Estonia Competition Authority
Estonia
Abstract Shape Background
Estonia Competition Authority

Estonia Competition Authority

Estonia

Read economist perspective on Estonia


Estonia: from the enforcer

Address: Tatari 39, Tallinn 10134, Estonia
Tel: +372 667 2400
Fax: +372 667 2401
Email: [email protected]
Web: www.konkurentsiamet.ee

Contacts

Märt Ots
Director General
Email: [email protected]

Kristel Rõõmusaar
Head of the Competition Division, Deputy Director General
Email: [email protected]

Juhan Põldroos
Head of the Supervisory Department
Email: [email protected]

Külliki Lugenberg
Head of the Merger Control Department
Email: [email protected]

Maarja Uulits
Head of External and Public Relations
Email: [email protected]

Questions and answers

How long is the head of agency’s term of office?

As per the Civil Service Act, the director general of the Estonian Competition Authority (ECA) is chosen by way of public competition performed by the Civil Service Committee for the Selection of Top Managers. Based on the results, the director general of the ECA will be appointed and dismissed from office by the minister of justice on the proposal of the secretary general. The director general is appointed for term of five years.

Which posts within the organisation are political appointments?

None.

What is the agency’s annual budget?

Approximately €1.99 million.

How many staff are employed by the agency?

The number of employees and officials is currently 45.

To whom does the head of the agency report?

As per its statutes, the ECA is a governmental agency that operates within the area of government of the Ministry of Justice, has a directing function and exercises state supervision and applies enforcement powers of the state on the bases and to the extent prescribed by law. The ECA is accountable to the Minister of Justice who will direct, coordinate and supervise the ECA’s activities.

Do any industry-specific regulators have competition powers?

No. The ECA carries out supervision tasks in the fields of competition, regulations of energy, water, postal communications and railways. The ECA also resolves disputes concerning airport fees and processes airport users’ complaints against the activities of the airport manager.

If so, how do these relate to your role?

Not applicable.

Do politicians have any right to overrule or disregard the decisions of the authority?

No.

Does the law allow non-competition aims to be considered when taking decisions?

The law does not contain specific instructions regarding consideration of non-competition aims by the ECA.

According to its practice, the ECA has considered aims concerning the environmental and health protection.

Which body hears appeals against the agency’s decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this?

The complaints regarding the administrative acts (decisions, precepts) of the ECA can be filed to the Tallinn Administrative Court, which is the first instance for the administrative cases. The appeal of the court decision goes to Tallinn Circuit Court. The third instance is the Supreme Court, which is the highest court in Estonia and reviews court judgments by way of cassation proceedings.

County courts (for example, Harju County Court, Viru County Court, Tartu County Court and Pärnu County Court) hear appeals against decisions of the ECA made in misdemeanour proceedings. The appeal against the decision of county court can be filed directly to the Supreme Court.

Has the authority ever blocked a proposed merger?

Yes, on four occasions:

  • the merger between Terve Pere Apteek OÜ and OÜ Saku Apteek, concerning wholesale and retail of pharmaceuticals, blocked by the decision of 8 May 2008 No. 3.1-8/08-020KO;
  • the merger between AS Eesti Post and AS Express Post, concerning postal services, blocked by the decision of 16 September 2011 No. 5.1-5/11-021; and
  • the merger between OÜ R-S Valdus and part of Aktsiaselts Väätsa Prügila, concerning the waste management sector, blocked by the decision of 21 September 2018 No. 5-5/2018-058.
  • The merger between Estravel Holding OÜ and Aktsiaselts Wris, concerning the travel services market, blocked by the decision of 15.08.2019 No. 5-5/2019-043.

Has the authority ever imposed conditions on a proposed merger?

The Competition Authority cannot impose conditions, but the parties can take obligations. There have been several cases where the merging parties have taken upon themselves to perform the obligations they had assumed.

