Analysis
Fall 2017 / Issue 55
Competition Authorities
Scrutinizing Sales &
Distribution Agreements
We’ve all witnessed an increase
in competition authorities’ activi-
ties across Europe. Recently, the
European Commission started
probing an alleged German car
cartel. At the same time, investiga-
tions revealed that European truck
producers breached EU antitrust
rules. For 14 years truck prices
were fixed and the cost of com-
plying with stricter emission rules
were passed onto consumers by
the cartel. As a result, a record €
2.93 billion fine was imposed on
the truck manufacturers. Greek
competition authorities also fined
six cosmetics manufacturers € 19
million for price fixing. Industries
including fuel distribution, cement
manufacturing and telecommuni-
cations have been carefully scruti-
nized by Romanian and Bulgarian
competition protection bodies.
It goes without saying that
similar actions can be expected
from the Macedonian Competi-
tion Commission, as Macedonia
looks to launch the EU Member-
ship negotiations. In fact, we’ve
already seen some signs of this.
The local legislation has already
been largely harmonized with EU
acquis, and the same legislative
tools and mechanisms for deter-
mining competition breaches
are already at the disposal of the
Macedonian authorities. Plans
to further amend Macedonian
leniency legislation and increase
awareness of whistle-blowers
immunity rights have both been
steps in this direction. The fines
stipulated in Macedonian law for
16
AmCham Macedonia Magazine
Kiril Papazoski,
Attorney-at-law,
Papazoski and Mishev
Law Firm
anticompetitive agreements are quite severe, reaching up to
10% of a company’s previous annual turnover. Considering the
complexity of the matter, the severity of potential fines and the
lack of established legal practice in the field, companies should
conduct a diligent review of their agreements, policies and prac-
tices to reduce their risk exposure in this area.
Macedonian legislation stipulates that agreements intended
to distort competition and those that succeed in doing so are
prohibited. In particular, agreements which:
directly or indirectly lead to price fixing or the deliberate
manipulation of any other trading conditions;
limit or control the production, market, technical devel-
opment or investments;
share the market or supply sources;
apply different conditions in similar transactions with
partners, thereby placing them in a less favorable com-
petitive position; and/or
condition the conclusion of the agreements with the
acceptance of supplementary obligations by the other
parties.
The law provides that these restrictions do not apply to intra-
group agreements and to agreements which are essentially
agency agreements (where under the agent does not undertake
any risks and rewards other than the ones associated with the
work as a commissionaire). Companies with small market shares
are also not subject to competition measures (e.g., companies
with <10% market share in horizontal agreements or <15% in
vertical agreements). However, serious competition breaches –
even by smaller players – would still be subject to closer scrutiny
and administrative action. The block exemption is also available
if the undertakings concerned have less than 30% market share
and their agreement doesn’t contain any serious competition
implications (e.g., selective distribution systems, non-compete
>5 years).
Special rules exist for companies with dominant market posi-
tions. There is no strait-jacket criteria to determine such domi-
nance, and it is always viewed in the actual economic context.
The burden of proof for dominant positions lies with the rele-
vant authorities, however 40% is the minimum threshold set by
Macedonian Competition Law. Examples of dominant abuse
sanctioned by competition authorities can be various loyalty
Analysis
Fall 2017 / Issue 55
programs, inducing rebates, pred-
atory pricing (dumping prices for
the purpose of eliminating the
smaller competition), refusal to
supply, refusal to transact, and
more.
Do’s & Don’ts
Do not share markets, cli-
ents or suppliers via a pre-
liminary agreement with
your competitors;
Do not fix buying or selling
prices or fees with your
competitors;
Never discuss any of the
above issues with your
competitors;
Always offer identical,
non-discriminatory treat-
ment given equal condi-
tions (dissimilar treatment
could be applied when
there are objective differ-
ences between cases);
Take due care when par-
ticipating in meetings of
industry
associations,
chambers of commerce
and similar. Do not share
information about your
prices, discounts, supply
conditions, profit margins,
cost structures, distribu-
tion practices, territories,
customers, future invest-
ment plans nor anything
on the discontinuance of
products/services.
Never set minimum resale
prices for which your dis-
tributors can sell a prod-
uct; this is generally seen
as a serious breach of the
competition principles.
In case of a dominant
market position, avoid
tying the sale of a prod-
uct to another transac-
tion or bundling several
products sold together,
unless the products are
complementary;
Expressly and publicly
refuse to participate to
meetings that have an
anticompetitive agenda;
Distance yourself expressly
from any anticompetitive
decisions/actions taken
by any group to which you
are a member (e.g., trade
association);
Do not respond in any way
to correspondence or doc-
umentation you may receive
containing details of poten-
tially anticompetitive con-
duct; and
Refuse meetings requested
by competitors that pertain
to potentially anticompeti-
tive conduct and seek legal
advice on the matter.
Investigations & Dawn Raids
Macedonian law offers the follow-
ing options in competition-related
investigations:
Clemency. Whistleblowers
may be granted immunity
from fines and those pro-
viding significant information
may reduce their fines;
Commitments. A party may
commit to change their
behavior in return for clos-
ing the investigation without
paying any fines;
Admitting. A 15-30% reduc-
tion of the basic fine may be
granted in cases where par-
ties admit fault.
The law entitles the Competi-
tion Commission to perform unan-
nounced “dawn raids” into business
premises, land or transportation
means to examine financial and
commercial documents and/or reg-
istries in both hard and soft copy
form. The Commission can also
request oral or written statements
from any company representative or
staff member regarding the alleged
acts. Also, for investigative pur-
poses, the Commission can obtain
copies or excerpts and/or seal any
documents, registries, and other
accountancies they deem relevant
to company activities.
Company Rights
& Obligations in Dawn Raids
It’s important to know your rights
as a company undergoing a dawn
raid. They are that the company:
Is not obligated to provide
access to information that is
outside the place stated or in
relation to another building,
or a specific object of inter-
est than the one(s) explic-
itly stated in the inspection
order;
Can request a specific time
when their external legal
counsel can participate in
the inspection, however
inspectors are not obligated
to grant this request;
Is not obligated to share cor-
respondence they have con-
ducted with their external
legal counsel;
Companies must also understand
their obligations in dawn raids. They
must:
Not refuse an order without a
justification nor deny inspec-
tors access to their premises
or documents;
Not break any seals placed
by inspectors on their
documentation;
Not hide or destroy informa-
tion during the inspection
which are considered rele-
vant to the inspection;
Allow inspectors access per-
sonal computers, lockers,
closets, notebooks, etc.;
Answer
inspectors’
questions.
The Use of
Forensic Technologies
In some neighboring countries,
competition authorities are using
specialized investigative IT tools
and software to copy hard disks,
CDs, DVDs, memory sticks, and to
recover and restore deleted or cor-
rupted emails and electronic docu-
ments. This can enable inspectors
to search for information using
key words, sort documents using
filters, extract and print relevant
documents, and more. Such tools
can be used to copy computers
and laptops (even data stored on
servers or in the cloud), devices
like printers and copy machines,
smartphones and other devices.
Given the institutional alignment in
the competition sphere, it is only a
matter of time before the Macedo-
nian Commission catches up with
such practices.
AmCham Macedonia Magazine
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