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What is the legal framework in your jurisdiction covering the behaviour of dominant firms?
The relevant legislation is the Slovenian Prevention of Restriction of Competition Act (the Competition Act), published in the Official Gazette of the Republic of Slovenia No. 36/2008. The Competition Act entered into force on 26 April 2008 and has undergone several amendments since. The latest amendment implementing the EU Antitrust Damages Directive entered into force in May 2017.
Article 9 of the Competition Act contains provisions prohibiting abuse of dominance that have been left unchanged since 2008. Violation of the prohibition of restricting agreements may also amount to a criminal offence, regulated by the Slovenian Criminal Code.
Definition of dominance
How is dominance defined in the legislation and case law? What elements are taken into account when assessing dominance?
Dominance is defined in article 9 of the Competition Act and the definition in principle follows the case law of the EU courts. According to the second paragraph of article 9, the undertaking or several undertakings shall be deemed to have a dominant position when they can, to a significant degree, act independently of competitors, clients or consumers.
In determining the dominant position, the Competition Protection Agency (the Agency) takes into consideration in particular the market share, funding options, legal or actual entry barriers, access to suppliers or the market, and existing or potential competition.
Purpose of legislation
Is the purpose of the legislation and the underlying dominance standard strictly economic, or does it protect other interests?
So far it has not been clarified by the case law of the Competition Protection Agency whether it is the consumer welfare or total welfare that is the object of the legislation and the Agency’s competition policy. Examples to support both answers can be found in the Agency’s decisional practice. The Supreme Court, however, has on one occasion in 2013, when reviewing a decision of the Agency concerning predatory pricing, stated that the purpose of competition law enforcement is not ‘to protect competitors’ but to prevent abusive unilateral practices of dominant undertakings.
As the Competition Act is generally in line with the EU competition law and policy, it is, therefore, to be expected that the Competition Protection Agency’s future enforcement activities will follow the trends established by the EU Commission.
Sector-specific dominance rules
Are there sector-specific dominance rules, distinct from the generally applicable dominance provisions?
The Competition Act contains no sector-specific provisions. There are, however, some sector-specific regulatory frameworks in place aiming at regulating the behaviour of undertakings active in these sectors. The application of these sector-specific regimes is monitored by special regulatory bodies (usually independent agencies) that carry out analyses of relevant markets, usually with the aim of ascertaining whether the relevant market is effectively competitive. In certain cases these regulatory bodies are authorised to impose ex ante regulatory measures. Most notable sector-specific regulation can be found in the following sectors: banking, electronic communications, energy, food, financial sector, mass media, postal services, rail transport and insurance.
Undertakings that are subject to sector-specific regimes must comply with both the abuse of dominance legislation and the regulatory obligations.
In the sector of electronic communications, the Agency for Communication Networks and Services of the Republic of Slovenia (AKOS) is entrusted with ensuring effective competition on the market by way of ex ante regulation, on the basis of the Electronic Communication Act. The regulator may impose certain regulatory obligations for undertakings with ‘significant market power’ in the relevant market. The term significant market power is defined by article 95 of the Electronic Communication Act as a position equivalent to a dominant position, allowing the undertaking to be substantially independent vis-à-vis competitors, customers and consumers.
According to the Postal Services Act, the Republic of Slovenia is obliged to ensure universal postal services under the same conditions to all of its users in its territory. The act also determines the conditions governing the provision of these liberalised services. The sector regulator AKOS has the power to impose this universal service obligation on undertakings and monitor their performance and quality. An appointed universal service provider is obliged to grant access to its postal infrastructure or universal services to other providers of interchangeable postal services.
According to the Energy Act, the Energy Agency has the power to regulate and monitor the energy market, in particular, the electrical energy and the natural gas markets, with the aim of ensuring the functioning of effective competition on the market while taking into account the need for permanent, reliable and quality supply of energy. In the context of monitoring the conditions on the market, the Energy Agency issues annual reports with a comprehensive overview of the situation on the markets for electricity, natural gas and heat.
