As of 1 January 2015, in the field of competition law violations, prison sentences and fines of up to 16 million euro for legal persons can be imposed only for anti-competitive agreements.
Competition offences in Estonia are classified as crimes or misdemeanours. The current Penal Code includes four different competition law violations that qualify as crimes. In an ongoing penal law revision, the Estonian Parliament adopted amendments on 19 June 2014 to decriminalise all but one of these, namely anti-competitive agreements. As of 1 January 2015, all other offences will be treated as misdemeanours for which the maximum fine is significantly smaller and imprisonment is not possible.
In addition to the amendments already adopted, there is an ongoing debate on a potential new penal law approach to anti-competitive agreements and related procedural rules. The parliament has ordered the Ministry of Justice to propose a solution for more efficient competition offence proceedings by 30 September. If you are interested in sending proposals on this issue to the Ministry of Justice, this should be done before the end of the summer so as to enable the Ministry to take your comments into account in the forthcoming analysis.
1. As of 2015, abuse of a dominant position, failure to notify a concentration and violation of obligations of undertakings in control of essential facilities will be punishable only as misdemeanours
Under the existing Penal Code, the following competition-related offences are punishable as crimes:
- abuse of a dominant position, if a punishment for a misdemeanour has previously been imposed on the offender for the same act or if the offence relates to price regulation for water, heating, electricity or gas undertakings;
- implementing a concentration without permission to concentrate or violating a prohibition on concentration or the terms of permission to concentrate, if a punishment for a misdemeanour has been imposed on the offender for the same act;
- violation of legal obligations for undertakings in control of essential facilities, if a punishment for a misdemeanour has been imposed on the offender for the same act. An undertaking is deemed to be in control of an essential facility if it operates a network or infrastructure which is impossible or economically unfeasible for other persons to duplicate, but without access to which it is impossible to operate in the particular market.
The Penal Code revision abolishes the concept by which a person who has previously been punished for a misdemeanour can be punished for a criminal offence if they commit the same violation again. Due to this general change, the above three competition law violations will no longer be punishable as criminal offences and will only remain punishable as misdemeanours under the Competition Act. The special provision which prescribed criminal liability for offences related to price regulation for water, heating, electricity or gas undertakings regardless of previous misdemeanours will also be deleted.
Unlike for criminal offences, misdemeanour proceedings do not entail collection of evidence by way of surveillance activities or application of harsh preventive measures (e.g. house arrest). Further, the limitation period for misdemeanours is three years, instead of five years for crimes, and punishments are less severe.
2. Fines for competition-related misdemeanours to increase in 2015
The fine ceiling for competition-related misdemeanours will increase significantly from 1 January 2015. At present, the maximum fine for legal persons for competition-related misdemeanours is EUR 32,000. Under the new amendments, this limit will increase more than ten times – to EUR 400,000. Although the amount remains well below the current maximum fine of EUR 16 million for repeated competition offences, fines for first-time offenders will increase significantly.
The maximum fine for natural persons for competition-related misdemeanours will remain unchanged. The limit is 300 fine units, which is currently EUR 1,200.
3. Ongoing debate regarding potential new penal law approach to anti-competitive agreements
The amended Penal Code applicable from 1 January 2015 will still include a section by which all anti-competitive agreements, between either competitors or non-competitors, are punishable as criminal offences. Unlike other competition-related offences, anti-competitive agreements qualify as crimes regardless of whether the person has been previously punished for the same act.
During revision of the Penal Code, several market participants proposed that anti-competitive agreements should also be treated as misdemeanours. This proposal was supported by the Estonian Chamber of Commerce and Industry and the Estonian Employers’ Confederation. The Ministry of Justice and the Competition Authority were against the change. Other proposals included creation of a new type of proceedings for anti-competitive agreements similar to state supervision proceedings, as applied in some other countries. Due to conflicting opinions, these issues were excluded from the amendment package entering into force on 1 January 2015. However, they remain on the table as the Legal Affairs Committee of the parliament ordered the Ministry of Justice to propose a solution for more efficient competition offence proceedings by 30 September.