- Africa and the Middle East
- Asia Pacific
- Latin America
- North America
- GCR 100
- Rating Enforcement
Antitrust and merger control rules are mainly contained in the Prevention on the Restriction of Competition Act (ZPOmK-1), which contains both substantive and procedural rules for administrative proceedings, as well as provisions concerning the institution responsible for enforcement. Substantive rules in general follow the EC competition rules.
Since infringements of antitrust and merger control rules are defined as minor offences, the provisions of the Minor Offences Act (ZP-1) are also applicable.
In addition, infringements of antitrust and merger control rules are defined as criminal offences under the Criminal Code (KZ-1). Article 225(1) of KZ-1 prescribes imprisonment of between six months and five years for persons who, while performing a business activity, breach antitrust rules banning the conclusion of anti-competitive agreements between undertakings, abuse the dominant position of one or more undertakings or create a forbidden concentration of undertakings, and who, in this way, prevent, materially impede or distort competition in the Republic of Slovenia or in the EU market, or materially or in significant part affect trade between member states, resulting in significant proceeds for that undertaking or undertakings, or significant loss for another undertaking. In addition, an undertaking can be held responsible for the same offence in accordance with the Liability of Legal Persons for Criminal Offences Act, punishable by a fine of between €10,000 and €1 million, forfeiture of property, termination of the undertaking, a ban on participation in public procurement or a ban on trading with financial instruments. KZ-1 also provides for a form of leniency which applies to all anti-competitive agreements. A perpetrator who concludes an anti-competitive agreement but informs authorities of this before the investigation has begun, cooperates with authorities during the investigation and applies remedies to the situation, and who has not coerced others to participate or remain in agreement, can have his punishment remitted. There are still no known criminal cases.
Relevant authorities: their powers and procedures
Slovenian Competition Protection Agency (CPA)
The CPA is the authority responsible for the enforcement of competition rules. It is organised as an independent public body led by a director and five-member council. Currently, there are only four council members. The director is also a member of the council, and employees of the the CPA can be appointed as council members. Members of the council and the director are nominated by the government and appointed by the parliament for a five-year mandate. The CPA is financed directly from the budget, as a direct budget user, as well as from the fees in relation to its costs. In accordance with ZPOmK-1, the CPA should adopt its tariff in relation to the costs, but so far the CPA has not published its tariff, which means that the CPA is currently only funded from the budget. With the latest amendment of the ZPOmK-1, the council has been granted the right to decide on the request of the parties for the exclusion of CPA officials from the proceedings. Previously, this was in the competence of the relevant ministry.
Two procedures exist, for administrative and minor offences. In an administrative procedure, infringements are assessed and brought to an end; in minor offences, proceedings fines are levied.
Rules on administrative procedure are contained in ZPOmK-1, with the rules of the General Administrative Procedure Act also applicable. An administrative procedure is initiated either:
- ex officio by the CPA when it has information on possible breach of antitrust rules or existence of notifiable concentration with the publications of order on initiation of proceedings; or
- following notification of concentration by the parties.
There is one joint proceeding conducted for the infringement of national and EU rules. Parties to the proceedings are usually only undertakings against which the proceedings are initiated. Natural persons are not party to the proceedings except in cases of concentration by a natural person who already controls another undertaking. Complainants and other parties, which can show legal interest, can request to be made party to the proceedings within 30 days from the publication of the order upon initiation of the proceedings. During proceedings, the CPA safeguards the confidential information that it gathers and the identity of the complainants, if requested to do so. Before the decision finding the infringement is reached, the CPA issues a statement of objections (SO). Parties have the right to respond to the SO within the 45-day time limit, as prescribed by ZPOmK-1. Decisions concluding administrative procedure are made by the panel, comprised of all the members of the council.
ZPOmK-1 prescribes time limits within which proceedings before the CPA should be concluded; however, there are no consequences if these are not met, and in fact the CPA does not usually reach a decision within the set time limit. Antitrust infringement proceedings should be concluded within two years from initiation, and merger control proceedings within 25 working days from the complete notification for Phase I decisions, and for Phase II decisions within an additional 60 or 75 working days from the issue of order on commencement of the proceedings.
