As of April 2011, Greece has a new Competition Law (L.3959/11). It replaced Law 703/1977, which was introduced long before Greece became a member of the then European Economic Community.
Both laws are based upon the European legislation. The new law does not introduce any radical changes; it integrates past changes developed since the old Law, particularly those introduced in 2009, as these changed the operation of the Hellenic Competition Commission in many ways.
Articles 1 and 2 of L.3959/11 are generally applicable provisions prohibiting anti-competitive behaviour and abuse of dominance, accordingly. Their wording - a literal translation of the equivalent articles 101 and 102 TFEU - was originally introduced before Greece joined the EC and has remained unaffected until today. Both articles provide for an indicative list of typical (per se) violations.
Hellenic Competition Authority
Generally, the responsibility for the enforcement of the Greek Competition Law 3959/11 lies with the Hellenic Competition Commission (HCC), which is also the National Competition Authority for the application of the equivalent EU provisions (articles 101 and 102 TFEU).
However, according to the EU common framework for liberalisation in the sectors of telecoms, postal services and energy as implemented in Greece, there are separate national regulatory authorities (NRA) for these sectors, namely the Hellenic Telecommunications and Postal Services Commission and the Regulatory Authority of Energy (RAE). Together with the rest of the regulatory sector-specific powers held by these NRAs, the RAE are further responsible for enforcing L.3959/11 in the above sectors, although cooperation with or referral to the HCC is also possible.
Under L.3959/11, the Hellenic Competition Commission consists of eight members, of whom six are full-time appointees (the chairman, the vice chairman and four commissioners).
Investigations can be initiated either ex officio (eg, in cases of public interest or in which a certain anti-competitive pattern has come to the attention of the authority, etc) or upon a complaint submitted by a third party (usually competitor, supplier or customer).
The investigative powers of the General Directorate of Competition (part of the HCC) are specifically provided for in L.3959/11 and are generally in line with those of the European competition authorities. Investigation requires a written mandate from the chairman of the HCC which defines the scope and legal basis of the investigation, and also mentions the sanctions applicable in case the enterprise fails to cooperate. As the case might be, other public officers or authorities may be involved in the investigation carried out by the officers of the General Directorate of Competition, which also has to comply with constitutional restraints (eg, in cases involving investigation in the residence of the representatives of an enterprise, court authorisation is required).
Failure of an enterprise to comply with the investigation (eg, refusing to provide information, submitting misleading data or concealing documents) entails administrative and criminal sanctions.
As soon as the investigation is concluded, the General Directorate of Competition assesses the findings of the investigation and proceeds, in cooperation with one of the commissioners, to draft a recommendation (similar to a statement of objections) to the HCC. Such recommendation is notified to the parties involved, in order to express their position both orally and in writing before the HCC (right of prior hearing).
According to article 1 of L.3959/2011, all agreements between undertakings, all decisions by associations of undertakings and concerted practices that have as their object or effect the prevention, restriction or distortion of competition in the Greek territory are prohibited and, in particular, those that:
- directly or indirectly fix purchase or selling prices or any other trading conditions;
- limit or control production, markets, technical development or investment;
- share markets or sources of supply;
- apply dissimilar conditions to equivalent transactions with other trading parties, thereby impeding competition, in particular by refusing without valid justification, to sell, purchase or conclude any other transaction; or
- make the conclusion of contracts subject to acceptance by other parties of additional obligations which, by their nature or according to commercial usage, have no connection with the object of such contracts.
The prohibition captures both horizontal and vertical behaviours, the difference being that the first ones (cartels) are considered to constitute the most serious type of violation and entail heavier sanctions. As regards vertical agreements, the EU Block Exemption Regulations also apply in Greece, the resale price maintenance and the restriction of passive sales constituting the main points of concern.
Under article 1 paragraph 3 of L.3959/2011, the provisions of paragraph 1 may not apply in cases where any agreement between undertakings, decision by associations of undertakings, or concerted practice:
- contributes to improving the production or distribution of goods or to promoting technical or economic progress;
- allows consumers a fair share of the resulting benefit;
- does not impose on the undertakings concerned restrictions that are not indispensable to the attainment of these objectives; and
- does not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
The above exemption criteria are cumulative, as per the EU model. Up until the enforcement of L.3959/2011, the system of self-assessment, as introduced by EU Regulation 1/2003, was only partially adopted in Greece, given that a notification system remained mandatory (as per article 21 of L.703/77). This formality has since been abolished and exemption applies automatically once the above criteria are cumulatively fulfilled. The burden of assessment lies with the undertakings involved.
