Enforcement proceedings in dominance in Bulgaria

Enforcement proceedings

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

The CPC has the authority to conduct investigations where reasonable grounds indicating possible abuse of a dominant position exist. The CPC is the sole Bulgarian authority responsible for enforcing competition laws across all sectors. As mentioned in question 4, the CRC has certain powers with regard to ex ante regulation in the electronic communications markets. Although the CRC exercises ex ante control on competition in the e-communication sector, this does not preclude the CPC from enforcing its competences into these markets ex post if breach exists irrespective of the ex ante regulatory control.

The CPC has a wide range of investigative powers. During an investigation the CPC case handlers are authorised to request information and evidence from the defendant, any third party, state authority or other competition authorities of the EU and member states that might have information relevant to the investigation. Requested parties should cooperate and provide all data in their possession, even if the information contains trade secrets. The CPC is obliged to protect any confidential information and not to disclose it to other parties. The CPC may fine any person who, without reasonable grounds, fails to comply with a formal information request.

The case handlers can take oral or written statements from representatives of undertakings and other persons, as well as conducting inspections of premises of undertakings.

For carrying out a dawn raid at the premises of the investigated undertaking, the CPC shall obtain an explicit authorisation from the Administrative Court in Sofia, based on which, it may enter all business premises used by the investigated undertakings (offices, motor vehicles, etc). However, under Bulgarian law, private premises and vehicles cannot be inspected by the CPC.

The CPC case handlers and other persons (such as IT experts) engaged by the CPC are authorised to:

• enter and search premises. During the unannounced inspections, the CPC case handlers are usually assisted by the police in entering the premises;
• take possession of relevant documents (in copy or original documents), or take necessary steps to preserve or prevent interference with such documents;
• require any person to provide explanations to documents or information, to the best of their knowledge;
• require relevant information that is stored electronically and is accessible from the secured premises to be produced in a form that is legible and to be taken by the CPC for further analysis; and
• access servers accessible by computers and other means, located in the premises and take forensic images of any digitally stored information.

Unlike the EC, the CPC may seize all information and evidence - not only evidence relating to the investigation in question, but all other documents or evidence that raise a well-founded suspicion of other infringement under Bulgarian or EU competition laws.

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

Under the LPC, for abuse of a dominant position the CPC can impose administrative (pecuniary) sanctions at an amount up to 10 per cent of the total turnover of that undertaking in the preceding financial year. The exact amount of sanctions is determined by the gravity and duration of the infringement, as well as the circumstances mitigating or aggravating the liability of the undertaking. The CPC has issued a Methodology on setting fines where detailed guidance is provided on calculation of fines for a particular type of infringement.

The CPC can also impose administrative sanctions to individuals who have assisted the commitment of infringements at the amount of up to €25,000.

The highest fine imposed by the CPC for abusive behaviour of a dominant undertaking was approximately €14 million - to Bulgargas (see question 22).

The CPC is also entitled to impose appropriate structural or behavioural measures to restore competition. In practice, after receiving a statement of objections, dominant undertakings may offer the CPC commitments to remedy the established anticompetitive behaviour. Recent examples are the commitment approved by the CPC where the dominant electricity end supplier proposed to enter into a power-purchase agreement with its competitor, thus remedying its unjustified refusal to enter into contractual relations.

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The CPC has the authority to conduct investigations and impose sanctions directly to undertakings that have abused their dominant position without additional sanction by a court. However, the CPC decisions are subject to appeal before the SAC (and from 1 January, 2019 - before the Administrative Court - Sofia District), which can confirm or reduce the amount of sanctions imposed by the CPC.

What is the recent enforcement record in your jurisdiction?

The CPC has developed extensive practice in dominance cases. Between 12 and 20 dominance cases are investigated each year. Based on currently available public data, in 2018, the CPC found abuse of a dominant position and imposed pecuniary sanctions in three cases.