The minor offences procedure is usually conducted as a follow-on procedure after the infringement has been established in an administrative procedure. There is no statutory requirement for this, and only a minor offences procedure could be conducted for finding an infringement and levying fines without previous administrative proceedings. However, the CPA generally chooses to conduct administrative proceedings beforehand. ZP-1 prescribes the same fast-track procedure for finding an infringement of antitrust and merger rules, and levying fines for these infringements as for other minor offences (eg, speeding). Proceedings are initiated ex officio. Perpetrators of minor offences are undertakings and natural persons – responsible persons of the undertakings. The CPA informs perpetrators of the charges against them in writing and warns them of the privilege against self-incrimination. Perpetrators have five days to provide an answer to the charges. After the CPA receives the answers, it adopts a decision levying fines. Decisions concluding minor offence procedures are made by a three-member minor offences panel, comprised of the members of the council and employees of the CPA. The minor offences panel is appointed by the council for each case separately upon the request of the director immediately after the first action in relation to the minor offences proceedings has been performed. ZPOmK-1 prescribes a relative five-year limitation period and an absolute 10-year limitation period from the date of the infringement.
In line with ZPOmK-1, the CPA has similar powers in administrative proceedings, as does the European Commission. It can request information (article 27 ZPOmK-1) and conduct inspections (articles 28 to 33 ZPOmK-1).
Under article 27 ZPOmK-1, the CPA has the power to request information from any undertaking or partners, members of management or supervisory boards and persons employed with the undertaking, even before initiation of proceedings, in the form of a simple request. The CPA can also request information from the undertaking by issuing a special order. The undertaking can challenge such an order only in the judicial protection filed against the final decision. There are no other legal remedies available to the undertaking against a special order requesting information. Undertakings have a duty to cooperate and provide all the information requested correctly, completely and on time, but are not required to admit to the infringement. If the request for information is made with a special order, the undertaking that does not provide the information requested, does not provide it on time or provides incorrect, incomplete or misleading information can be penalised up to €50,000 by order of the CPA. The penalty can be imposed again until the combined amount reaches one per cent of the annual turnover of the undertaking in the preceding business year. Undertakings can challenge, in judicial protection proceedings, the order setting the penalty, but cannot challenge reasonableness of the special order requesting information within those judicial proceedings.
The CPA can also conduct inspections on the premises of the undertakings against which proceedings have been initiated, or on the premises of other persons. After the ruling of the Constitutional Court of the Republic of Slovenia (Constitutional Court) in 2013 found the rules on conduct of inspection to be unconstitutional, changes to the ZPOmK-1 came into effect on 10 May 2014 changing the procedure for the conduct of the inspections. In accordance with the amended article 28 ZPOmK-1, CPO now requires a court order to conduct inspections at the premises of the undertakings against which proceedings have been initiated as well as for inspections at other premises. The regime is now more closely mirrored on the criminal rules of procedure.
In accordance with article 33 ZPOmK-1, the CPA could conduct inspections on other premises if there are reasonable grounds to suspect that documentation relating to the subject matter of an inspection are being kept at the premises of another undertaking, or on the residential premises of members of the management or supervisory bodies, or of staff or other associates of the undertaking against which the procedure has been initiated. The CPA needs a court order to search those premises, obtained from a judge of the competent court in Ljubljana.
Amended article 28(1) of ZPOmK-1 now provides that the CPA can enter and conduct inspections on the premises of the undertaking against which proceedings have been initiated either with the consent of the undertaking being inspected or by presenting an order issued by the District Court in Ljubljana in presence of two adult witnesses. A court order for inspection is issued upon the proposal of the CPA, if there are reasonable grounds to suspect that an infringement of national or EU Competition Law rules exists. The Court has to rule on the proposal within 48 hours. Besides the request for the two adult witnesses to be present at the inspection, CPA-authorised persons retain the same rights as before, which are mirrored from the rights of the EC and still retain, in addition, the right to seize items for no longer than 20 working days and identify persons present at the inspection.