Abuse of dominance
Greek law does not contain a definition of dominance. However, as per the well-established European and Greek case law, the market share (potentially greater than 50%, depending on the allocation of the market power of the remaining players) and the ability of a firm to act independently of competitors and customers is critical. Of course, the overall market structure is always of interest (eg, other competitors, legal or actual barriers to entry, etc), so even undertakings with a smaller market share (even around 30%) can be held dominant if the degree of market-share dispersion is high.
Article 2 of L.3959/11 prohibits any abuse by one or more undertakings of a dominant position within the national market or in a part of it. Such abuse may, in particular, involve:
- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or
- making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
From the above indicative examples, it is clear that the provision does not distinguish between horizontal (exclusionary) and vertical (exploitative) practices, therefore both aspects of possible abusive practices are covered. The exact form of abuse of dominance may vary, therefore there are two points that are of particular interest for dominant undertakings: rebates and predatory pricing.
It is true that, with all the evolution of EU case law, it is hard for a dominant firm to implement a feasible discount policy that can stand effectively in the market and, at the same time, be in full compliance with competition rules. It is generally accepted that rebates connected with, for example, target sales are only exceptionally admissible once they are cost-related and justified. The rationale is common as per the EU approach (ie, preventing dominant firms from any practices that end up binding the customers and excluding potential competitors).
As for predatory pricing, proper assessment of such a conduct presupposes a careful cost analysis. As a general rule, the critical threshold is the average variable cost, since sales below such cost are deemed to be abusive. Other than that, each case needs to be examined on an ad hoc basis, in the framework of the exact competition conditions of each market.
A critical element for defending an alleged abuse of dominance is its objective justification, interrelated with a commercial rationale. Also, potentially overriding interests (more efficient service for the customer) may counterbalance prima facie abusive behaviour. Proportionality is crucial in any case for the overall assessment of a certain conduct.
It must be noted that, particularly in cases involving alleged discrimination, the prohibition of dissimilar treatment of similar situations is often misinterpreted as a ‘flat' equality of treatment. However, the details of a specific practice cannot and must not be disregarded since, for example, the different credit risk or sales volume between customers may well justify their different treatment. Comprehensive understanding of the facts of each case, combining vigorous legal analysis and economic competitive assessment, is a prerequisite for grey areas, which is mostly the rule in competition law.
Sanctions in general
According to article 25 of L.3959/11, the HCC has the power to impose fines against the violating undertakings. The fine cannot exceed 10% of the aggregate turnover of the undertaking for the previous fiscal year, depending on the gravity and the duration of the infringement. EC guidelines for the calculation of the fine are also followed by the HCC.
As per the provisions of L.3959/2011, there are three new elements regarding administrative sanctions:
- in cases with a group of companies, the aggregate group turnover is to be considered;
- in cases where the economic benefit enjoyed by the undertaking can be measured, the fine cannot be less than that (even if it exceeds the threshold of 10%); and
- individuals involved in violations of L.3595/2011 face a twofold personal liability:
- they are jointly liable together with the undertaking for the payment of the above fine (this existed also under L.703/77); and
- a separate fine ranging from €200,000 to €2 million may be imposed against them in cases in which they have been involved in preparing, organising or committing the violation.
Criminal sanctions are also threatened in cases that violate L.3959/2011 or articles 101 and 102 TFEU. According to article 44 of L.3959/11, distinction is made, depending on the type of violation:
- horizontal violation leads to imprisonment of between two and five years, and a fine ranging from €100,000 to €150,000;
- vertical violation leads to a fine ranging from €15,000 to €150,000; and
- abuse of dominance leads to a fine ranging from €30,000 to €300,000.
As per a new law (May 2016), criminal violations in case of horizontal violations (cartels) are eliminated in case of leniency or settlement (see below section), provided that the accused undertakings have paid off any fines imposed by the HCC.
Decisions issued by the HCC are, at the first stage, subject to appeal before the competent administrative court of appeal. The court examines both the legality and the substance of the decision, which may be annulled in total or in part. This includes the reduction of the fine (if any), something which is not at all unusual. On the contrary, annulment of the decision is not as frequent, and in many cases this is because of technicalities owing to the inability of the HCC to strictly adhere to administrative procedural rules.
