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What is the legal framework in your jurisdiction covering the behaviour of dominant firms?
The relevant legislation covering the behaviour of dominant undertakings in Bulgaria is the Law on Protection of Competition (LPC). Provisions of the LPC prohibiting abuse of dominant position mirror article 102 of the Treaty on the Functioning of the EU, excluding the requirement for effect on the trade between member states. An English version of the LPC (reflecting amendments in the LPC up to 2015) is available on the website of the Bulgarian Competition Authority - Commission on the Protection of Competition (CPC) - www.cpc.bg/General/Legislation.aspx.
Definition of dominance
How is dominance defined in the legislation and case law? What elements are taken into account when assessing dominance?
The Bulgarian LPC defines dominance as a position on the market of an undertaking that, in view of its market share, financial resources, market access possibilities, level of technology and economic relations with other undertakings, is able to act independently from its competitors, suppliers and purchasers.
In assessing dominant position, the CPC takes into account factors such as the market share of the undertaking under the investigation and of other market participants; market conditions and market structure; barriers to entry in the market; and consumers’ preferences.
Bulgarian law also addresses a monopolistic position of an undertaking as an exclusive right to carry out a certain economic activity granted by law in cases explicitly provided for in the Bulgarian Constitution.
Purpose of legislation
Is the purpose of the legislation and the underlying dominance standard strictly economic, or does it protect other interests?
Bulgarian competition legislation aims to ensure protection of and conditions for free enterprise. The law regulates protection against the abuse of monopolistic and dominant market position that may result in prevention, restriction or distortion of competition and may affect consumers’ interests. In its constant practice the Commission confirms that the LPC protects the competition on the market but not individual interests of particular undertaking. In dominance cases, the CPC in recent years has increased its focus on consumers’ welfare.
Sector-specific dominance rules
Are there sector-specific dominance rules, distinct from the generally applicable dominance provisions?
The competition law applies to all sectors of economy, including regulated sectors, such as telecommunications, postal services, energy and transport.
At the same time, in conformity with the 2009 EU electronic communications regulatory framework, the Bulgarian Commission on Regulation of Communications (CRC) must ensure that telecoms markets are competitive. It has independent authority to review and define markets subject to ex ante regulation. The CRC defines the relevant markets and determines market players with significant market power (SMP). The CRC may impose specific obligations on the SMP operators where it finds that, owing to the structure of the market and the SMP position of the operator, the effective competition may be prevented (ex ante regulation). Irrespective of the ex ante regulation by the CRC, the proper function of competition is subject to ex post control by the CPC.
Exemptions from the dominance rules
To whom do the dominance rules apply? Are any entities exempt?
The LPC applies to all undertakings carrying out economic activity in Bulgaria regardless of their organisational form (ie, natural or legal person or unincorporated entity) and does not provide exceptions for public or other entities. However, the conduct of a public body or non-profit based organisation may be qualified as abuse of a dominant position only where these bodies may qualify as an undertaking for the purposes of competition law (ie, the particular conduct does not solely represent exercise of their administrative functions and authority but also carries the features of commercial activity). For example, the Bulgarian National Health Insurance Fund has been under investigation several times for abuse of a dominant position, and only in one of the cases did the CPC find that it acted in the capacity of a commercial undertaking and assessed possible abuse of a dominant position. In 2017, the CPC investigated a possible abuse of a dominant position by the Commercial Register in relation to the provision to third parties of the Commercial Register’s database against remuneration. The CPC found that the investigated activity does not aim to generate profit and thus does not constitute an economic activity, but is rather part of the functions of the Commercial Register as an administrative body and therefore the competition law does not apply to those particular circumstances. In 2018, the CPC assessed the position of an ‘undertaking’ of two nationwide collective management organisations for IP and related rights (MUSICAUTOR and PROFON) where it again reconfirmed the application of functional approach to the definition of undertaking. In the particular cases, although the organisations were not allowed to generate any profit for themselves, their activities were found to be commercial in nature as they were ultimately benefiting subjects (such as artists) who genuinely pursue profit in their work.
Transition from non-dominant to dominant
Does the legislation only provide for the behaviour of firms that are already dominant?