Undertakings have a duty to cooperate with the CPA. Privileged communication, namely, communication between the undertaking against which the procedure has been initiated and its attorney pertaining to the procedure in question, is excluded from the inspection. If there is any doubt as to whether documents are to be treated as privileged communication, documents are seized and the Supreme Court of the Republic of Slovenia (the Supreme Court) decides if it constitutes privileged communication. In the case of obstruction of the inspection by the undertaking being inspected, the CPA can issue an order setting a penalty of up to 1 per cent of the annual turnover of that undertaking in the preceding business year. If the inspection is obstructed by any other person not connected to the undertaking being inspected, the CPA can issue an order against such person, setting a penalty of up to €50,000. The undertaking or other person to which the order is addressed can challenge, in judicial protection proceedings, the order setting the penalty, but cannot challenge reasonableness of the inspection within those judicial proceedings. The CPA continued to take a strict approach with respect to the obstruction of inspections. The CPA’s order fining media company Pro Plus €105,000 for obstruction of inspection of possible abuse of dominance infringement in television advertising in 2011 has been upheld by the ruling of the Supreme Court in November 2013. In October 2013, the CPA also issued another fine for the alleged obstruction of July 2013 inspection at the premises of GEOPLIN for the alleged abuse of dominance in long-term natural gas supply to industrial customers. In this latest case, the CPA issued a fine in the amount of 0.2 percent of the annual turnover of GEOPLIN in the preceding year, amounting to around €1 million. This fine is being challenged in the Court Proceedings.
For minor offence procedures, criminal procedure rules apply in accordance with ZP-1 – meaning that all the caveats of criminal proceedings apply (privilege against self-incrimination, reasonable cause standard). In order to conduct an inspection, the CPA needs a court order from the local court. Inspections are carried out by the police with CPA employees assisting. The CPA does not usually carry out investigations in minor offence proceedings; however, since the CPA now requires a court order for the conduct of inspection in administrative proceedings as well, the practice in this matter might change.
CPA decisions can be challenged in judicial proceedings only
Following August 2013’s amendment of the Courts Act, the jurisdiction for the review of the CPA’s decisions in administrative proceedings, has been moved from the Supreme Court to the Administrative Court. Judicial proceedings are now two stage. Parties have two possible lines of challenge of the first stage Administrative Court ruling. With the 10 May 2014 amendment of ZPOmK-1, it is now possible for parties to file a complaint to the Supreme Court against a first stage ruling, although this is limited. In addition, parties can also use extraordinary measures, such as request for revision against the first stage proceedings, if no complaint is admissible, or against the second stage decision on the complaint. A request for judicial protection has to be filed within 30 days from the issue of the decision or the order. A complaint against a first-stage Administrative Court decision can be filed if admissible within 15 days from the issuing of the ruling, and request for a revision within 30 days from the decision being challenged.
Decisions of the CPA in minor offence proceedings can be challenged in accordance with ZP-1 with a request for judicial protection before the Local Court in Ljubljana. Decisions of the Local Court can be appealed before the High Court in Ljubljana.
The May 2014 amendment of ZPOmK-1 has also introduced a new provision obliging the CPA to publish on its website any judicial proceedings decision. This is a welcome change that will greatly enhance transparency of the CPA proceedings.
The rules in ZPOmK-1 on substantive matters are modelled on EC competition rules. ZPOmK-1 is applied to all sectors and all undertakings.
Anti-competitive agreements and concerted practices
Article 6 of ZPOmK-1, modelled on article 101 TFEU, prohibits as null and void agreements between undertakings, decisions by associations of undertakings and concerted practices of undertakings (agreements), which have as their object or effect the prevention, restriction or distortion of competition on the territory of the Republic of Slovenia with some actions stated as examples of prohibition (ie, price fixing, market sharing, limitation of production, discrimination, etc).
There are exemptions to the general prohibition contained in article 6 of ZPOmK-1:
- Article 6(3) of ZPOmK-1 provides for exemption in line with article 101(3) TFEU. Burden of proof lies with the undertaking claiming exemption.
- Article 7 provides for a de minimis exemption for agreements by parties whose market share does not cover 10 per cent in the case of horizontal agreements; 15 per cent in the case of vertical agreements; or 10 per cent in the case of mixed horizontal-vertical agreements. Thresholds are decreased by 5 per cent if competition on a relevant market is restricted by the cumulative effects of parallel or similar agreements between other undertakings. The de minimis exemption does not apply to agreements including hard-core restrictions (eg, price fixing).
