Competition Issues December 2008

Bulgaria launches new competition law
Global Competition Review, December 04, 2008

Italy closes rail transport probe
Global Competition Review, December 04, 2008

Vietnam investigates insurers
Global Competition Review, December 01, 2008

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Bulgaria launches new competition law
Global Competition Review, December 04, 2008

Bulgaria's Law on the Protection of Competition came into force on Tuesday, bringing the country's practice further in line with EU law.

Bulgaria's Commission for the Protection of Competition developed the law, in cooperation with Italy's Antitrust Authority. The project was funded by the PHARE programme, which aims to help states accede to the EU. PHARE was set up in 1989 as Poland and Hungary: Assistance for Restructuring their Economies. It now provides assistance to 10 recently acceded EU member states. Bulgaria joined the EU in 2007.

One of the most significant changes in the new law is the introduction of a leniency programme. Companies will have the opportunity to gain immunity from fines in return for early cooperation with the commission leading to the detection of a cartel.

The approach to fining companies for competition infringements has also changed. Under the previous law, fines were capped, whereas the new rules mean they will be calculated as a percentage of a company's annual turnover, in line with EU practice.

On abuse of dominance, the law abolishes the presumption of dominance for undertakings that control 35 per cent of a market, and allows the commission to impose interim measures and accept behavioural commitments from undertakings.

Merger thresholds have also changed. Under the new law, the notification threshold for concentrations has been increased from 15 million levs (€7.7 million) to 25 million levs (€12.8 million). In addition, at least two parties to the deal are required to have a turnover in Bulgaria of 3 million levs (€1.5 million) in the preceding financial year.

Finally, the law includes provisions for private enforcement. It allows individuals and companies to claim damages for a competition law infringement, even if the conduct doesn't harm them directly. A commission decision will be viewed as binding on national courts in private actions, as long as all relevant avenues for appeal have been exhausted.

Earlier this year, the commission fined 28 egg and poultry producers for price-fixing. It has also fined insurance companies and cooking oil producers for competition infringements in the past 12 months.

Italy closes rail transport probe
Global Competition Review, December 04, 2008

Italy's Competition Authority has closed its investigation of two railway companies, accused of abuse of dominance.

Ferrovie dello Stato (FS), a holding company, and its subsidiary Rete Ferroviara Italiana (RFI), which operates railway network infrastructure, have offered behavioural commitments to allay the authority's concerns about a possible violation of article 82 of the EC Treaty.

Until June 2004, RFI had offered discounts to railway transport companies to compensate them for the loss they incurred by requiring two drivers on the trains. The railway infrastructure, controlled by RFI, was underdeveloped and lacked the necessary regulations and technology to operate using only one driver.

The authority launched an investigation amid complaints that RFI had terminated discounts to those railway undertakings, to benefit Trenitalia, a licensed railway company providing passenger and freight transport services, contolled by FS. RFI was accused of anti-competitively raising access costs for companies that compete with Trenitalia.

Vietnam investigates insurers
Global Competition Review, December 01, 2008

Vietnam's Competition and Administration Department has launched an investigation of 16 insurance companies, after they raised car insurance premiums.

Tran An Song, deputy head of the department, was quoted last week in Vietnamese press outlets saying that the companies had signed an agreement to "ease the fierce competition among insurers" in violation of the country's competition law.

The companies allegedly signed the agreement in October. According to the press reports, they include: Bao Viet, Petrolimex Insurance, PetroVietnam Insurance, Samsung Vina, Global Insurance, BIDV's Insurance, Bao Long, Bao Ngan, Bao Minh, Bao Tin and Agribank Insurance.

If found guilty, the companies face penalties of up to 10 per cent of their annual turnover. It is understood that they have met the department to discuss its concerns, and claim the agreement does not violate the law. Vietnam's competition law does allow exemptions for certain types of agreement among insurers, where the agreement aims to protect the general health of the market.

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