €2.5 million in Denar countervalue according to the exchange rate valid on the day of preparing the annual account, gained in the business year preceding the concentration; or
  • the market share of one of the participants is more than 40 per cent or the aggregate market share of the participants in the concentration on the market is more than 60 per cent in the year preceding the concentration.

The participants in the concentration shall be obliged to submit a notification to the Commission prior to its implementation and following the conclusion of the merger agreement; that is, the announcement of the public bid for purchase or acquisition of majority participation in the basic capital of the undertaking.

As previously mentioned, the additional rules apply for certain sectors (eg, banking, insurance, telecommunications and media).

Deadlines

The merger notification must be filed with the Commission. The filing can be made based on a notification, letter of intent or any similar document showing both parties’ serious intent to enter into the transaction.

The Commission shall be obliged to adopt a decision within a period of 25 working days as of the day of receipt of the duly notification. The period may be extended for up to 35 working days if the participants in the concentration assume commitments before the Commission in order to achieve the concentration that is in accordance with the provisions of the Law. The decisions referred to as decisions in case of initiated procedure shall be adopted within a period of 90 working days as of the day of initiation of the procedure. In coordination with the participants in the concentration, the Commission may extend the time periods referred to in paragraphs at any time following the initiation of the procedure. However, the total duration of each extension or extensions cannot exceed 20 working days.

If the Commission does not adopt a decision within the time periods determined above, it shall be deemed that the concentration is in accordance with the provisions of the Law on protection of the competition.

Fees and penalties

The Misdemeanour Commission shall, by a decision, impose a fine of up to 10 per cent of the value of the aggregate turnover calculated in accordance with article 16 of the Law, expressed in absolute and nominal amount, on the participants in the concentration, having an obligation to submit the notification referred to concentration appraisal if they:

  • fail to submit a notification of the concentration;
  • implement the concentration contrary;
  • fail to act upon the decision adopted; or
  • implement a concentration which by a decision adopted has been determined not to be in accordance with the provisions of this Law.

Furthermore, special sanctions might be applicable in particular sectors (ie, banking or telecommunications), such as additional fines or non-registration. However, up to now, there has been no single case where the Commission has ruled against the mergers.

General sanctions

When setting the fine regarding a violation of the provision of the Law on the Protection of Competition, the Commission will consider the following:

  • the gravity of the misdemeanour;
  • the duration of the misdemeanour, and
  • the degree of distortion of competition and the effects caused by the misdemeanour.

The Misdemeanour Commission shall first determine a basic amount of the fine and shall then adjust it taking into consideration the mitigating or aggravating circumstances.

The basic amount of the fine shall, as a rule, amount to up to 30 per cent of the revenue of the perpetrator of the misdemeanour generated from the activity carried out at the relevant market where the misdemeanour has been committed in the last complete business year in which the perpetrator of the misdemeanour participated therein. The amount determined in such a manner shall be multiplied by the number of years during which the misdemeanour lasted.

The Misdemeanour Commission shall, by a decision, impose on the undertaking – that is, the association of undertakings – a fine in the amount of up to 10 per cent of the value of the aggregate turnover generated in the last business year, expressed in absolute and nominal amount for which the undertaking or the association of undertakings has prepared an annual account, if it:

  • concludes a prohibited agreement or otherwise participates in an agreement, decision or concerted practices which distorts the competition in terms of article 7 of the Law;
  • abuses the dominant position in terms of article 11 of the Law;
  • fails to act upon a decision of the Commission for the Protection of Competition referred to in article 51 of the Law; and
  • fails to act upon a decision of the Commission for the Protection of Competition referred to in article 52 of this Law.

Furthermore, if the misdemeanour is committed by an association of undertakings and it refers to the activities of its members, the fine shall not exceed the amount of 1 per cent expressed in absolute and nominal amount for minor misdemeanours; that is, 10 per cent expressed in absolute and nominal amount for more serious misdemeanours from the sum of the aggregate turnover for each member of the association acting on the relevant market. If a fine is imposed on an association of undertakings for the activities of its members, and the association is insolvent, it shall be obliged to collect funds for payment of the fine from its members.

In addition to the fine, the Misdemeanour Commission may impose a temporary ban on carrying out a specific activity of between three and 30 days on the legal entity.