- ZPOmK-1 allows for block exemptions under article 8. In Slovenia, block exemptions applicable in the EC apply directly even if there is no effect on trade between member states. In addition, the government can adopt additional block exemption regulations, but has not yet done so.
In case of proceedings of possible infringement of article 6 or article 101 TFEU, the CPA can:
- adopt a decision finding an infringement, requiring that it be brought to an end and imposing reasonable measures for it (eg, disposal of business or part of the undertaking’s business; division of an undertaking or disposal of shares in undertakings; transfer of industrial property rights and other rights; conclusion of licence and other contracts; or ensuring access to infrastructure);
- adopt decision-making and binding commitments proposed by the undertaking against which the proceedings were initiated, with a view to eliminating the circumstances leading to the likelihood of an infringement’s existence; and
terminate proceedings with an order if:
- it finds no infringement or if specific circumstances indicate that procedure would not be reasonable;
- the EC initiates a procedure for the infringement of EC rules, or has already issued a decision on the same matter; or
- a competition authority of another EU member state has initiated a procedure for the infringement of EC rules, or has issued a decision on the same matter.
In the case of a breach of article 6 of ZPOmK-1 or article 101 TFEU, the CPA can impose minor offences fines in the amount of up to 10 per cent of the annual turnover of the undertaking in the preceding business year on a legal entity, entrepreneur or an individual who performs economic activity; or between €5,000 and €30,000 on the responsible person of a legal entity or the responsible person of an entrepreneur. In addition, in accordance with the ZP-1, any gains from the infringement are to be reclaimed as well.
Leniency is only granted in cartel cases and applies to undertakings and natural persons. Leniency is granted as full immunity or a reduction of fine (up to 50 per cent). Full immunity is granted to the first applicant; the second applicant can be granted a reduction of between 30 and 50 per cent of the fine; the third applicant, between 20 and 30 per cent; and any other applicants, up to 20 per cent.
Conditions for immunity are met by the applicant who:
- fully and completely discloses his participation in an alleged cartel;
- is the first to submit information and evidence which enables an inspection in connection with the alleged cartel, or the finding of an infringement in connection with the alleged cartel;
- cooperates with the CPA;
- ends his involvement in the alleged cartel immediately upon cooperation with the CPA, except if the CPA requests otherwise; and
- did not coerce other undertakings to join the cartel or to remain in it.
Conditions for a reduction of fine are met by the applicant who:
- provides evidence of his participation in the alleged cartel, which represents significant added value with respect to the evidence already in the CPA’s possession;
- cooperates with the CPA throughout the procedure; and
- ends his involvement in the alleged cartel immediately upon cooperation with the CPA, except if the CPA requests otherwise.
Leniency only applies to the minor offences procedure and has no bearing on criminal proceedings.
In 2013 and 2014, judicial proceedings against previous decisions of the CPA were issued, the CPA initiated one new case and closed some cases.
The Supreme Court continued with its now established practice of overruling decisions of the CPA finding infringement of article 101 TFEU. The Supreme Court (and now the Administrative Court) have constantly ruled that the CPA has failed to establish an effect on trade between members states since the CPA has failed to analyse the market. This has been the case in recent rulings such as the 2011 construction cartel case, the 2010 mountain lift operators cartel case and the 2013 pharmaceuticals case. The court has returned this cases to the CPA for re-evaluation of the effect on trade, while in different cases approving or overruling infringement of national rules infringement. For example, the court turned to the CPA for the re-evaluation of an infringement of the national rules, as well with respect to some of the parties in the 2011 construction cartel (for insufficient reasoning regarding the involvement of some of the parties) and the 2010 mountain lift operators (for the lack of evidence for a certain time period of the alleged cartel duration).
In addition, the Supreme Court, in its January 2014 ruling, completely overruled the 2012 CPA decision finding that GEN Energija and GEN-I had infringed article 6 ZPOmK-1 and article 101 TFEU by defining within the framework agreement in advance a fixed price for the sale of electricity to eligible customers in the period from 1 January 2007 until 4 January 2010. The Supreme Court found that the CPA had failed to properly evaluate the existence of a single economic entity as concerns the two companies involved.
The CPA has not yet issued any decisions in the cases that were returned for re-evaluation.