The appeal does not suspend the payment of the fine imposed or the enforcement of other conditions or remedies imposed by the opposed decision. The court, however, may suspend enforcement, totally or in part, conditionally or unconditionally, in extreme cases such as a clearly unfounded decision or the complete inability of the undertaking or undertakings to pay the fine. A provision - strongly contested as unconstitutional - limits the authority of the court to suspend the fine by 80%.
The decision of the Appellate Court is subject to appeal (cassation) before the Supreme Administrative Court for legal reasons only (wrong application of the law assuming as correct the factual basis accepted or dictum not supported by reasoned arguments). The law also allows the suspension of the contested decision of the Appellate Court by the Supreme Administrative Court.
Article 42 of the new law provides that any violation of the law is subject to a five-year prescription, which starts on the date when the violation was committed. In cases of continuous violations or repeated violations, it starts on the date when the offence ceased.
The new provision resolves a controversial issue in cases of violation of articles 1 and 2 of L.3959/11 (equivalent to 101 and 102 TFEU). Prior to the new provision, the HCC did not accept the concept of prescription or the application of the provision of article 23 section 2a of Regulation 1/2003. On the contrary, it was argued that many generally accepted principles that are applicable in administrative law require the Administration to act in a timely manner (ie, within a reasonable time frame and not at any time). In addition, the rule of uniform application and the interpretation of European and national law cannot be disregarded to this direction.
Contrary to EU Regulation 1/2003, which clearly refers only to violation of articles 101 and 102 TFEU, the above provision, speaking for ‘any violations of the law', appears to also cover infringements of merger control Greek provisions. Such a provision on the limitation period is absent from the respective EU Regulation 139/2004, but indirectly found in Regulation 2988/74 (article 1), which remains applicable for any competition infringements other than those falling under Regulation 1/2003.
The main question is whether or not the late notification or prior implementation of a merger would be considered to be a continuous violation. It must be noted that issues of prescription have not been tackled by the HCC in merger cases.
Still, though the general rule of the administrative law should apply - which does not allow the revocation of an illegal act after the passing of a reasonable time - a period of five years is always considered as such.
Prescription can be interrupted by any act of the HCC (or the EC) within the framework of the investigation of the violation or of the procedures related with the specific violation including, but not limited to:
- written requests of the HCC or other authority for providing information or orders for audit (or dawn raids);
- assignment of the case to a rapporteur; and
- servicing of a statement of objections or of a recommendation report.
The interruption starts from the communication of the relevant act to at least one of the undertakings participating in the violation and applies to all accomplices. The deadline for the completion of a prescription is suspended during the time that the act or decision of the HCC relating to the case is pending before courts. In any case, the prescription is complete after 10 years have passed (ie, double the basic period of prescription).
The ‘commitments decision' procedure under Regulation 1/2003 and Greek competition law provides the HCC with a mechanism to dispose of competition law cases by way of a formal ‘settlement' similar to a US consent decree.
The involved undertaking may voluntarily propose that the HCC undertake certain behavioural or structural commitments to terminate the alleged infringement (either an anti-competitive agreement, decision or concerted practice, or an abuse of dominance).
The HCC can consider such commitments and render them mandatory if and when:
- they remove the HCC's initial competition concerns;
- the case is not one in which a fine would be appropriate (therefore excluding commitment decisions in hard-core cartel cases); and
- efficiency reasons justify that the Commission limits itself to making the commitments binding, and does not issue a formal prohibition decision.
It must be noted that the HCC is considered to have wide discretion in accepting commitments. Recently, the HCC rendered Decision No. 588/2014 on Commitments.
As of 2005, leniency has been introduced into Greek competition law. Recently, the HCC rendered Decision No. 526/VΙ/2011 on Leniency, following in general terms the respective EC Leniency Notice.
Leniency applies only in horizontal cartel cases and not in vertical cartel cases or abuse of dominant position cases. As per the EU approach, a distinction is made between:
- full immunity from fines, in case the undertaking is the first to submit evidence for a cartel that the HCC did not have, at the time of submission, sufficient evidence to carry out an investigation or find out the infringement; and
- reduction of fines, in case the undertaking provides the HCC with evidence of the alleged infringement, which represent a ‘significant added value' when compared to other information already possessed by the HCC.