Permission to concentrate with obligations was granted in 2003 to three mergers, in 2004 to one merger and in 2005 to one merger. In 2005, the ECA gave approval to Elion Ettevõtted AS, a wholly owned subsidiary of AS Eesti Telekom, to purchase MicroLink AS, the leading Baltic IT services company. MicroLink Eesti AS will continue independently in the Elion Group. According to the decision of the ECA, MicroLink had to sell its fibre-optic network based on Ethernet technology and contracts, as well as knowledge related to this network. The cases with conditions were in 2011 and 2012, both concerning the markets for the production and distribution of thermal energy. The last cases with imposed conditions were in 2017, 2018 and 2019 concerning the market for the retail sale of motor fuel.

Has the authority ever pursued a company based outside your jurisdiction for a cartel offence?

No.

Do you operate a leniency programme? Whom should potential applicants contact?

At the beginning of 2010, parliament adopted the amendments of the Competition Act, the Penal Code and the Criminal Procedure Code. The amendments introduce a specific leniency programme into the Estonian legal system. The principles for leniency are based on the ECN Leniency Programme that has been taken into consideration, while considering specific circumstances of the national system. Because of the criminal enforcement system, leniency-related tasks and activities have been divided between the Public Prosecutor’s Office and the ECA. The leniency application shall be submitted to the ECA. The Public Prosecutor’s Office shall terminate the criminal proceedings if the applicant and the application is in conformance with the conditions for leniency. The relevant person to contact is:

Juhan Põldroos
Email: [email protected]
Tel: +372 667 2450

Is there a criminal enforcement track? If so, who is responsible for it?

The person who coordinates authority’s activities regarding criminal investigations is:

Juhan Põldroos
Email: [email protected]
Tel: +372 667 2450

Are there any plans to reform the competition law?

Yes, there are plans to reform the competition law due to the transposition of the ECN+ Directive.

When did the last review of the law occur?

The most recent amendments entered into force on 5 June 2017. Mainly these were additions and improvements about the adoption of the European Parliament and the Council Directive 2014/104/EU. Amendments that were made in the Competition Act facilitates claims for compensation for damage when there has been a harmful cooperation between undertakings and abuse of a dominant position.

It is also important to mention that, with the most last amendment, the ECA has the right to exercise administrative control over the compliance of the Competition Act. Also, it is important that the ECA can issue a precept to a local government or to other state authorities when their activities are not in accordance with the Competition Act.

With the recent amendments, there is now a regulation that regulates the transfer of the direct financial damage. Also, there were changes about the expiry of the claim and gathering evidence and the admissibility of the evidence.

Do you have a separate economics team? If so, please give details.

The ECA has no separate economics team, but there is a chief economist.


Estonia: from the enforcer's competition economists

Address: Tatari 39, 10134 Tallinn, Estonia
Email: [email protected]
Tel: +372 667 2400
Fax: +372 667 2401
Web: www.konkurentsiamet.ee

Contacts

Kristel Rõõmusaar
Head of Competition Division
Email: [email protected]

Juhan Põldroos
Head of Supervisory Department - Chief Economist
Email: [email protected]

Külliki Lugenberg
Head of Merger Control Department
Email: [email protected]

Anna Mazur
Adviser, Supervisory Department
Email: [email protected]

Svetlana Ljutova
Adviser, Merger Control Department
Email: [email protected]

Kairi Kaasik-Aaslav
Senior Analyst, Merger Control Department
Email: [email protected]

Questions and answers

How many economists do you employ?

The Competition Authority employs seven economists in the competition division.

Do you have a separate economics unit?

We do not have a separate economics unit; all of the economists are distributed between two different
departments.

Do you have a chief economist?

Yes, we have a chief economist.

To whom does the chief economist report?

The chief economist reports to the director general and to the head of Competition Division.

Does the chief economist have the power to hire his or her own staff?

No.

How many of your economists have a PhD in industrial economics?

None.

Does the agency include a specialist economist on every case team? If not, why not?

Yes, one or more economists are included in every case team.

Is the economics unit a ‘second pair of eyes’ during cases – is it one of the agency’s checks and balances? If not, why not?

Not applicable.

How much economics work is outsourced? What type of work is outsourced?

The Competition Authority does not outsource economics very often, the need for specific analyses is estimated on a case-by-case basis. The Authority has mostly outsourced economics work from the universities.