Under Bulgarian law, prohibition of abuse of a dominant position only applies to undertakings that already enjoy dominance.
The LPC also prohibits abuse of supreme bargaining power (SBP). Abuse of SBP, however, is not a form of abuse of (pre-)dominant position (ie, part of antitrust regulations). It is regulated by the LPC in the Chapter addressing unfair trade practices. More information on the ‘abuse of supreme bargaining power’ is provided in sections 21 and 34. In several cases that companies were found by the CPC not to enjoy dominant position (because of, among other things, relevant market definition, market share, structure of the market), SPB was later considered to be present under the particular circumstances. A recent example in this regard is a case against A1 - one of the three national telecoms operators in Bulgaria, which was found abusing its superior bargaining power against a local retailer upon terminating exclusive long-term relations and fined approximately €400,000. This decision was in the context of previous CPC investigations (for alleged abuse of dominance) where the CPC found that the markets of the telecoms operators are ‘oligopolistic’ in nature, and because of their structure none of the three telecoms operators have dominant position.
Is collective dominance covered by the legislation? How is it defined in the legislation and case law?
The concept of collective dominance was reflected in Bulgarian legislation in 2008. The law prohibits any abuse of a dominant position by two or more undertakings holding a collective dominant position. The Methodology for Investigation and Definition of Market Position of Undertakings on the Relevant Market (the Methodology) adopted by the CPC, defines ‘collective dominance’ as a position of two or more legally independent undertakings that are linked in such a way that they adopt and apply a common market policy. In a few cases the CPC dealt with the concept of collective dominance and held that to find collective dominance it is sufficient to establish that the undertakings have given up their independent market behaviour and, given the structure of the market, collectively have market power that allows them to dictate the market conditions in a way that can gain an advantage over competitors (decision 623/2009).
Does the legislation apply to dominant purchasers? Are there any differences compared with the application of the law to dominant suppliers?
Bulgarian legislation applies to all undertakings holding and abusing a dominant position on the market. In most cases, the CPC analyses the behaviour of dominant suppliers. While there are no cases where the behaviour of dominant purchasers is assessed, we expect that the CPC will apply the same approach under the law as applicable to dominant suppliers.
Market definition and share-based dominance thresholds
How are relevant product and geographic markets defined? Are there market-share at which a company will be presumed to be dominant or not dominant?
In 2009, the CPC adopted a Methodology that provides guidance for defining relevant product and geographic markets. The approach of the CPC in defining the relevant product and geographic markets in dominance cases is no different from the approach used in merger control cases. The relevant product market includes all products or services regarded by the consumer as interchangeable in view of the product characteristics, price and intended use. The geographical market covers the territory on which the substitutable goods or services are offered and where the conditions of competition are homogenous and differentiate significantly from the conditions on the neighbouring markets.
Before 2008, the repealed LPC provided for a presumption for dominance where a market share of 35 per cent was present. The current LPC does not provide for a market share threshold at which an undertaking will be presumed to hold a dominant position. However, the CPC Methodology provides that if an undertaking holds a market share below 40 per cent on the relevant market it is not likely to be considered dominant. Therefore, a market share of 40 per cent could be an indication for existence of a dominant position. This threshold is often used by the CPC in dominance cases.
Abuse of dominance
Definition of abuse of dominance
How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?
Bulgarian law defines the abuse of dominance as a conduct of undertaking with monopolistic or dominant position that may prevent, restrict or distort competition and may affect consumers’ interests.
A non-exhaustive list of abusive behaviour is provided in the legislation. This includes:
- the imposition of prices or unfair trading conditions;
- limitation of the production, trade and technical development to the detriment of consumers;
- applying dissimilar conditions to equivalent transactions with certain trading parties, thereby placing them at a competitive disadvantage;
- making the conclusion of contracts conditional upon acceptance by the other parties of obligations or conclusion of additional contracts which, by their nature or according to normal commercial practice are not independently linked to the subject of the main contract or the execution thereof; and
- unjustifiable refusal to supply any goods or provide any services to an existing or potential customer, with the purpose of hindering their business.
