Prioritisation Policy

The Antimonopoly Office of the Slovak Republic (hereinafter referred to as „the Office“) as a guarantor of ensuring the protection of competition in the Slovak Republic, applies national and European competition law. Consumer welfare (better prices of goods and services, better quality, increased innovation) is measure of correct and efficient fulfilment of this task, what is also embodied in the purpose of the Act on Protection of Competition . Competition policy encourages companies to compete for a consumer what ultimately brings benefit to the whole economy.

The Office’s ambition to become a respected authority using the latest knowledge of world competition policy, mainly, implementation of new, effect-based economic approach in practice, makes increasing professional demands on the Office in terms of conducting sophisticated economic analysis in assessment of cases, but also in relation to increasing procedural complexity of cases.

As all competition authorities in the world, including the European Commission, also the Office tries to use its resources in the most efficient way in order to focus on handling meaningful competition issues with significant impact on consumers. At the same time, drawing on international experience, publishing the priorities themselves may lead to more responsible behaviour of undertakings in a priority sector or area.

Protection of competition takes place primarily through decision-making activity within which the Office directly intervenes in individual competition infringement cases or decides on mergers. Competition advocacy is another, not less important form of the Office´s intervention. It is aimed at prevention in the area of protection of competition and rising of awareness of professional and lay public. The Office´s powers are more closely specified in § 22 of the Act on Protection of Competition. 

Based on the Act, administrative proceedings, with the exception of assessment of mergers, commence on the Office´s initiative. Current legislation makes room for the Office´s assessment whether a particular issue or complaint requires intervention of the Office and in the next step whether the intervention should be in form of opening of an administrative proceeding, it means, generally time- and capacity consuming form or it is possible to solve an issue in a different way, for instance by mean of competition advocacy.

In order to fulfil its tasks to the benefit of consumers, it is indispensable to set both long-term as well as short-term priorities. Some competition authorities make their prioritisation policy based on law, other have issued documents that are not legally binding. 

The issue of prioritisation is not new for the Office and has been already applied in practice. Purpose of this document, based on the current practice of the Office, as well as practice of other competition authorities, is to publicly declare fundamental basis for its implementation and this communicate with the public, with the aim to make the public aware of the systematic work of the Office, but also to receive feedback, in order to respond more effectively and quickly to the needs of market and society as such.

I. Prioritisation from a long-term perspective

What does the Office prioritise?

In the prioritisation of its activities, the Office determines what it will primarily focus on and how it will intervene. 

The Office determines its priorities in relations to the following activities:

  • decision-making activity including enforcement of decisions issued by the Office,
  • market research and sector inquiries,
  • activities in the area of competition advocacy, including training in the field of competition policy,  issuing guidelines and methodical instructions.
Prioritisation takes place not only in terms of different forms of intervention but also within individual industries and sectors, in which the Office will allocate its capacities. 

Why does the Office prioritise?

The Office is a central body of state administration linked to the state budget. Given that its activity is financed from public funds, the Office takes a responsible approach to allocation of its personnel and financial resources, in order to be focused on activities that are most beneficial to consumers. This is especially urgent, as the whole society faces financial problems.

How does the Office prioritise?

Prioritisation is based on basic prioritisation criteria, which do not have, however, an absolute character and are designed to create a uniform basis for prioritisation of Office´s activities. 

It is important to see prioritisation as a continual process that must take place not only in relations to new but also in relations to existing cases, the Office has been already dealing with. This will therefore require regular and critical revision of case priority in different stages of their solution, so that the capacities of the Office are not bound to cases, which have been in the meantime shown as non-priority (for instance because of new circumstances, legislative changes, need of an in-depth analysis of a sector, etc.)

In the future, the Office will seek to follow prioritisation policy of competition authorities of other Member States, including the Commission, as similarly set prioritisation of the Office´s work with other competition authorities enables their better cooperation and sharing of common resources, for instance in order to monitor a particular sector or an industry at the multijurisdictional level.

