Alternative solutions to competition issues in Anti-Trust Office’s decision- making practice
In the recent case, the Office for the Protection of Competition refrained from initiating sanction proceedings despite the alleged existence of an illegal price-fixing agreement. The office thus indicated its willingness to resolve some matters by means of competition advocacy, i.e. an alternative resolution of competition issues.
Alternative ways to resolve competition issues
There are two possible procedures to be followed by the office that do not result in sanctions for competitors: the remediation of a competition issue without initiating proceedings, and the imposition of obligations on competitors.
Where the office has not yet initiated administrative proceedings and no public interest exists for their initiation, a competitor may be given the opportunity to undertake measures to quickly remediate the problem and effectively restore competition. If the office then believes that the remedy measures taken have been sufficient, the case may be closed without administrative proceedings. In cases where the harmful effect on competition is low, the office may even stay the case without dealing with it any further.
Where administrative proceedings have already been initiated, the office may impose obligations proposed by the competitors to effectively restore competition. Once the competitors fulfil the obligations, the office may rule to close the administrative proceedings without imposing a penalty.
Alternative solutions in the office’s recent decision-making practice
In the recently assessed case, VETCENTRUM Duchek obliged its customers to only sell to end consumers and demanded that they should accept their recommended retail prices. During the investigation by the office, VETCENTRUM Duchek demerged. In the context of the demerger, the business terms and conditions were amended to no longer contain any anti-competitive provisions. Although the agreements were in fact never complied with, VETCENTRUM Duchek's legal successor Rebel Dog proposed to the office that they would explicitly inform their customers that such obligations were invalid and compliance with them would not be enforced or checked in any way. The company then also demonstrated to the office that they had indeed implemented the proposed measures. Since the competitor had only a minor market share, the agreements were not being fulfilled, their compliance was not enforced, and as the potentially harmful situation was remedied prior to the office’s intervention, the office considered this case suitable for the use of alternative solutions to competition issues (competition advocacy). The office thus did not initiate administrative proceedings against the competitor and imposed no penalty.
In the past, the Office has used competitive advocacy for example in its investigation of Kaufland regarding listing fees, i.e. fees for the inclusion of goods for sale within Kaufland's network of shops). Once Kaufland undertook certain obligations, the office stayed the administrative proceedings.
The above cases demonstrate that competition issues can also be resolved before the office in alternative ways: without initiating administrative proceedings or by imposing obligations without a penalty. However, it should be borne in mind that competition advocacy is not always applicable and its use is limited, in particular in cases of unlawful mergers. If you have any questions regarding alternative solutions to competition issues or other competition law questions, please do not hesitate to contact our experts from KPMG Legal.