In Slovenia, competition rules are mainly contained in the Prevention of the Restriction of Competition Act (the Competition Act), which entered into force on 26 April 2008. The Competition Act applies to anticompetitive agreements, decisions and concerted practices, unilateral conduct constituting abuse of a dominant position as well as mergers and other types of concentrations.
The Slovenian Competition Protection Agency (CPA) is a relatively new authority with the powers of enforcing competition rules. It was established in 2013 by reorganisation of the former Slovenian Competition Protection Office which was a part of the Ministry of the Economy. The CPA is now organised as an independent administrative authority which is responsible for the enforcement of antitrust and merger control rules in Slovenia. If an anticompetitive practice also affects trade between EU member states, the CPA will apply articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
In May 2014 the provisions of the Competition Act were subject to amendments, which determined that involuntary inspections by the CPA are only permitted on the basis of a court order and in the presence of two adult witnesses. These changes to the legislation were the result of the Constitutional Court's decision of 11 April 2013, which found that the provisions of the Competition Act allowing the CPA to conduct an unexpected inspection only on the basis of the order of the Director of the CPA are in breach of article 37 of the Constitution of the Republic of Slovenia on communication privacy.
The leniency programme started functioning on 1 January 2010 when the Government Decree on the procedure for granting immunity from fines and reduction of fines in cartel cases (the Leniency Decree) came into force. The Slovenian leniency programme is largely based on the European Competition Network Model Leniency Programme and applies to undertakings as well as natural persons (responsible persons of undertakings) involved in cartel cases.
Just recently, in May 2017, a number of significant changes were made to the Competition Act with the implementation of the Directive 2014/104/EU of the European Parliament, and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the member states and of the European Union. As a result of the transposition of the directive into national law, the Competition Act now also includes provisions governing, most notably, the uniform right to full compensation for natural or legal persons who have suffered harm caused by an infringement of competition law; evaluation of damages; disclosure of evidence; implication of final infringement decisions of the CPA; specific rules on joint and several liability, limitation periods, ‘passing-on' defence and indirect purchasers; the effect of consensual settlements on subsequent actions for damages; cooperation between courts, European Commission and the CPA, etc.
The CPA is empowered not only to establish the infringement of the competition rules, but also to impose fines. In line with the existing Slovenian regulations the CPA conducts two types of procedures: an administrative procedure in which infringements of the Competition Act and articles 101 or 102 TFEU are assessed and brought to an end and a minor offence procedure where fines are levied. For the minor offences procedure the provisions of the Minor Offences Act also apply.
Antitrust rules apply to ‘undertakings'. The concept of undertaking covers any entity that is engaged in economic activities, regardless of its legal and organisational form and ownership status. An ‘economic activity' means any activity that is performed on the market for payment. Accordingly, state-owned enterprises, public entities and other legal entities subject to public law and performing economic activities are also subject to the Competition Act. An undertaking also means an association of undertakings that is not directly engaged in an economic activity but affects or may affect the behaviour in the market of undertakings as defined above. Under Slovenian competition law the Competition Act applies to all undertakings, irrespective of the industry sector they belong to.
The statutory provision dealing with anticompetitive agreements is article 6 of the Competition Act. Slovenian competition law prohibits anticompetitive agreements, decisions and concerted practices, which have as their object or effect the prevention, restriction or distortion of competition on the territory of the Republic of Slovenia. Such agreements are null and void. Application of ‘object' and ‘effect' concepts is in line with the practice developed by the European Commission and the EU courts. Slovenian competition law covers horizontal as well as vertical restrictive agreements. Its main wording corresponds to article 101 TFEU and lists the same examples of restrictive practices as article 101 TFEU such as price fixing, fixing of production, sales quotas and market sharing.