The Media Act contains certain specific provisions defining a dominant position. However, these specific provisions are only applicable in the context of merger control where the Ministry of Culture may refuse to give consent regarding concentration of ownership of printed media, radio or television, if the concentration creates a dominant position.
In 2014, based on the provisions of the Agriculture Act, the Competition Protection Agency gained certain specific competences with respect to the food supply chain. The Agriculture Act identifies certain types of conduct that are considered illicit practices when they are carried out by undertakings in the food supply chain that hold ‘significant market power’. These practices are those that contrast with fair trade and are abusive to the other party, in particular: failure to comply with statutory payment deadlines, imposition of conditions, such as extra payments, bonuses, rebates, promotions or unfair supply conditions. The Competition Protection Agency is responsible for the supervision of the implementation of provisions on illicit practices and may impose fines. In cases where the illicit practice also constitutes an infringement of competition law, the Agency may open an antitrust investigation.
Exemptions from the dominance rules
To whom do the dominance rules apply? Are any entities exempt?
The Competition Act applies to undertakings, which are defined as entities engaged in an economic activity regardless of their legal form or ownership, and to associations of undertakings that do not directly engage in an economic activity but have or may have an impact on the conduct of undertakings. An economic activity is defined as any activity carried out on the market against payment. The Competition Act applies to all undertakings engaged in an economic activity, including public entities or other entities subject to public law.
Transition from non-dominant to dominant
Does the legislation only provide for the behaviour of firms that are already dominant?
Article 9 of the Competition Act applies only to firms that already hold a dominant position in the relevant market. Provisions on abuse of dominance do not cover conduct through which a non-dominant company attempts to become dominant.
Is collective dominance covered by the legislation? How is it defined in the legislation and case law?
Article 9 of the Competition Act covers collective dominance, however, no special criteria concerning the assessment of collective dominance is laid down by the act, except a rebuttable presumption of dominance when the collective market share reaches the threshold of 60 per cent on the relevant market.
Does the legislation apply to dominant purchasers? Are there any differences compared with the application of the law to dominant suppliers?
Article 9 of the Competition Act applies to all undertakings engaged in an economic activity, thus it may also apply to dominant purchasers. One of the examples of abuse listed in article 9 is ‘the direct or indirect determination of unfair sales or purchase prices or other unfair business conditions’, which indicates the provisions intended to also catch the conduct of dominant purchasers. In the past, the Agency has already investigated an alleged abuse of dominant position by a supermarket chain that was presumed to be a dominant purchaser of consumer goods.
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?
The definition of the term relevant market is laid down by article 3 of the Competition Act and is in line with EU competition law. The same approach to market definition is taken in abuse of dominance as well as in merger control cases. According to the definition, the relevant market is defined by the relevant product or service market and the relevant geographic market. The ‘relevant product or service market’, as a rule, comprises all products or services that are regarded as interchangeable or substitutable by the consumer or user given their characteristics, their prices or their intended use. In turn, ‘relevant geographic market’ is defined as a market that, as a rule, comprises an area in which competitors in the relevant product or service market compete in the sale or purchase of products or services, an area in which the conditions of competition are sufficiently homogeneous and that can be distinguished from neighbouring areas because the competition conditions are substantially different.
Article 9(5) of the Competition Act lays down a presumption of dominance by stating that an undertaking shall be deemed to have a dominant position on the market if its market share within the market of the Republic of Slovenia exceeds a threshold of 40 per cent. In cases of collective dominance, the relevant collective market share threshold that triggers the presumption of dominance is 60 per cent. This presumption may be rebutted by demonstrating other relevant countervailing features of the market.
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?
Article 9 of the Competition Act prohibits the abuse of dominance and lists four particular examples of abuse:
- the direct or indirect determination of unfair sales or purchase prices or other unfair business conditions;
- limiting production, markets or technical progress to the detriment of consumers;
- the use of unequal conditions for comparable transactions with other contractors if this places the contractor in a competitive disadvantage; and
- the requirement to accept additional obligations, which by their nature or according to commercial practices are not related to the subject matter of these contracts.