Under Bulgarian law, abusive practices of dominant undertakings are not per se illegal. In most of its decisions the CPC follows an effect-based approach looking for actual or potential harm to competition or consumers’ interests in order to identify and sanction anticompetitive behaviour of dominant undertakings. So far in its practice, the CPC has not applied the concept of ‘by nature abusive behaviour’.
Exploitative and exclusionary practices
Does the concept of abuse cover both exploitative and exclusionary practices?
Under Bulgarian law, both exclusionary practices and exploitative conduct of dominant undertakings are abusive and prohibited. For example, in 2017 and 2018, there are several cases where, in the context of liberalisation of the Bulgarian energy market, the conduct of vertically integrated electricity companies (combining grid operation, distribution and supply) where they were imposing unfair trading conditions with the aim to gain unjustified financial benefits by delaying the registration of end-customers to the free (liberalised) market and administering a change of the end-customer supplier, if the latter was not within the vertically integrated group, was qualified by the CPC as an exploitative and discriminatory abuse. In another case, the CPC qualified as an exclusionary abuse the conduct of an undertaking (acting as a heat energy supplier and a heat consumption accounting company) where, by leveraging its dominant position on the upstream market for sale of heat energy, the undertaking adopted a strategy for restricting the access and removing from the heat consumption accounting market its competitor by unjustified termination of the established contractual relationship with the latter. In another recent 2018 case, the CPC assessed in detail whether the behaviour of a collective management organisation for IP and related rights (MUSICAUTOR) resulting in termination of supply of music works and related rights of use to the Bulgarian National Radio (BNR) owing to the latter not accepting new price tariff, should be qualified as exploitative abuse (ie, forcing BNR to accept higher tariff under threat of termination of supply) or an exclusionary one (ie, refusal to supply where the input is indispensable for the continuance operation of BNR). By the facts of the case, the CPC ultimately found that MUSICAUTOR was abusing of its dominant position in the form of exclusionary conduct (refusal to supply).
Link between dominance and abuse
What link must be shown between dominance and abuse? May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?
Bulgarian law prohibits abusive unilateral conduct of dominant undertakings or of an undertaking with monopolistic position. The case law of the Supreme Administrative Court (SAC; decision 1402/2007) held that there is a causal link between a dominant position and the abusive behaviour. The conduct would be considered abusive only where it was possible because of the market power of the dominant undertaking. In a recent decision (decision 15878/2018), the SAC upheld the decision of the CPC rejecting a refusal to supply claim by one of the largest wholesalers of medicinal products in Bulgaria against the US-based pharmaceuticals manufacturer Pfizer, on the argument that since Pfizer’s medicinal product is not in a dominant position on the relevant market as defined, no abuse can be further considered and confirmed that dominance is a constitutive element of all ‘abuse of dominance’ infringements.
According to Bulgarian law, the anticompetitive effect of the abusive behaviour of the dominant undertaking may occur in the market where such undertaking is dominant or in other markets, such as downstream or otherwise adjacent markets.
What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?
Bulgarian law does not provide explicit conditions for exclusion from liability for abusive behaviour of a dominant undertaking. In its practice, the CPC accepted certain justifications raised by dominant undertakings in their defence. For instance, objective justifications like poor creditworthiness of a customer or implementation of a new commercial strategy by dominant undertakings equally applicable to all customers are considered as objective justifications for refusal to supply. In decision 1133/2007, the CPC found that a pharmaceutical company had objective justifications of their refusal to supply their former distributors with medicines as a result of the changes in the distribution model applied by the company after the accession of Bulgaria to the EU. The company decided to supply the Bulgarian market through several large distributors and made a tender with objective selection criteria (volume of sales) equally applicable to all participants. In this case the CPC also considered that the market for supplying the medicines in question was not foreclosed, as the non-selected distributors had options to obtain the products from other distributors or by import. In a 2018 case for alleged abuse of dominance by a collective management organisation (PROFON) for IP and related rights, the defendant raised, among other things, the defence that the introduced price tariff (allegedly abusive and with significantly higher prices) was, by law, subject to prior approval by the Minister of Culture and, therefore, cannot be considered as an unilateral act by a dominant undertaking. Although this was not the decisive factor of the CPC when rejecting the complaint against PROFON, it was still credited as a strong argument in favour of the defendant.
