The New Prevention of Restriction of Competition Act

Author: Ema Patricija Končan

On 29 September 2022, the Slovenian National Assembly adopted the new Prevention of Restriction of Competition Act (ZPOmK-2), which transposes Directive (EU) 2019/1 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (“Directive 2019/1”). Directive 2019/1, which was adopted to unify the rules for the functioning of the competition authorities of the Member States, provide adequate guarantees for independent functioning and resources as well as the power to enforce rules and impose fines, regulates certain elements differently from the previously applicable ZPOmK-1, therefore it was necessary to consolidate the existing Slovenian legislation.

ZPOmK-2 will enter into force on 26 October 2022 and will be applicable three months after its entry into force.

The main changes compared to the current ZPOmK-1 concern the introduction of a single administrative procedure, administrative sanctioning of undertakings, investigations, the use of information from leniency statements obtained by reviewing the file, and the service and enforcement of acts in other Member states and of foreign acts in Slovenia. The most important changes are briefly summarised below:

1. Abolition of Minor Offence Procedure and Introduction of Administrative Sanctions

From a practical point of view, the most important change is undoubtedly the introduction of a unified administrative procedure for establishing infringements of competition law rules and administrative sanctioning of undertakings.

The current ZPOmK-1 requires the Agency to establish infringements of competition law rules in an administrative procedure, but fines are imposed in a minor offence procedure. The duality of procedures has long been controversial in Slovenian law and represents an additional burden for the Agency, which must conduct two separate procedures. The legislator therefore considered that, in order to ensure a more efficient implementation of the Agency’s tasks and competences and to reduce the administrative burden on undertakings, it would be reasonable to simplify the procedure for sanctioning undertakings for infringements of competition law rules and create a unified procedure. In a unified procedure, the Agency will establish the existence of competition law infringements and, if competition law infringements are established, will also impose a sanction on the undertaking.

In addition to the introduction of the above-mentioned unified administrative procedure, ZPOmK-2 introduces a new concept of administrative sanctioning into the Slovenian legal order. The possibility of introducing administrative sanctioning was already foreseen by the amendment of the Minor Offences Act (ZP-1J) in 2016, which did not regulate administrative sanctioning at all, as it only determined that the provisions of the Minor Offences Act do not apply to administrative sanctioning of legal persons pursuant to the regulations governing the protection of competition, insurance supervision, the securities market, the prevention of money laundering and the regulations implemented by the Bank of Slovenia. Administrative sanctioning is a completely new concept in the Slovenian legal order that has not been regulated in a systemic manner, therefore ZPOmK-2 had to introduce the entire legislative framework for administrative sanctioning and regulate all the fundamental material and procedural issues, while also considering the constitutional guarantees of the punitive procedure.[1]

The new provisions on administrative sanctioning of undertakings apply to infringements committed after ZPOmK-2 enters into force. However, administrative and minor offence procedures initiated but not finalised by the time ZPOmK-2 enters into force of the ZPOmK-2 will, by express provision, be concluded in accordance with the existing rules.  The law, however, does not explicitly regulate how proceedings for infringements committed before the new law comes into force should be conducted, if the proceedings will not have been initiated yet by the time the new law comes into force.

Notwithstanding the paragraph above, the provisions on administrative sanctions for undertakings in ZPOmK-2 may apply to infringements committed before ZPOmK-enters into force, provided that the offender will be treated more leniently than under the old ZPOmK-1.

2. Simplified Concentration Notification Procedure

The new ZPOmK-2 is introducing a simplified concentration notification procedure. The new procedure allows the Agency  to carry out an assessment of a notified concentration under a simplified procedure following the example of the European Commission, if the notified concentration does not give rise to competition concerns or in the case of concentrations which are normally approved without any serious doubt and where no special circumstances are present. The introduction of the simplified procedure represents the implementation of the principle of procedural economy and eliminates administrative and cost burdens for the parties to the proceedings and the Agency.