In 2013, the CPA issued two decisions on restrictive practices. On 10 October 2013, the CPA issued a decision finding 12 bus operators in breach of article 6 ZPOmK-1 and 101 TFEU for allegedly sharing markets in public tender for regular internal bus lines operations in the market of Slovenia. The decision has been appealed, but there has been no court ruling yet. The other decision was issued on 14 October 2013 against four pharmaceutical wholesalers for an alleged collusion on prices and market sharing in the market for sale of pharmaceuticals to public pharmacies in public tender procedures. The Administrative Court confirmed the CPA decision in April 2014, but the parties has filled requests for revision.
In addition, in 2013 the CPA initiated one new case in the construction sector for possible bid rigging.
Abuse of dominance
Article 9 of ZPOmK-1, modelled on article 102 TFEU, prohibits abuse of dominant position on the market by one or more undertakings on the territory of the Republic of Slovenia, or on a substantial part of it, and gives some examples of what would count as an abuse (setting of unfair prices, limitations of production, discrimination, etc).
Dominance is defined as the ability of an undertaking to act, to a significant degree, independently of competitors, clients or consumers. In addition, there is a legal presumption that the undertaking is dominant if its share on the Slovenian market exceeds the 40 per cent threshold and that undertakings are jointly dominant if their share on the Slovenian market exceeds 60 per cent.
The CPA issues the same decisions and imposes the same fines applicable to cases concerning anti-competitive agreements.
The Supreme Court upheld the May 2013 CPA decision finding an infringement of article 9 ZPOmK-1 and article 102 TFEU by Pro Plus. The CPA found that Pro Plus had abused its dominant position on the market for TV advertising via exclusivity clauses and conditional loyalty rebates. The Supreme Court also upheld a decision finding abuse of dominance by SAZAS (authors rights management organisation).
The CPA has not initiated any new proceedings in 2014 so far.
A concentration in line with article 10 ZPOmK-1 is a change of control on a lasting basis due to a merger, aquistion of control or creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity.
A concentration has to be notified if the following thresholds from article 41 ZPOmK-1 are met:
- the total annual turnover of the undertakings involved in a concentration, together with other undertakings in the group, on the Slovenian market in the preceding business year exceeds €35 million;
- the annual turnover of the acquired undertaking, together with other undertakings in the group, on the Slovenian market in the preceding business year exceeds €1 million; or
- in the case of joint venture, the annual turnover of at least two undertakings concerned in a concentration, together with other undertakings in the group, in the preceding business year exceeds €1 million.
Article 41(3) prescribes the alternative threshold for notification in the case that the market share, on the Slovenian market, of the undertakings involved in a concentration, together with the other undertakings in the group, exceeds 60 per cent. If this threshold is met, the undertakings concerned must inform the CPA of the concentration before its implementation. The CPA has 15 days to decide if it is going to request that the undertakings notify the concentration.
The concentration must be notified within 30 days of the conclusion of the contract, the announcement of the public bid or the acquisition of a controlling interest, whichever is first. Notification must be filed on the form prescribed in the decree, defining the contents of the notification form for the concentration of companies.
After the notification or initiation of ex officio proceedings, there is a standstill obligation. In addition, the CPA can issue a special decision banning other companies and public bodies from implementing a concentration or exercising rights from the concentration. Companies can request, in individual cases, the permission of the CPA to exercise their rights and obligations from the concetration prior to the decision of the CPA on the concentration, if it is essential for maintainenance of the full value of the investment or for performance of services of general interest.
The test for the prohibition of concentration is in line with EC standards: concentrations are prohibited if they would significantly impede effective competition on the territory of the Republic of Slovenia or on a substantial part of it, in particular as a result of the creation or strengthening of a dominant position.
In merger control proceedings, the CPA can adopt the following decisions:
- the concentration does not fall within the scope of ZPOmk-1;
- the concentration is compatible;
- the concentration is compatible if remedies offered by the undertaking are met; or
- the concentration is incompatible (only in Phase II).
If the concentration is found to be incompatible the CPA may impose measures on the undertakings involved in the concentration to restore the situation that prevailed prior to the implementation of the concentration, in particular through the division of the undertaking or disposal of all the shares acquired.
