At the end of May 2016 the Commission for the Protection of Competition fined Siemens EOOD Lev35,000 (approximately €17,900) plus attorney fees of Lev2,500 (approximately €1,280) for "abuse of stronger bargaining power".(1) This is the first case where the commission has dealt with the Institute of Stronger Bargaining Power, which was introduced in the Competition Protection Act in July 2015. Given the abstract wording of the term 'abuse of stronger bargaining position' and the lack of any methodology or instructions regarding its application, the commission's decision should be considered as initial guidance on how it will interpret the term in future.
The proceedings against Siemens were opened at the request of its competitor and commercial partner Bright Engineering OOD. Bright Engineering claimed that as a result of Siemens' unjustified refusal to supply certain reserve parts, Bright Engineering was unable to supply its own contractor EVN Bulgaria Heating EAD. Bright Engineering further claimed that the unjustified refusal resulted in damages for itself and EVN.
The commission did not accept Siemens' arguments, which were as follows:
- Under its internal structure, Siemens does not supply reserve parts in Bulgaria, subject to the dispute. The parts are supplied by another Siemens company(2) to which Bright Engineering was redirected.
- Bright Engineering could have been supplied with the reserve parts by other producers.
- Bright Engineering did not act with the due diligence of a good merchant because it did not request from Siemens whether it could supply the reserve parts before entering into a contract with EVN.
- EVN did not fall under the definition of 'customer' and, hence, the entire provision on abuse of stronger bargaining position did not apply.
The commission underlined that the assessment of stronger bargaining power must be made on a case-by-case basis, given potential competition, the number of alternative suppliers and purchasers and entry barriers, among other things. In this case, Siemens – as a representative of Siemens AG – had stronger bargaining power, since Bright Engineering was economically dependent on it in order to supply EVN. Thus, Siemens's refusal to supply was unjustified and therefore contradictory to good trade practices. Given the lack of a definition of 'customer' in the Competition Protection Act, the commission found that the definition under the Energy Act should apply (and not the definition under the Consumers Protection Act, as claimed by the defendant). Accordingly, EVN was classified as a customer.
Siemens has appealed the decision before the Supreme Administrative Court.
For further information on this topic please contact Galina Petkova at Advokatsko Druzhestvo Andreev Stoyanov & Tsekova in cooperation with Schönherr Rechtsanwälte GmbH by telephone (+359 2 933 1072) or email ([email protected]). The Advokatsko Druzhestvo Andreev Stoyanov & Tsekova website can be accessed at www.schoenherr.eu.
(1) The 'abuse of stronger bargaining power' is not explicitly defined. Instead, the commission provides that:
"Any action or omission to act of an undertaking with stronger bargaining power, which is in contradiction with the good trade practices and impairs or may impair the interests of the weaker party and the customers, shall be prohibited. Contradictory to the good trade practices shall be those actions or omissions to act which have no objective economic justification, such as unjustified refusal to deliver or purchase goods and services, imposing unjustifiably."
(2) Siemens' market share in the market of sales of the disputed reserve parts in Bulgaria is 0%.