The efficiencies defence is generally accepted by the Bulgarian competition authority. The efficiency gains are usually raised by dominant undertakings in their defence in ‘abusive pricing’ cases. However, in most cases, the CPC rejects the defence arguments based on the failure to provide sufficient evidence for efficiencies gains for consumers.
Specific forms of abuse
Types of conduct Types of conduct
Although the CPC considers rebate schemes that tend to foreclose competition to be abusive if applied by dominant undertakings, there are a limited number of cases where the loyalty rebate scheme was assessed for compatibility with Bulgarian antitrust provisions (for example, CPC decision No. 28/2000). The CPC fell short of categorising the rebates (it found elements of ‘loyalty rebates’, ‘exclusive dealing’, ‘target rebates’) and focused its analysis on the foreclosing effect of the discount scheme implemented by the dominant undertaking.
Tying and bundling
Under the LPC, neither tying nor bundling are per se prohibited. However, making the conclusion of contracts subject to obligations that have no direct pertinence to the subject of such contracts could constitute abuse of a dominant position.
In the assessment of tying and bundling as forms of abusive behaviour, the CPC follows EC and ECJ case law - in its decision 839/2010 it outlines the elements that are relevant for establishing of an infringement: dominance in the tying market; tied offering of two distinct products or services; compulsion for buying the tied product; and lack of objective justifications for the applied practice. In the said decision, the CPC assessed the market behaviour of a Bulgarian cable TV operator for alleged abuse of market position on the cable TV market by way of tying services - the service ‘cable TV’, where the operator was said to have a dominant position was bound with a ‘fixed telephony’ - where it had small market share. The CPC analysis, however, did not prove the statements of the claimant that the cable operator held a dominant position on the cable TV market and the CPC closed the case.
Bulgarian case law on tying and bundling mainly concerns telecoms and TV markets.
There is no precedent in the CPC practice, although the exclusive dealing is recognised by the CPC as a form of an abusive behaviour (CPC decision 28/2000).
The CPC has rarely applied complex analyses on various cost measures in the assessment of alleged predatory pricing, although there are few examples of such cases. In its practice so far, the CPC has not considered recoupment as a necessary element of the predatory pricing.
Back in 2014, the CPC found that Letishte Sofia EAD, a ground handling operator at Sofia Airport, was not guilty of imposing predatory prices for its services, as it did not hold a dominant position in the relevant market for ground handling services at Sofia Airport (see question 12). In December 2018, the SAC returned for a second time to the case for review by the CPC with mandatory instructions. Under current mandatory instruction by the SAC, the CPC shall accept the dominant position of Letishte Sofia EAD and review the predatory pricing claim in substance.
Price or margin squeezes
In Bulgarian case law (decision 210/2006, decision 135/2006), margin squeeze is recognised as a form of abuse of dominance where a vertically integrated undertaking is dominant in the upstream market and downstream competitors rely upon the input from the upstream market. In its decision, the CPC found that the dominant undertaking set a margin between its downstream retail price and upstream wholesale price that cannot cover downstream costs; and is significantly active on the downstream market.
Refusals to deal and denied access to essential facilities
Under Bulgarian law, unjustified refusal to supply goods or provide services by a dominant undertaking to actual or potential clients is explicitly listed as abusive behaviour. In its practice, the CPC considers as abusive the practices applied by undertakings operating essential facilities without economic justification such as refusals to supply to existing and potential clients; termination (even partially) of long-standing relationships; and delay to entering into a commercial relationship.
The concept of ‘essential facility’ has been applied by the CPC for more than 18 years. ‘Essential facility’ is defined in Bulgarian case law as a facility owned by a dominant undertaking that cannot be efficiently duplicated (such as a bus station; an incineration facility; telecommunication infrastructure of the incumbent operator; or electricity grid) and without access to which other undertakings cannot provide goods and services to their clients.