CPA can annul its decision on compatibility:
- within three years of its issuance, if the decision is based on incomplete, incorrect or misleading information supplied by one of the undertakings involved in the concentration; or
- within two years from the time that remedies were to be implemented if an undertaking acts contrary to remedies.
Actions performed in breach of a standstill obligation are null and void.
ZPOmK-1 defines as minor offences:
- failure to notify a concentration within the time limit;
- the implementation of rights or obligations arising from the concentration in breach of a standstill obligation;
- failure to implement remedies or obligations imposed by a decision;
- actions in contravention of a decision declaring a concentration incompatible; and
- actions in contravention of an enforceable decision imposing measures to restore situation prior to the implementation of concentration.
The CPA can impose fines for these minor offences in the amount of:
- up to 10 per cent of the annual turnover of the undertaking and of other undertakings in the group in the preceding business year, on a legal entity and entrepreneur;
- between €5,000 and €30,000 on the responsible person of a legal entity or the responsible person of an entrepreneur; and
- between €3,000 and €15,000 on a natural person already controlling at least one undertaking.
The Supreme Court overruled a 17 April 2013 CPA decision prohibiting a merger in the energy sector, finding that the companies had already aborted the transaction before the CPA had issued its decision, so there was no merger to evaluate anymore. The first prohibition decision issued by the CPA in 2009 ordering Delo to disinvest its share in ČZP Večer has still not been fulfilled.
In 2012, Pivovarna Laško initated a damages claim for illegality of the order of CPO from April 2011 in merger control proceedings, which then prevented a sale of shares, effectively preventing the sale of a national supermarket chain to a foreign company, against the previous director of CPO and the Republic of Slovenia. A decision was issued in ex officio proceedings of an alleged concentration between eight banks and a supermarket chain, which were terminated in October 2011 after a finding that no concentration existed. A decision prohibiting the sale of shares was appealed before the Supreme Court, which found that the decision by CPO was illegal since the alleged concentration fell under European Commission merger rules and should therfore have been assessed by the European Commission. The Supreme Court found that the CPA had no jurisdiction. The decision is still pending in the damages claim case.
In December 2013, the CPA approved a concentration between Agrokor and Mercator, Slovenia’s leading retail company.
In 2014, the CPA has not yet initiated any ex officio proceedings, but in May the CPA initiated one Phase II proceeding in the media sector.
Private enforcement of antitrust rules is mainly focused on damages claims. There are no specific rules for the enforcement of damages in antitrust cases; general rules for damages apply. There is no possibility of joint actions. ZPOmK-1 only prescribes in article 62 that in follow-on damages actions courts are bound by the final decision of the CPA, and that the statute of limitations for damages claims is suspended for the period from the procedure’s initiation before the CPA. In recent years, there has been more spotlight on private damages claims, with cases in telecommunications and postal sector being actively dealt by the courts.
Kavčič, Rogl & Bračun
Trg republike 3
Tel: +386 1 244 55 00
Fax: +386 1 244 55 01
Odvetniška družba Kavčič, Rogl in Bračun, o.p., d.o.o. is a full-service law firm, offering legal services to national companies, public and private institutions and other business subjects. Odvetniška družba Kavčič, Rogl in Bračun, o.p., d.o.o. provides a broad range of national and international related legal services, day-to-day legal advice and litigation. Main areas of practice include corporate law, M&A, competition law, employment law, commercial contracts, telecommunications and IT, intellectual property, real estate, litigation and public procurement. Odvetniška družba Kavčič, Rogl in Bračun, o.p., d.o.o. has extensive experience in corporate transactions, providing all types of corporate and transactional services to Slovene and international clients, as well as in matters of national and EC competition law. Founded in 2009 odvetniška družba Kavčič, Rogl in Bračun, o.p., d.o.o. has quickly become a well established law firm in Slovenia, with a reputation for its quick response and excellence. The firm’s clients are Slovenian and foreign business companies, corporations, banks and other financial institutions, insurance companies, consulting firms, institutions, societies and clubs, and other business entities.
The firm has vast experience of handling antitrust and merger cases, and provides advice on competition law in a quick and efficient manner. Partners have extensive experience in competition law and especially in network industries (telecoms, postal services) representing national incumbents in active cases and advising on competition compliance overall.
Next Chapter: Spain: National Commission for Markets and Competition