The past year has been a record high in the number of merger notifications in Estonia. However, the lawyers interviewed and the Estonian Competition Authority (ECA) note that the economic competition assessment of the investigations is often limited.

In Estonia, the implementation of the ECN+ Directive, designed to harmonise competition law enforcement within the EU, is yet to be completed. The key discrepancy is that cartels and other anticompetitive agreements have been criminal offences and abuses of dominance have been misdemeanour offences (quasi-criminal offences) in Estonia, unlike in many other jurisdictions. Hence, the implementation involves procedural difficulties in the process of stepping from criminal and misdemeanour proceedings to administrative investigations, which up to now has not enabled the imposition of fines. Once the implementation is completed, the administrative process is expected to result in an increasing number of cases due to a lower burden of proof. Economic evidence may play a larger role in administrative cases compared to criminal ones.

This article is based on interviews with the ECA and with prominent competition law practitioners from the COBALT, Ellex Raidla and Sorainen, conducted in May 2022.

Closure of cinema enabled merger despite prior concerns by the ECA

The number of merger notifications in Estonia in the second half of 2021 and the first half of 2022 exceeded the number observed in the previous years. As in other countries, the increased activity is likely related to the fact that many mergers and acquisitions were on hold during the first two years of the covid-19 pandemic. The increased number of merger notifications also led to multiple Phase II investigations in Estonia. Still, according to the interviewed lawyers and the ECA, the economic competition assessment of the investigations is often limited.

In April 2022, MM Grupp, the key owner of movie theatres in Estonia and a large film distributor for cinemas, purchased a theatre in Tallinn from Forum Cinemas. The acquisition was conducted without being reviewed, since in 2021 the target’s revenue fell below the notification threshold of €2 million. Post-merger MM Grupp has 80–100 per cent market share in film exhibition services in Tallinn according to the ECA’s assessment of the market prior to the merger. The acquisition was part of the wider merger between MM Grupp and Forum Cinemas OÜ, which the ECA was about to prohibit in early 2021 before the parties withdrew from the merger. The ECA concluded that the concentration would lead to price rises in the Tallinn and Tartu cinema market.[1] The companies’ revenues reduced as a result of covid-related restrictions during 2020 and 2021 and, additionally, the Tallinn Coca-Cola Plaza cinema was closed at the end of 2021. This allowed the merger to be completed without involvement by the competition authority since the target company’s revenues fell below the notification threshold of the ECA. In relation to this development, the ECA expressed concern that the closure of the cinema might be a deliberate action to force the acquisition beneath the notification threshold.[2] However, the ECA has not publicly opened an antitrust proceeding against the parties by August 2022 (when this article was written).

Proposed consolidation in the declining postal delivery sector

In March 2022, the state-owned postal delivery company Eesti Post notified its planned acquisition of the postal delivery company AS Express Post to the ECA. The investigation is still pending at the time of writing this article. The parties have reasoned the proposed merger based on a failing firm argument according to which an efficient continuation of deliveries in a declining market requires economies of scale, which can only be achieved through the merger.

Coincidentally, Eesti Post had recently filed a complaint of abuse of dominant position by AS Express Post regarding unequal pricing practices. The ECA had decided not to pursue an investigation reasoning that AS Express Post did not have any delivery network that could not be duplicated by a competitor, hence that AS Express Post did not have a dominant position. In March 2022, The Supreme Court came to the same conclusion when Eesti Post challenged the ECA’s decision.[3] Based on our interviews with lawyers and the ECA, the case did not involve further economic assessment.

ECN+ implementation seems to head towards administrative fines, but procedural aspects are yet to be defined

The ECN+ Directive aims for the harmonisation and efficiency improvement in the monitoring of competition across EU jurisdictions. In Estonia, the implementation has been further delayed beyond the original target of early 2021. The key discrepancy is that cartels and other anticompetitive agreements have been criminal offences and abuses of dominance have been misdemeanour offences (quasi-criminal offences) in Estonia, unlike in many other jurisdictions. This has permitted the implementation of broad investigation tools for the relevant authorities but has also entailed a high burden of proof for the misconduct.