The Agency may assess a concentration in a simplified procedure if one of the following conditions is met:

• none of the undertakings concerned in the concentration, together with the other undertakings in the group, is active in the same relevant product or service market and geographic market (horizontal overlap) or in a relevant product or service market which has a vertical relationship or is a closely connected adjacent market to a relevant product or service market in which any other undertaking concerned in the concentration is active;
• the combined market share of all undertakings concerned in the concentration, together with other undertakings in the group active in the same relevant product or service market (horizontal relationships), does not exceed 15 % under all plausible market definitions;
• the individual or combined market share of the undertakings concerned in the concentration, together with other undertakings in the group active in the product or service market which is vertically related to the market in which any other undertaking concerned in the concentration operates (vertical relationships), does not exceed 25 % in any of the vertically related markets under all plausible market definitions;
• the undertaking concerned in the concentration, together with other undertakings in the group, obtains sole control over an undertaking over which it already exercises joint control.

Notwithstanding the above, the Agency shall not assess the concentration under the simplified procedure when certain special circumstances are present, e.g. relevant markets or market shares are difficult to define; at least two undertakings concerned in the concentration are active, together with other undertakings in the group, in closely connected adjacent markets.

3. Use of Information from Leniency Statements

ZPOmK-2 also regulates the use of data from leniency statements in more detail. The new ZPOmK-2 allows access to a leniency statement only to the parties to the proceedings for the purpose of exercising their rights of defence. However, in proceedings before a court reviewing a decision of the Agency, a party may use information from a leniency statement or a settlement application only under specific conditions and only when necessary for the purpose of exercising their rights of defence in the proceedings. The use is only admissible for the purpose of assessing distribution of an administrative sanction for which the cartel participants are jointly and severally liable or for the purpose of assessing a decision by which the Agency has found an infringement of ZPOmK-2 or Articles 101 or 102 of the Treaty on the Functioning of the European Union.

4. New Investigatory Powers of the Agency

Investigatory powers of the Agency are also supplemented. The current ZPOmK-1 allows the Agency to collect information based on a request for information and to conduct an investigation in an undertaking. The new law extends the Agency’s powers to gather information even before issuing a decision to open an investigation. The Agency may now collect information based on a request for information, a specific decision to provide information, or can even invite representatives of undertakings or other natural persons who may have information relevant to the subject or the purpose of the supervision to provide oral explanations of facts and documents relating to the subject to the supervision.

As regards the existing powers of investigation, the conditions for issuing a court order for the search of premises and documents, including electronic devices, have been unified and the possibility for the Agency to lodge an appeal if a judge disagrees with its proposal to initiate an investigation has been introduced.

5. International Cooperation Between Competition Authorities

ZPOmK-2 transposes the main solutions of Directive 2019/1 relating to international cooperation on service and enforcement of documents of competition authorities into Slovenian law. Service of preliminary findings of an alleged infringement and other procedural acts on an undertaking which has its seat or assets in another Member State is procured through the foreign competition authority or another competent public authority which is competent to enforce acts based on the national rules in the other Member State. Enforcement of a final decision imposing an administrative sanction or a periodic administrative sanction on an undertaking which does not have sufficient resources in the Republic of Slovenia to pay the administrative sanction imposed shall be carried out similarly. For this purpose, the Agency may request assistance of the competition authority of another Member State or of another public authority responsible for the enforcement of acts under national law in another Member State.

The Act also regulates the content of the above-mentioned requests, whereby no recognition, amendment or replacement procedure is required for service or enforcement.

[1] In its decision No. U-I-40/12-31 of 11 April 2013, the Constitutional Court has already stated that the powers conferred on the Agency in the supervisory proceedings must be assessed as powers conferred on a state authority to carry out punitive proceedings. Accordingly, the administrative sanctioning procedure should probably also be considered as a punitive procedure.