Efficiency enhancing agreements fall outside the scope of article 6(1) of the Competition Act. Where in an individual case a restriction of competition within the meaning of article 6(1) of the Competition Act has been proven, article 6(3) can be invoked as a defence. Article 6(3) of the Competition Act provides similar four cumulative conditions as article 101(3) TFEU in order to satisfy the exemption. The burden of proof rests on the undertaking invoking the benefit of the exception rule.
In addition, according to article 7 of the Competition Act certain types of agreements of minor importance are not prohibited (the de minimis exemption). The thresholds are 10% (for horizontal agreements and mixed horizontal-vertical agreements) and 15% (for vertical agreements) of the aggregate market share, in combination with other undertakings in the group, on any of the relevant markets on the territory of the Republic of Slovenia. If competition on a relevant market is restricted by the cumulative effects of parallel or similar agreements between other undertakings, the mentioned market share thresholds are lowered to 5%. However, the article defines certain anticompetitive agreements for which the de minimis exemption does not apply even though the thresholds were not exceeded. These are ‘hard-core' practices such as price fixing, limiting of production or sales or market sharing in cases of horizontal agreements and fixing of retail prices or granting territorial protection in vertical agreement cases.
From 2015 to date, the CPA has initiated three new cases, two of them are still open. The first case (Hyundai) in the motor vehicle sector was closed in 2016. The second case (GSK, ARC, GAPS) from 2015 relates to the consumer goods for personal care segment. The CPA initiated the last case in 2016 against the Slovene Chamber of Pharmacy for alleged fixing of selling prices or other trading conditions on the retail market for medicinal products. According to publicly available information, the CPA has no other ongoing investigations except for a construction cartel case (2010), which has not yet been completely closed. In addition, there are also cases that the Administrative Court or the Supreme Court returned to the CPA for reconsideration and re-evaluation (ie, a case that concerned an agreement among 12 bus operators for allegedly sharing markets in a public tender for regular internal bus line operations and another case in the field of public tenders relating to three providers of office supplies).
In May 2015, the CPA issued a prohibition decision against three undertakings from the construction sector for an alleged bid rigging relating to a single procurement procedure. At least according to publicly disclosed information, the case is still pending before the Administrative Court. In June 2015, the CPA terminated the infringement proceedings in relation to a vertical agreement in the packaging waste management sector. In May 2016, the CPA closed the case in the motor vehicle sector against the authorised Slovenian importer and distributor for Hyundai motor vehicles and its authorised repairers by accepting the proposed commitments.
As regards courts, in 2015 the Supreme Court upheld the main part of the CPA's decision (2013) in the case against pharmaceutical wholesalers where the CPA found that four pharmaceutical wholesalers were engaged in an anticompetitive agreement or concerted practice for selling medicines for human use to public pharmacies in Slovenia, although the CPA still needs to repeat the procedure for two (of four) pharmaceutical wholesalers. Also, in 2015, the Administrative Court annulled and returned to the CPA a decision adopted in a case concerning the anticompetitive agreement between providers of office supplies. Likewise, early in 2016, the Administrative Court annulled the CPA's decision (2014) in the case of resale price maintenance in the electricity market and referred the case back to the CPA.
Abuse of dominance
The statutory provision dealing with the behaviour of dominant firms is article 9 of the Competition Act. Its main wording corresponds to article 102(1) TFEU and provides that the abuse of a dominant position in the market by one or more undertakings in the territory of the Republic of Slovenia or in a substantial part of it shall be prohibited. Article 9(4) of the Competition Act also lists the same examples of infringements as article 102(2) TFEU.
Article 9(2) of the Competition Act defines ‘a dominant position' as a position of an undertaking or several undertakings when they can, to a significant degree, act independently of competitors, clients or consumers. Such an approach follows the case law of the European courts. The same applies to the definition of a ‘relevant market' that is provided in article 3 of the Competition Act and also reflects EU competition legislation and case law. The definition is the same as the one for merger control purposes and it means a market defined by the relevant product or service market and the relevant geographic market. In determining the dominant position, the CPA takes into consideration, in particular, the market share, financial options, legal or actual entry barriers, access to suppliers or the market and existing or potential competition.