The implementation of the Directive into Estonian law – and thereby the transition to administrative procedures – has proven complicated. The procedural complexities stem from the level of cooperation of the investigated firms and the authority’s investigation tools. The interviewed practitioners expressed concerns that there is less legal protection for the companies under the administrative process. Some of the lawyers we interviewed mentioned the misdemeanour approach as an alternative. This approach would combine parts of the criminal and administrative processes. Both the ECA and the interviewed lawyers were concerned about the procedural handling of the ongoing cases if practices change in the middle of the investigation. The interviewed lawyers expect that in the first two years after the implementation of the ECN+ there will be procedural loopholes in the investigations that can lead to procedural disputes.

The ECN+ implementation has taken a toll on ECA’s resources, and all interviewed lawyers are looking forward to getting the new legislation in place. The change will be fundamental regarding the sufficient proof of abuse of dominance and cartel cases and, hence, regarding the claim of damages from them. The ECA expects that economic evidence will play a larger role under the administrative procedure, compared to the current situation. In a criminal process, the misconduct must be proved against the individuals, rather than with regard to the impact of the antitrust act on the market. Hence the implementation of ECN+ is expected to increase the application of economic evidence in competition matters in Estonia.

While still uncertain, some of the interviewed practitioners expect that the new legislation will be approved by the parliament by the end of 2022, although some expect the process to be prolonged even further.

The ECA actively investigates potential abuse-of-dominance cases, but many are closed

The ECA has actively investigated matters concerning potential abuse of dominance and anti-competitive agreements. The ECA’s investigations have included domestic cases in the digital markets, in which the ECA notes that there are no standard proceedings. By way of an example, the ECA investigated a case of a narrow price parity clause against the delivery company Wolt Eesti OÜ. More specifically, Wolt had a clause in its contracts with restaurants according to which the price in the restaurants and on the platform had to be equal regardless of the service fee of the platform. Wolt changed its clause during the procedure, and hence the ECA terminated the procedure with no in-depth assessment into the effects.[4] Hence, new case law is not generated often, since parties frequently settle, or processes are terminated without substantive assessment of competition concerns. The ECA explained that some still unpublished abuse of dominance cases are under investigation, so it seems that the ECA continues to be active in this field of competition enforcement.

Sustainable coordination could materialise in the energy sector

The European Commission launched the draft version of the Horizontal Guidelines in March 2022.[5] The new guidelines allowed cooperation in sustainability and innovation issues in cases in which the advantages were not achievable without a horizontal agreement. The interviewed lawyers and the ECA were somewhat sceptical as to whether such agreements would materialise in Estonia in the near future, but some mentioned the energy sector as a potential candidate for such cooperation.

Rather than the Horizontal Guidelines, the interviewed lawyers and the ECA commented that the Guidelines on Vertical Restraints have had more practical implications. Some lawyers mentioned that the exemption on dual pricing of online and offline sales in some cases has been a helpful revision in the Guidelines.


Notes

[1] The ECA’s public decision of the case MM Grupp/Forum Cinemas on 19 February 2021: https://www.konkurentsiamet.ee/sites/default/files/Koondumised/24-2020_arakiri_19.02.2021_otsus_nr_5-5-2021-013.pdf.

[2] See for example news article in ERR November 2021: https://news.err.ee/1608420938/competition-authority-looking-at-tallinn-cinema-closure-anti-trust-aspects.

[3] The ECA’s announcement on Surpreme Court decision based on Eesti Post complaint March 16, 2022: https://www.konkurentsiamet.ee/en/news/supreme-court-did-not-satisfy-complaint-eesti-post-against-estonian-competition-authority.

[4] ECA’s notice regarding the Wolt investigation was published in March, 2021. Available online: https://www.konkurentsiamet.ee/sites/default/files/juhtumid/2021/teade_menetluse_lopetamisest_wolt_eesti_ou_19.03.2021_ilma_ak.pdf.

[5] European Commission’s draft Horizontal guidelines published March 2022: https://ec.europa.eu/competition-policy/public-consultations/2022-hbers_en.

View all profiles

Unlock unlimited access to all Global Competition Review content