In a number of cases the competition authority and the SAC held that refusal to grant access to an essential facility constitutes an abuse of dominance. Most recently, the concept of ‘essential facility’ was applied in a 2018 case against NURTS (the owner and operating entity of the only electronic communications network for terrestrial digital radio transmission of TV programmes with national coverage), where NURTS was found to hold a dominant position as owner of infrastructure that cannot be duplicated in an economically viable scenario. In its review on the substance of the alleged abuse (namely, refusal to supply), the CPC found no indications of infringement and fully accepted the NURTS defence that it is not abusive for a dominant company to terminate relations with a counterparty that is in default of payment under the applicable contract (see also question 13).
The highest sanction so far imposed by the CPC for refused access to an essential facility (electricity grid) was in 2015, and amounted to 14 million leva.
Predatory product design or a failure to disclose new technology
There have been no precedents on predatory product design or failure to disclose new technology under Bulgarian law.
Under Bulgarian law, both price and non-price discrimination are regarded as abusive behaviour. The law prohibits a dominant undertaking to apply dissimilar conditions to equivalent transactions to trading partners, thereby placing them at a competitive disadvantage.
The CPC regularly reviews cases for price discrimination. For instance, in 2015 the CPC fined an undertaking with dominant position on the market for distribution of individual heat cost allocators for applying dissimilar pricing conditions to its customers living in one city in comparison with prices applicable to consumers in other cities where the dominant company provided similar services.
As mentioned above, in 2015, a prohibition on abuse of SBP was included in the scope of the LPC. Any action or omission of an undertaking with a SBP as regards its counterparty, which contradicts the fair commercial practices and which damages, or could damage, the interests of the weaker bargaining party and consumers, is prohibited (such as imposing unfairly harsh or discriminatory conditions and unjustifiable termination of trading relationships). Unlike with the dominant position that takes a view on the position of the undertakings on the market, the SBP is determined in the context of a particular legal relationship between undertakings and with a view on the level of dependency between those undertakings resulting from the market structure, their business activity and the existence of alternative channels of supply.
Exploitative prices or terms of supply
Pursuant to Bulgarian law, imposition of purchase or sale prices or other unfair trading conditions constitutes a form of abuse if committed by a dominant undertaking. The majority of CPC dominance cases in recent years relate to the imposition of exploitative (excessive) prices and unfair terms of trading by companies in the energy and telecom sector that operate essential facilities.
For example, in 2015, three operators of electricity distribution networks were fined for unjustifiably imposing excessive prices on access to the electricity distribution network. The CPC found that the dominant undertakings included in their prices certain expenses not related to the particular service for access to the electricity grid.
In 2014, a fine of approximately €14 million was imposed on the state-owned gas supplier Bulgargas for imposing unfair trading conditions to gas suppliers by forcing them to extend the terms of supply contracts without granting any option to renegotiate the contractual terms. (The CPC decision was overruled by the SAC.).
In 2017, a Bulgarian electricity company was found to have abused its dominant position by imposing unfair trading conditions on its customers with the aim of gaining unjustified financial benefits in the context of providing access to its electricity distribution grid (qualified by the CPC as an exploitative abuse).
In 2018, the CPC issued another landmark decision against an affiliated to Bulgargas company - Bulgartransgas (the licensed national operator of the gas transmission grid) regarding allegedly abusive terms of supply and conduct applied towards a local gas supplier connected to the grid. In particular, Bulgartransgas was accused of, among other things, not providing sufficient and timely information on available capacities and their allocation, on upcoming bids for capacity, on pricing and other terms for access to the grid. As a result, Bulgartransgas was further alleged to have caused huge unbalance in the supply and available capacities of the local company and has put it in a position not to be able to perform gas supplies to its end customers. Ultimately, this resulted in significant financial loss for the local company. The CPC found, however, that the conduct of Bulgartransgas could not qualify as a unilateral act in order to represent an abuse of its dominant position and the allegations were not substantiated. The CPC decision is currently under appeal before the SAC.
Abuse of administrative or government process
There are a very limited number of cases where the CPC investigated enforcement of intellectual property rights as a form of abusive behaviour. For example, the CPC found an infringement where a company banned the use of a figurative trademark ‘green point’ in order to exclude its competitor from the market (the CPC decision was overruled by the SAC).