In addition, article 9(5) of the Competition Act incorporates a legal presumption and defines that an undertaking shall be deemed to have a dominant position on the market if its market share within the market of the Republic of Slovenia exceeds a threshold of 40%. Even though the market share threshold creates a legal presumption, such a presumption may be rebutted, since market share is an important, though not crucial, indicator of dominance.
Article 9 of the Competition Act also covers collective dominance, although there are no details on the assessment of the collective dominance prescribed in the Competition Act, except its presumption when the collective market share reaches the threshold of 60% on the relevant market.
Similar to the EU competition law, the abuse of a dominant position as such is not defined by the Competition Act. The Competition Act generally prohibits the abuse of a dominant position and lists four typical examples of abusive behaviour which show that the concept of abuse covers exploitative as well as exclusionary practices. The example of exploitative abuse of dominant position as set out by the Competition Act is unfair prices or trading conditions. The examples of exclusionary abuse of dominant position include, inter alia, predatory pricing, discrimination, refusal to deal and tying. The list of forms of abuse in article 9 of the Competition Act is not exhaustive. Therefore the CPA is not excluded from dealing with other types of abusive practices.
In order to apply article 9, the existence of dominant position has to be first established. However, simply having a dominant position is not illegal. Further, if abuse of a dominant position is established, it shall be prohibited, with no explicit exemptions. The Competition Act does not provide for an efficiency defence.
The CPA's case law is generally aligned with EU case law and it shows that abuse is still defined more in terms of the form of conduct rather than in relation to the effects of specific conduct in the market and on consumers. To date, article 9 has been mostly used in the regulated industries, in particular, telecommunications and energy.
As regards administrative proceedings, the CPA initiated one new proceeding in the media sector (the supply of sport TV channels) in 2015. In 2016, the CPA opened proceedings against a provider of services of inter-organisational business operations (Panteon Group) for allegedly refusing access to certain electronic data exchange systems held by providers of electronic data exchange services and their users. Finally in 2017, the CPA initiated a new case against PRO Plus for alleged abuse of its dominant position in the media sector (wholesale supply of TV channels).
Moreover, there are still a few opened cases that the Administrative Court or the Supreme Court returned to the CPA or the Administrative Court for reconsideration and re-evaluation. Two pending cases are against the Slovenian national telecommunication incumbent Telekom Slovenije: Telekom Slovenije-Dzabest and Telekom Slovenije-ISDN/ADSL. The third case is against the incumbent gas importer and supplier in the Republic of Slovenia, Geoplin.
In 2015, the CPA issued a prohibition decision in the administrative proceedings on the basis of article 9 of the Competition Act and article 102 TFEU against Telekom Slovenije. The CPA held that Telekom Slovenije abused its dominant position on the wholesale markets for broadband bitstream access and for access to physical network infrastructure by various individual conducts that jointly represent a single and continuous infringement of article 102 TFEU and its equivalent in the Competition Act. The case is still pending before the Administrative Court.
As regards the court review in 2015, the Administrative Court overruled the CPA's decision in Geoplin and referred the case back to the CPA. In addition, although the Administrative Court upheld the CPA's decision in Telekom Slovenije (ISDN/ADSL), the Supreme Court annulled the Administrative Court's decision and the case was finally referred back to the CPA again. The case concerns Telekom Slovenije customers who were forced to lease ISDN connections to purchase ADSL broadband internet access even though they did not need it and it was not technically necessary.
The CPA has powers to impose fines of up to 10% of the infringing companies' worldwide turnover in minor offence proceedings. The CPA has not adopted guidelines on the setting of fines for breaches of Slovenian antitrust law. When setting a fine, the CPA takes into account the general provisions of the Minor Offences Act and, thus, all circumstances that may reduce or increase the sanction (mitigating and aggravating circumstances). Therefore, guidance on the application of the current rules can be gathered mostly from case law of the CPA and the Slovenian courts.