The undertaking must also:
- cooperate fully, actively and on a continuous basis throughout the investigation procedure, and provide the HCC with all information and evidence in its possession or that might later become available to it;
- end its participation in the alleged infringement as soon as it submits the information to the HCC;
- not have encouraged other undertakings to participate in the infringement;
- treat, with full confidentiality, the fact that it has applied for leniency until the completion of the investigation and the drafting of the report by the HCC on the case; and
- not have participated in any cartel case in the past that has been detected and confirmed by a National Competition Authority or the European Commission.
Recently (May 2016), the HCC has issued a statement of objections in the so-called ‘construction cartel', focusing on alleged collusion regarding tenders for public works of infrastructure, notably road construction, rail transport, metro rail and concession projects (public-private partnerships). This is practically the first case in Greece where one of the accused parties has contributed considerably in the substantiation of the infringement by submitting a leniency application following the dawn raids conducted by the HCC. The only other precedent in Greece several years ago, regarding cartel activity in the milk sector, was unsuccessful and linked with a major scandal, involving allegations against the ex-director general and other parties for alleged blackmailing and other criminal violations.
On 18 July 2016, the HCC issued decision 628/2016 by which it formally established a settlement procedure for cartel infringements, thus further bringing its practice in line with that of the European Commission, which first introduced this procedure in 2008. Pursuant to this HCC decision, companies may express their interest, in writing, to partake in the settlement procedure, either before to the issue of a statement of objections or after, within a maximum of 35 days prior to the date set for an oral hearing (in contrast to the European Commission, which will always carry out the procedure prior to the issue of a statement of objections). Unlike the European Commission which offers a 10% reduction, the HCC offers a 15% reduction of the fine for cases which successfully complete the settlement procedure. Viewed in light of the ongoing financial crisis in Greece, which has hit businesses especially hard, it is anticipated that this settlement tool will be put to use often.
In fact, the issue of this HCC decision coincided with the issue of a statement of objections for the largest case ever dealt with by the HCC, both in terms of the number of implicated undertakings (40) and the fines threatened (over €200 million). While the settlement procedure appears to be nearing its end for those who expressed interest to settle the case, a settlement decision is yet to be issued.
Meanwhile, on 10 January 2017, the HCC issued its first settlement decision (HCC Decision No. 636/2017)1, which refers to cosmetics/selective distribution channel, following settlement request by the leading retailer in the Greek market. This case was the second one submitted to the simplified (settlement) procedure but the first one to successfully complete it.
The HCC is also capable of enforcing articles 5 to 10 of L.3959/11, which deal with merger control of concentrations of a national dimension. In this capacity, it has the decisive power to verify whether there is significant impact in competition from the concentration and to allow or prohibit it, accept remedies or impose conditions. The HCC is also capable of handling mergers with a community dimension that are referred to it by the European Commission as per the provisions of EU Regulation 139/2004.
National merger control applies when a concentration exceeds the following thresholds of turnover:
- the combined aggregate worldwide turnover of all the undertakings concerned is at least €150 million; and
- the aggregate turnover of each of at least two of the undertakings concerned in the Greek market exceeds €15 million.
The above thresholds apply to all market sectors, except for that of the mass media, where special legislation (L.3592/2007) defines the respective thresholds as follows:
- the combined aggregate worldwide turnover of all the undertakings concerned is at least €50 million; and
- the aggregate turnover of each of at least two of the undertakings concerned in the Greek market exceeds €5 million.
If falling under Greek merger control rules, the undertakings are prohibited from materialising the concentration prior to the clearance by the HCC or contrary to the prohibition decided by the HCC. Otherwise the undertakings concerned are subject to serious sanctions (ie, a penalty and the possible invalidation of the concentration). A penalty is also the result of a late notification, even if the parties have not yet implemented the concentration or if the concentration was finally approved.
While EU Regulation No. 139/2004 does not set any notification deadline and it is in the parties' interest to move quickly in order to get clearance and implement the merger, notification in Greece must be made within 30 days from:
- the entry into an agreement;
- the publication of an offer or an exchange; or
- the undertaking of the obligation to acquire participation that secures the control of another undertaking.
Prior to the implementation of the new law, the deadline was only 10 working days, during which time it was difficult to notify properly.
Greek law, following the EU significant impediment to effective competition (SIEC) test, provides that a concentration is prohibited if it may lead to a significant impediment of competition in the whole or a substantial part of the Greek market, especially by creating or strengthening a dominant position.
Therefore, market share is examined, but it is not the only decisive criterion. In the framework of the test adopted, the law itself specifies the basic criteria to be considered, such as the structure of the relevant markets, actual or potential competition, barriers to entry, market position of the participating undertakings, available sources of supply and demand, consumers' interest and efficiencies.