Granting immunity (leniency)

With the aim of detecting cartels, in the sense of the Law on the Protection of Competition, a company is automatically granted leniency if it first presents evidence enabling the Misdemeanour Commission to initiate a misdemeanour procedure or first presents evidence enabling the Misdemeanour Commission to complete the already initiated misdemeanour procedure with a decision establishing the existence of a misdemeanour if the existence of the misdemeanour could not be established without such evidence. If an undertaking does not fulfil the requirements for leniency, the fine may be reduced if it provides evidence that was not available to the Commission and that contributes to the closure of the case.

The Misdemeanour Commission shall not grant full immunity from a fine to the undertaking referred throughout the duration if the cartel has taken measures by which it has forced the other undertakings to participate or remain therein.

Recent developments and case law practice

As previously mentioned, the Commission aims to be considered the most efficient regulatory body in the field of competition. In its relatively brief history of performance, the Commission has passed many important decisions, mainly on request of third parties but also ex officio.

The decisions are aimed at sanctioning the infringement of the rules for protection of the competition. However, we must emphasise that most of the decisions that are appealed in front of the Administrative Court are confirmed at a later date. This underlines the fact that the Commission is an independent body which passes the decisions based on the experience and expertise of its decision-makers.

Regarding the sanctions, the main principles that are taken into consideration when determining the sanctions, are the principles of education and punishment for the unlawful activities. However, the main purpose of the sanctions of the Commission is in its educative and instructive nature. Due to that fact, the sanctions determined for the infringement of the Law on the Protection of Competition are still among the lower limits provided by the law. The main reason for this is because there has not been a severe infringement of the Law on the Protection of Competition that should be ultimately sanctioned and, further on, the goal of the Commission is to maintain the market condition without causing further distortions for the market players by imposing severe sanctions.

The recent case law practice of the Commission is in line with the world trends. It recently dealt with licensing agreements in the field of intellectual property. In relation to this, there are two very important decisions that created case law practice regarding the ‘semi exclusivity’ of copyright. In both cases, the Commission ruled that semi exclusivity is forbidden, especially when the main players on the media market are not equally treated.

Furthermore, the Commission deals with the regulation of the prices of internet services in the telecommunications sector. In one decision, the Commission found an abuse of dominant position of a telecoms operator in a case where the offer for a wholesale given to internet service providers was almost the same as the retail prices for the end users. Put simply, it ruled that it is not allowed to offer wholesale prices that are higher than retail prices.

Finally, it is important to note that the number of cases in front of the Commission constantly increasing, since the Republic of Macedonia is moving forward in the area of telecommunications, media, energy and pharmaceuticals.

The Commission’s role is ‘creating the rules’ for protection of the competition in the fastest developing sectors in the Republic of Macedonia. This mission has a beneficial role for all of the market players and for the welfare of the consumers.

Law Office Pepeljugoski

St. Veljko Vlahovik No. 4/1-1
1000 Skopje
Macedonia
Tel: +389 2 3 211 005
Fax: +389 2 3 211 004
Valentin Pepeljugoski
vpepeljugoski@unet.com.mk
Ana Pepeljugoska
apepeljugoska@on.net.mk
www.pepeljugoski.com.mk

Law Office Pepeljugoski was established in 1999 by Valentin Pepeljugoski and in a short period of time has become one of the most famous and successful law offices in the Republic of Macedonia.

Today, it is a multidisciplinary office that covers all the areas of civil and criminal law. The office is specialised in working in the field of intellectual property law, unfair competition, telecommunications, media and advertising. For many years Law Office Pepeljugoski has been positioned as a leading law firm also for corporate matters, trade law, contract and tort law, as well as energy law.

Credit for its leading position in the market goes to the dedication, quality and efficiency of the performed legal work. Our team comprises 11 attorneys and four junior advisers. Since 2012, we operate also with a branch office in Kosovo.

Law Office Pepeljugoski provides legal services on highly professional level, not only in the Republic of Macedonia, but also in the entire region. This task is accomplished by day-to-day cooperation with the leading law offices in the region, as well as cooperation with notary public, enforcement agents, expert witnesses, evaluators, court appointed translators and many others.

For the past few years, Law Office Pepeljugoski has been representative of many domestic and international clients in complex issues deriving from various areas of the law. This has enabled Law Office Pepeljugoski to create a large top client portfolio and to retain its reputation in the market for legal services.

Law Office Pepeljugoski is known as a recommended office for doing business in all the relevant national and international rankings and directories, and our leading partners and attorneys at law are proud to be named as leading lawyers for various legal areas.

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