In principle, the Agency follows the trends of EU competition law, including the effects-based approach; however, the case law suggests that abuse is still often determined by the type of conduct and not by the effects on the market.
Exploitative and exclusionary practices
Does the concept of abuse cover both exploitative and exclusionary practices?
The concept of abuse covers both exploitative practices, such as unfair prices and trading conditions, as well as exclusionary practices, such as predatory pricing, discrimination, refusal to deal and tying.
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?
While in most cases a causal link between dominance and abuse is established, an abuse may exist even in the absence of the causal link between the dominant position and the inspected conduct. The conduct of a company may also be considered abusive on a market where the company does not have a dominant position.
What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?
The Competition Act prohibits the abuse of a dominant position without exceptions and does not explicitly lay down the basis for efficiency defence. Nevertheless, dominant companies defend themselves by relying on EU case law and stating that their actions were objectively justified. In such cases the Agency assesses whether the companies proved their actions were justified and proportionate to the pursued goal.
Specific forms of abuse
Types of conduct Types of conduct
While there is no explicit reference to rebates and discounts in the Competition Act, the Agency has in the past found loyalty-inducing rebates to constitute an abuse of dominance. In a case concerning the market of television advertising, the Agency found the granting of rebates by a dominant media company abusive as they were conditional upon the shares of advertising purchased to such an extent that they had a loyalty-inducing effect. According to the Agency, the rebate scheme had provided a strong incentive for advertisers to spend their entire TV advertising budget for advertising on TV channels of the dominant undertaking.
Tying and bundling
Article 9 of the Competition Act prohibits making the conclusion of contracts subject to acceptance of additional obligations, which by their nature or according to commercial practices are not related to the subject matter of these contracts, and thus also covers tying and bundling.
In 2013, the Agency issued a decision against a telecommunications operator and concluded that it had abused its dominant position on the market of inter-operator broadband access with bitstreaming via the copper-based network in the Republic of Slovenia by making ADSL connections for internet providers conditional on the prior leasing of ISDN connections by end users, although an ISDN connection was not needed or technically necessary.
In the past, various contractual obligations that required customers to purchase goods or services exclusively from a dominant undertaking were deemed abusive by the Competition Protection Agency.
In 2013, the Agency issued a decision finding an abuse of dominance on the market of television advertising airtime by way of exclusive dealing arrangements, such as requiring individual advertisers to devote their entire advertising budget exclusively to the dominant media company.
In 2015, the Agency concluded that an incumbent gas importer and supplier abused its dominant position on the market of gas supply to large industrial customers by concluding long-term contracts and imposing an obligation to purchase minimum quantities. The Agency concluded that as a result of these contractual provisions the customers were effectively forced to exclusively deal with the dominant undertaking.
In 2012, the Agency issued a decision concerning alleged predatory pricing by a mobile telephony operator in the retail mobile telecommunications service market. The operator was deemed to have abused its dominant position by offering a package deal to mobile phone users at unfair retail prices. The decision of the Agency was later annulled by the Supreme Court, owing to the fact that, inter alia, the Agency failed to state sufficient reasons with respect to the methods used to calculate the incremental costs. The judgment of the Supreme Court also stated that in order to find predatory pricing it is essential for the Agency to establish intentional sales of goods and services at a price below the costs, as the basic purpose of the predator is to eliminate competitors from the market while possessing a long-term ability to recover these short-term losses. According to the Supreme Court, it is, therefore, essential to distinguish between the prices that are set (too) low because of the predatory intent and the prices that are set very low because of the tendency to compete and increase the efficiency of the competitive process.
Price or margin squeezes
The Competition Protection Agency has on several occasions examined an abuse of dominance by way of margin squeeze in the telecommunications sector. From 2008 to 2015, the Agency carried out an investigation of an alleged abuse of dominance by the incumbent operator in the wholesale markets for broadband bitstream access and for access to physical network infrastructure concerning, inter alia, allegations of margin squeeze. However, the allegations of margin squeeze were dropped by the Agency in the 2015 decision on this matter. The allegations of margin squeeze were also investigated by the Agency between 2009 and 2012 in the case concerning abuse of dominance on the market of mobile services. Similarly, the margin squeeze allegations were dropped in the final decision where the Agency focused on proving the abuse of dominance by way of predatory pricing.