The above test applies in all market sectors, except for that of the mass media where special law L.3592/2007 provides for a dominance test. For the purposes of this law, ‘dominance' is translated into a market share from 25 to 35%, depending on the case.
The content of the notification is defined by a decision of the HCC. The HCC has issued a new draft notification form (Decision No. 558/VΙI/2013), together with a separate form for submitting remedies (Decision No. 524/VI/2011). The format of these templates generally follow the guidelines of the European Commission and the purpose is to make clear to the notifying parties the minimum information they have to substantiate as part of the notification. The notification form must be submitted in Greek, together with all supporting documents and the receipt of the filing fee, which currently amounts to €1,100. A summary of the notification must also be published in a daily financial newspaper, as well as in the website of the HCC, so that any third party (eg, competitor, supplier, customer, customer's association) may take knowledge of the transaction and express its comments to the HCC.
Without filling in and submitting the notification form properly the notification is not complete, and neither are the deadlines for submission met nor the deadlines for the HCC to issue its decision. Depending on the extent of omission, it may be considered as a failure to notify.
Within a month of receiving a notification, the president of the HCC must issue an Act to certify that the concentration concerned does not fall within the scope of the law. If the concentration falls within the scope of the law, the concentration may be examined in one or two phases, in line with the practice defined by EU Regulation 139/2004.
If the HCC finds that the concentration notified does not raise serious doubts as to its compatibility with the competition requirements of the relevant national markets, the HCC issues a decision approving the concentration within a month from the date of notification (ie, within the same period granted for the verification that the concentration is within or outside of the scope of the law).
If the HCC finds that the concentration raises serious doubts, its president will issue a decision initiating Phase II proceedings, which is notified to the interested parties. This decision must be issued within a month of receiving the notification. Following the decision, the case must be introduced within 45 days to the HCC, which has to decide within 90 days whether to approve or prohibit the concentration. If the HCC fails to issue a decision within this 90-day period, the concentration is deemed to be approved. Both the 45 and 90-day deadlines start from the initiation of the Phase II examination, instead of the notification date under the previous law.
The first month from when the notification is received is the most critical within this period and the concentration may be declared as not falling within the scope of the law and, if it does, will be decided if it is allowed because it does not raise serious doubts that it will significantly impede competition or whether Phase II will follow (ie, whether a full investigation has to follow). The total maximum period, provided that the notification is full and no remedies have been submitted, is a month plus 90 days.
During the Phase II investigation, and within a period of 20 days from when the parties receive the recommendation and the case is introduced before the HCC, the parties may jointly proceed to modifications in concentration or propose remedies to remove the serious doubts as to its compatibility with the competition in the relevant market. The HCC may, in exceptional cases, accept a proposal of remedies after the expiration of the above deadline. In this case, the Phase II deadline of 90 days may be extended by 15 days to 105 days in total.
The HCC may approve the notified concentration, attaching to its decision conditions and provisions to ensure compliance of the participating undertakings with the commitments undertaken by them with a view to rendering the concentration compatible with the provisions of the law requiring that the concentration must not raise serious doubts on its significant impact to competition in national market or, in case of a joint venture, the latter operates as an autonomous unit.
The decision may threaten fines against the participating undertakings in case they fail to comply with the conditions and provisions in the framework of remedies.
Depending on the kind of violation, the HCC may impose fines of:
- at least €30,000 and up to 10% of the aggregate turnover in cases of violation of the obligation of the undertaking to notify in time a concentration subject to prior notification, regardless of whether failure was unintentional but was owing to light negligence;
- the same as above, but for the implementation of the concentration before the approval is granted;
- up to 10% of the aggregate turnover of all participating undertakings that do not comply with undertaken remedies; or
- up to 10% of the aggregate turnover of all participating undertakings for failure to comply with the conditions of the HCC's decision in the framework of the approved concentration.
In addition, the law provides for criminal sanctions that are cumulative to the fines imposed by the HCC. Article 44 section 1 provides for a fine ranging from €15,000 to €150,000 to be imposed by the criminal court on anyone who violates the provisions on merger control or does not comply with the relevant decisions of the HCC. The criminal nature of the offence is eliminated for the culprits or the accomplices who notify the HCC, the prosecutor or any other competent authority of the violation, also submitting any evidence pertaining to it.