The most frequent forms of abusive behaviour investigated by the CPC concern unjustified refusal to supply and imposition of excessive prices and other unfair trading conditions. The most common infringements sanctioned by the CPC are cases where unfair trading conditions were found to be imposed: applying dissimilar conditions to equivalent transactions and refusal to supply. In recent years, after being served with a statement of objections by the CPC, most of the companies accused of abusive behaviour submitted proposals for remedies.

Under Bulgarian law, there is no deadline for completion of investigation in antitrust cases. The investigation by the competition authority may take at least six months, depending on the complexity of the case. The appeal proceedings last about two years in each instance.

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

Unlike cartels, there is no express provision in the LPC regarding the impact of an inconsistent clause in a contract involving a dominant company and the consequence with respect to the validity of the contract. In such cases, general provisions of the Bulgarian Contracts and Obligations Act shall apply - agreements that contradict or circumvent the law are null and void. However, if a particular clause is null and void but could be replaced by imperative provisions of law, the entire agreement shall not be affected.

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

Under Bulgarian law the concept of private enforcement is not yet well developed.

Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

On 7 January 2018, an amendment and supplementation (the Private Damages Amendment) of the LPA entered into force, implementing into Bulgarian law the provisions of the Private Damages Directive. The Private Damages Amendment is expected to facilitate efforts by victims of anti-trust infringements to claim compensation. Under the LPC, any direct or indirect purchaser (a natural person or a legal entity) may claim full compensation for damages caused by an infringement of the respective provisions of the European and Bulgarian competition law before the competent civil courts. The liability for antitrust infringements is limited to direct damages, where the compensation shall cover actual loss, loss of profit and payment of interest from the time the harm has occurred until the payment of the compensation.

Where there is an EC decision or a CPC decision establishing an infringement of the LPC that has not been appealed or has been upheld on appeal, the latter would be binding on the civil courts as regards the established infringement. In such cases, the claimant should prove in the court proceedings the actual damage, causation link between the damages and the particular anticompetitive behaviour, and the amount of damages. Decisions rendered by competition authorities in other EU member states will have evidential value in relation to proving an infringement, which, however, could be rebutted by the defendants.

If the claimant brings an action for damages directly before the civil courts, he or she should be able to prove that a dominant undertaking has infringed the LPC, prove actual damages, a causation link between the tort and damages suffered, and the amount of damages. Unlike for cartels, the LPC does not provide rebuttable presumption that abuses of dominant position always causes damages. The Private Damages Amendment increases the role of the judge in the determination of the amount of damages. In addition, for assessment of the damages caused, judges are authorised to seek the assistance of the CPC for the amount of the damages.

Pursuant to Bulgarian law, claims for damages should be brought before the competent civil courts.

To what court may authority decisions finding an abuse be appealed?

Until 2019, CPC decisions were subject to first instance appeal before the SAC and cassation (final instance) before an extended, five-judge panel of the SAC.

As of 1 January 2019, the competent court to hear appeals against CPC decisions at first instance changed to the Administrative Court - Sofia District. The Administrative Court - Sofia District, acting as a first instance, is entitled to review all the facts and law.

Appeal against a CPC decision should be filed within 14 days of receiving notification of the CPC decision. Any interested third party is also entitled to appeal the decision within 14 days of its publication on the CPC website. The appeal should be submitted through the CPC. The entire CPC file is provided to the court of appeal. The evidence and information marked as confidential are kept in separate files to which only the judges have access. The appellant, the CPC and the interested parties may submit written statements on the appeal and are summoned to take part in oral hearings before the court. The court may appoint external experts on specific technical or financial issues. Usually, the appeal before the SAC used to take up to two years. One of the objectives of the reform and transferring appeal at first instance from SAC to the Administrative Court - Sofia District is to improve timing and reduce the administrative burden.

Following the amendments as of 1 January 2019, the Administrative Court - Sofia District judgment would be subject to cassation before the SAC sitting in a panel of three judges. Acting as a cassation jurisdiction, the SAC is limited in its review of the considerations raised by the claimant. The SAC’s three-strong panel judgment is final and binding. The cassation usually takes two years.