Refusals to deal and denied access to essential facilities
On several occasions in the past, the Agency has held that refusal to deal constitutes an abuse of a dominant position. In 2009, the Agency issued a decision against the undertaking operating the only Slovenian port, stating that an undertaking owning or managing an infrastructure, without which its competitors cannot carry out their activities, may not refuse access to infrastructure without justification. Access to the port infrastructure was considered to be an essential facility for undertakings performing the towing of ships. Refusal to deal and access to infrastructure was also examined by the Competition Protection Agency in the context of telecommunications infrastructure.
In 2017, the Agency opened an investigation concerning a potential abuse of dominance by a multinational automobile manufacturer by refusing to supply technical information and training to car repairers.
Predatory product design or a failure to disclose new technology
According to publicly available information, the Agency has not yet examined cases concerning predatory product design or a failure to disclose new technology.
Price discrimination has been investigated by the Competition Protection Agency with respect to retail prices of mobile telephony, the pricing strategies of a society holding a statutory monopoly on collective management of copyrights to music authors and the prices for excessive consumption of electric energy charged by the electricity distribution system operator.
Outside the scope of antitrust law, price discrimination is regulated and prohibited by the Consumer Protection Act, which in article 25 states that an undertaking must sell goods and services to all consumers under the same conditions. In contrast to the abuse of dominance legislation, this provision only applies to the sale of goods and services to consumers and does not require the undertaking to hold a dominant position on the market.
Exploitative prices or terms of supply
Exploitative prices and terms of supply are covered by article 9 of the Competition Act. The Agency, however, has not yet issued any decisions concerning these forms of abuse.
Abuse of administrative or government process
According to publicly available information, the Agency has not yet examined cases of abuse of administrative or judicial proceedings.
Mergers and acquisitions as exclusionary practices
According to publicly available information, the Agency has not yet examined cases of abuse of dominance by way of mergers and acquisitions.
The Agency has not yet decided on any case dealing specifically with strategic capacity construction or underinvestment in capacity, predatory advertising or excessive product differentiation. The list of forms of abuse in article 9 of the Competition Act is not exhaustive, therefore the Agency may in the future deal with other types of abuse.
Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?
The provisions of the Competition Act and EU competition law in Slovenia are enforced by the Slovenian Competition Protection Agency.
The Agency may address a request for information to each undertaking, its partners, members of management or supervisory boards and persons employed by the undertaking. In case the Agency requests the information with a special order, an undertaking is obliged to submit all requested documents and information, but not to admit an infringement. If an undertaking, to which such an order was issued, provides incorrect, incomplete or misleading information or does not supply the requested information within the set time limit, a penalty of up to €50,000 may be imposed.
The Agency may also carry out an inspection on the premises of an undertaking, either upon consent given by the undertaking or the person whose data is being inspected or upon a court order, issued by a judge of the District court in Ljubljana upon the Agency’s proposal if there are reasonable grounds for suspicion of an infringement and the probability of finding relevant evidence with investigation exists.
The inspection is conducted by the employees of the Agency, whereby specific professional tasks may be carried out by special organisations, institutions or individuals, and with police assistance, if the undertaking obstructs the investigation or there are reasonable grounds to expect that. During the investigation, authorised persons are also empowered to:
- enter and inspect the premises (premises, land and means of transport) at the registered office of the undertaking and at other locations at which the undertaking itself or another undertaking authorised by the undertaking concerned performs the activity and business for which there is a probability of an infringement;
- examine the business books and other documentation;
- take or obtain in any form copies of or extracts from business books and other documentation;
- seal any business premises and business books and other documentation for the period and to the extent necessary for the inspection; and
- ask any representative or member of staff of the undertaking to give an oral or written explanation of facts or documents relating to the subject matter and purpose of the inspection.