The CPA can also impose on the undertaking behavioural or structural remedies. According to article 37 of the Competition Act, the CPA may impose on the undertaking the obligation to take reasonable measures to bring an infringement and its consequences to an end, in particular through the 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 that may be concluded in the course of operations between undertakings, or ensuring access to infrastructure.
In the case of a breach of articles 6 or 9 of the Competition Act or articles 101 or 102 TFEU, the CPA can impose a minor offence fine on a legal entity, entrepreneur or an individual who performs economic activity of up to 10% of the annual turnover of the undertaking in the preceding business year. A fine of between €5,000 and €30,000 can also be imposed on the responsible person of a legal entity or the responsible person of an entrepreneur. Under the Slovenian Minor Offences Act legal entities are not able to be held responsible alone for offences and the CPA needs to identify one or more individuals (offenders) who have committed the infringement and then attribute their behaviour to the legal entity they represented to impose a fine on that entity.
The Slovenian case law on imposing fines in abuse of dominance cases is still limited to a few cases, which were concluded with the force of res judicata. The CPA's case law shows that it also takes into account the nature and gravity of the infringement, the market power of the undertaking, effects on the market, the geographical scope of the infringement and the duration of the infringement.
In 2014, the CPA imposed fines in two minor offence proceedings (PRO Plus and SAZAS) amounting to fines totalling €5.1 million on the legal entities. In both proceedings, finally the CPA had to suspend the minor offence proceedings in a substantial part.
From 2015 to date, the CPA has imposed no fines, at least according to publicly disclosed information.
The concept of concentration as provided in article 10 of the Competition Act shows that a concentration is deemed to arise where a change of control on a lasting basis results from the merger of two or more previously independent undertakings or parts of undertakings; the acquisition of direct or indirect control of the whole or parts of one or more other undertakings; or the creation of a joint venture by two or more independent undertakings, performing on a lasting basis all the functions of an autonomous economic entity.
The notification thresholds are set in article 42 of the Competition Act. A concentration must be notified to the CPA if:
- the total annual turnover of the undertakings involved in a concentration, together with other undertakings in the group, on the market of the Republic of Slovenia in the preceding business year exceeded €35 million; and
- the annual turnover of the acquired undertaking, together with other undertakings in the group, on the market of the Republic of Slovenia in the preceding business year exceeded €1 million; or if in the case of the creation of a 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 exceeded €1 million.
As in previous years, most of the CPA's decisions were issued in merger control proceedings. According to publicly disclosed information, in 2016 there were five decisions of note, which were adopted in the banking sector (Gorenjska banka dd, Kranj/Hypo Alpe-Adria-Leasing), the construction sector (Kolektor Koling d.o.o./CPG), the railway freight-forwarding and postal services sector (Rail Cargo Logistics - Austria GmbH/InterEuropa-FLG d.o.o.), the telecommunications sector (Telemach d.o.o./Maxtel d.o.o. Ljubljana), the sale of natural gas and electricity sector (GEN-EL d.o.o. and GEN d.o.o./GEN-I d.o.o.) and others.
The Competition Act provides a fine of up to 10% of the annual turnover of the undertaking involved in a concentration together with other undertakings in the group in the preceding business year which can be imposed on a legal person and entrepreneur when they:
- fail to notify the CPA of a concentration or fail to notify it within the prescribed time limit;
- implement rights or obligations arising from the concentration in contravention with provisions on suspension of concentration;
- fail to implement corrective measures or obligations imposed by a decision declaring the concentration compatible with competition rules;
- act in contravention of a decision declaring a concentration incompatible with competition rules; or
- act in contravention of an enforceable decision imposing measures to restore the situation prevailing prior to the implementation of the concentration.
A fine of between €5,000 and €30,000 can also be imposed on the responsible person of a legal entity or the responsible person of an entrepreneur.