There are a few cases where the registration of IP rights in breach of respective IP procedures and excessive enforcement of such rights was considered a form of unfair competition. However, in such proceedings the market position of undertakings exercising their rights is irrelevant and the abusive behaviour has been assessed in the context of unfair competition practices that constitute a separate form of infringement under Bulgarian law.
Mergers and acquisitions as exclusionary practices
In 2018, the CPC for the first time in its practice prohibited two acquisitions for concerns that they may lead to strengthening of dominant position and result in prevention, restriction or distortion of competition on the relevant or related markets. Both decisions concerned highly sensitive industries - the electricity sector where the acquisition of CEZ Group’s assets in Bulgaria (operating as one of the three electricity distribution companies in Bulgaria and also present on the markets for grid maintenance, electricity supply and electricity trade); and the media sector - for sale of one of the two largest private media companies). Both decisions are debatable and are currently being appealed before the SAC. The decisions lacked sufficient argumentation, and legal and economic analysis to indisputably ground the prohibition (according to public information, the notifying parties were not given the opportunity to suggest remedies and restructure the transaction).
In two recent cases the CPC imposed financial sanctions for abuse of dominance to companies in the electricity sector. The CPC analysed the behaviour of the electricity distribution company and the respective end suppliers and traders from the same economic groups (CEZ and EVN) in relation to the liberalisation of the Bulgarian electricity market. The CPC found that the companies engaged in the following prohibited practices:
- the respective electricity distribution company obstructed and slowed the process of issuance of the required documents by end clients for entering the liberalised market;
- the respective electricity distribution company and end supplier denied access to the client’s consumption data to independent electricity traders outside their economic groups; and
- the respective electricity distribution company and end supplier and the related electricity trader exchanged information in relation to the actual consumption of clients.
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.
Sanctions and remedies
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.
Unilateral conduct by non-dominant firms
Are there any rules applying to the unilateral conduct of non-dominant firms?
As mentioned in question 21, from 2015, abuse of an SBP has been considered an infringement under the LPC and applies to a unilateral behaviour of non-dominant undertakings. The law prohibits any action or omission of an undertaking with an SBP as regards the contractor in the course of negotiations, such as imposing unfairly harsh or discriminatory conditions, unjustifiable termination of trading relationships, and which action or omission damages or could damage the interests of the weaker bargaining party and consumers. Unlike a dominant position, the SBP is determined not as a position of the undertaking on the market, but in the context of a particular legal relationship and with a view of the level of dependency between the undertakings concerned in the market structure, the character of their business activity, and the existence of alternative channels of supply.
For abuse of an SBP the CPC may impose a pecuniary sanction at an amount of up to 10 per cent of the undertaking’s turnover generated during the last financial year from the sale of the goods or services concerned. The amount of such pecuniary sanction cannot be less than 10,000 leva and a cap of 50,000 leva is established if the infringer did not generate any turnover in the preceding financial year.
Unlike in the antitrust investigations, under SBP investigations undertakings are not provided with a statement of objections and have no options to remedy their behaviour.
Following the CPC’s first decision for abuse of SBP prohibition in 2016, where Siemens Bulgaria was found to be in SBP as regards another undertaking requesting supply of Siemens-branded spare parts required under a public procurement tender awarded to the claimant, in 2017 CPC investigated nine SBP cases and imposed a pecuniary sanction in one case. The CPC found that BTV Media Group (a Bulgarian television channel) has abused its SBP by imposing unjustifiably burdensome conditions in the contracts using its SBP in the course of the negotiations with three cable operators. As mentioned above, in 2018 the biggest SBP case was against A1 for termination of a long-term contract with a local retailer (Handy) for exclusively servicing the network of A1, which resulted in a pecuniary sanction for A1 of approximately €400,000.
Outside of dominance and abuse of SBP, the CPC is entitled to impose a pecuniary sanction of up to 10 per cent of annual turnover on a non-dominant undertaking that sells significant quantities of goods or services over an extended period of time at prices below their production and marketing cost with the intention of unfairly soliciting clients (unfair solicitation of clients is a form of unfair competition).