A penalty amounting to up to 1 per cent of the turnover in the preceding business year on an undertaking and up to €50,000 on a natural person may be imposed in case of an obstruction of the inspection.
The Agency may also conduct the investigation on other premises, on the basis of a prior court order, if there are reasonable grounds to suspect that business books and other documentation relating to the subject matter of the inspection are being kept at the premises of an undertaking against which the procedure has not been initiated, or on the residential premises of members of the management or supervisory bodies or of staff or other associates of the undertaking against which the procedure has been initiated.
Sanctions and remedies
What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?
In administrative proceedings, the Agency may issue a decision finding the existence of a violation of article 6 or 9 of the Competition Act or article 101 or 102 of the Treaty on the Functioning of the European Union (TFEU) and requiring the undertaking to cease the infringement. With the same decision it may impose on the undertaking appropriate measures to remedy the violation and its consequences, in particular the divestiture of an activity or part of a company’s activities, the division of a business or the divestiture of shares in undertakings, the transfer of industrial property rights and other rights, the conclusion of licensing and other contracts that can be concluded in business between companies, providing access to the infrastructure.
Having found an infringement of competition law, the Agency may, in a separate minor offence procedure, impose a fine of up to 10 per cent of the undertaking’s annual turnover in the preceding business year. A fine ranging from €5,000 to €10,000 may be imposed on the responsible person of the legal entity or entrepreneur. If the nature of the offence is particularly severe due to the amount of the damage caused or the amount of the unlawfully obtained property proceedings or because of the perpetrator’s intent or purpose of material gain, the responsible person of the legal entity or entrepreneur may be fined from €15,000 to €30,000.
A breach of competition rules may also constitute a criminal offence under article 225 of the Slovenian Criminal Code. An individual committing such an offence may be punished by imprisonment of six months to five years.
In addition, a legal entity can be held responsible for the same criminal offence in accordance with the Liability of Legal Persons for Criminal Offences Act. A fine of at least €50,000 and up to 200 times the amount of damages caused or illegal benefit obtained through the criminal offence may be imposed on a legal entity found liable for the criminal offence.
If certain stipulated conditions are met, the winding up of a legal person and the prohibition of a specific commercial activity of not less than six months and no more than five years as a safety measure may also be ordered pursuant to provisions of the Liability of Legal Persons for Criminal Offences Act.
Can the competition enforcers impose sanctions directly or must they petition a court or other authority?
The Agency may impose sanctions directly, either through administrative proceedings, in which it may issue a decision finding an infringement and may impose remedies, or through minor offence proceedings, in which it may impose fines.
In case the breach of competition rules constitutes a criminal offence, it may be prosecuted by the public prosecutor in criminal proceedings before the competent court.
What is the recent enforcement record in your jurisdiction?
On average, the Agency issues one decision concerning abuse of dominance per year, and opens at least one investigation into abusive practices annually. The average length of an abuse of dominance proceeding, from initial investigative measures to the final decision, is more than two years. However, several recent prohibition decisions have been annulled by the Administrative court and returned to the Agency for re-examination.
In the past, the Agency has most frequently applied article 9 of the Competition Act and article 102 of the TFEU in the regulated industries, such as telecommunications and energy, as well as companies granted a statutory monopoly.
Since 2016, the Agency has initiated three new investigations concerning a possible infringement of article 9 of the Slovenian Competition Act as well as article 102 of the TFEU. In 2016, the Agency opened an investigation concerning the conduct of a provider of services of inter-organisational business operations that allegedly refused access to certain electronic data exchange systems held by providers of electronic data exchange services and their users. In the past year, the Agency opened proceedings against a leading media company for alleged abuse of a dominant position on the market of wholesale supply of TV channels. In late 2017, the Agency opened proceedings concerning the conduct of a Slovenian subsidiary of a multinational automobile manufacturer on the market of the provision of technical information and training to car repairers; in May 2018, the Agency issued a commitment decision accepting the commitments proposed by the Slovenian subsidiary of the multinational automobile manufacturer to reduce the likelihood of violation of the provisions of article 9 of the Competition Act and article 102 of the TFEU.
Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?
Contracts involving abuse of dominance are only subject to general civil law as there are no provisions regarding the consequences of abuse of dominance violations on the validity of contracts in the Competition Act.
Article 86 of the Obligations Code stipulates that a contract that opposes the constitution, compulsory regulations or moral principles is null and void if the purpose of the violated rule does not imply any other sanction or if the law does not prescribe anything else in that particular case. If the conclusion of a particular contract is forbidden to only one party, the contract shall remain in force unless there is something else specified in the law for the individual case, and the party who violated the legal prohibition shall be affected by the corresponding consequences. Article 88 of the Obligations Code stipulates that in view of the invalidity of a certain contractual provision the contract itself is not null and void if it can stand without the null provision and if this provision was not a contractual condition and not the decisive inclination for which the contract was concluded.
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?
Article 23 of the Competition Act stipulates that the Competition Protection Agency may issue a decision on initiating the proceeding ex officio when it becomes aware of circumstances from which the likelihood of a violation of the provisions of article 6 or 9 of the Competition Act or article 101 or 102 of the TFEU arises. Affected parties (competitors or customers) can file a complaint to the Agency and provide it with information of the infringement; however, the Agency is not obliged to initiate proceedings based on a complaint.
Private enforcement of competition law in Slovenia is mainly focused on damages claims where 2017 marked the transposition of the EU Damages Directive (Directive 2014/104/EU). The power of the courts to impose any behavioural remedies on the dominant firm is limited to the scope of the general provisions of the law of obligations.
Other measures to remedy the violation of competition law and its consequences, such as the divestiture of an activity or part of a company’s activities, the division of a business or the divestiture of shares in undertakings, the transfer of industrial property rights and other rights, the conclusion of licensing and other contracts and providing access to the infrastructure, can only be imposed on the undertaking by the Agency in the administrative decision finding an infringement.
Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?
In 2017, the latest amendment of the Slovenian Competition Act entered into force and transposed the EU Directive 2014/104/EU on antitrust damages actions into the Slovenian legal system.
According to article 62 of the Competition Act, a person who has suffered damage caused by a violation of competition law (the injured party) has the right to compensation for damages under the general rules of tort law. Damage claims are adjudicated by the competent district court.
Based on the general provisions of tort law and in accordance with the principle of full compensation the injured party is entitled to compensation for material damage and loss of profit. According to a specific provision of the Competition Act the injured party is entitled to default interest from the occurrence of the damage to payment. The material damage is calculated as loss that has actually occurred. Loss of profit is calculated as the difference between the revenues the injured party would have created if there was no infringement and the costs that would have been incurred in connection with these revenues. The court may also request the Competition Protection Agency’s opinion on the determination of the amount of the damage.
In exceptional cases, when the amount of damages cannot be determined or if the determination thereof would entail unreasonable difficulties, the quantification of damages shall, according to article 216 of the Civil Procedure Act, be left to the judicial discretion. In these cases, the court may take into account the profit that was obtained by way of abuse of dominance.
To what court may authority decisions finding an abuse be appealed?
The Competition Protection Agency’s decision finding an abuse may be appealed to the Administrative court of the Republic of Slovenia; in this judicial protection procedure the appellant cannot introduce new facts or propose new evidence. The court reviews the Agency’s decision within the reasons stated in the appeal concerning the facts as well as the law, while ex officio reviewing certain essential procedural violations, in accordance with the Administrative Disputes Act. In certain cases, a further extraordinary legal remedy based on the points of law - revision to the Supreme Court - is possible.
Unilateral conduct by non-dominant firms
Are there any rules applying to the unilateral conduct of non-dominant firms?
There are no rules in Slovenian competition law applying to the unilateral conduct of non-dominant firms. Such practices may be subject to the rules on unfair competition, consumer protection, etc.