Prioritisation criteria:

Establishment of priorities determining whether the Office will deal with an issue or will proceed in case solving results from the following principal criteria:

1. Gravity

Type gravity
  • very serious offences, namely: horizontal agreements on prices, market allocation, actual restriction of production, bid rigging, abuse a of dominant position in particular the exclusion, implementation of a merger that would be prohibited without previous notification to the Office or implementation of a merger which is inconsistent with the legally binding decision issued by the Office, failure to comply with conditions imposed by the Office;
     
  • serious offences, namely: abuse of a dominant position of exploitative nature, horizontal agreements other than those mentioned in the previous paragraph, for instance commitment by the parties to the agreement that different conditions related to an identical or comparable performance will be applied to individual undertakings, which will or may disadvantage these undertakings in competition, or conditions stipulating that the conclusion of contracts will require the parties to accept further obligations that are not related to the subject of these contracts in terms of their nature or according to customary commercial practice, vertical agreements containing so called hard-core restrictions (e.g. agreements on resale prices or agreements on market allocation), implementation of a merger, which would not be prohibited without a merger notification; restriction of competition by local self-administration authorities during the performance of self-administration and transferred performance of state administration and special interest bodies during the transferred performance of state administration (hereinafter referred to as „§ 39“) of a greater importance;
  • less serious offences, namely: vertical agreements of a minor importance, competition restrictions falling under § 39 of a minor importance and other less serious competition law infringements.

Priority will be given to very serious and serious offences. The above type categorization for the purpose of prioritisation cannot be perceived as fixed and unchangeable. Every infringement is assessed in regards to all factors and only after an overall assessment it can be concluded whether the nature of the infringement is overall very serious, serious or less serious. 

Factual gravity

  • actual or unavoidable impact, or potential impact on competition (priority is given to actual or unavoidable impact),
     
  • geographical impact (priority increases with a greater extent of affected area),
     
  • conflict duration (priority increases with duration of the offence),
     
  • number of affected consumers (priority increases with the number of affected consumers),
     
  • a case, when it comes to disadvantaged consumers, who may be primarily exposed to exploitation due to limited access to market,
     
  • direct or indirect impact on a consumer (indirect impact is, for instance, increased consumer and business trust in proper market functioning),
     
  • type of product – everyday consumer product, luxury product (greater priority is given to everyday consumer products used by large number of consumers),
     
  • market share of the undertaking on the relevant market,
     
  • repeated infringement consisting in repetition of the same facts or in repeated anti-competitive conduct.

2. Importance of an investigation

  • nature of industry (priority increases in liberalized and network industries, in the markets where, based on the knowledge from previous Office´s investigations, proceedings or sector inquiries, regarding their structure, high degree of concentration, barriers and possibilities to entry, etc. it is proved that it leads to market failures on a regular basis),
     
  • the total amount of damages caused by a competitor or end consumer (priority increases with the amount of damage),
     
  • existence of actions in private enforcement relating to the case.
3. Probability of success
  • availability of relevant information and evidence and possibility to obtain them by the Office,
     
  • existence of precedents,
     
  • assessment whether there is another authority, being able to effectively deal with the matter (regulator, competition authority of another state, the European Commission, court).

4. Strategic nature

Also in a case, when a particular issue will appear as non-priority based on criteria under parts 1 - 3, the Office may decide to deal with the issue if it is of a strategic importance, in particular:

  • in terms of current goals and vision of the Office in the period,
     
  • in order to build credibility of the Office in relation to the public or due to strengthening of rules of competition law enforcement,
     
  • it is a legal precedent (priority increases if a case has a potential of precedent for the future); legal precedent may prevent from infringement of competition rules in the future due to its deterring effect and it may also be important as „an interpretive rule“ in case of newly adopted legislation.

Office´s intervention

Prioritisation also needs to be carried out in relation to different ways of solving competition issues, it means, whether an administrative proceeding is the most suitable way to deal with a competition issue (that assumes the most significant general prevention), or preference is given to competition advocacy, or sector inquiry in order to achieve the most effective remedy of a competition problem.

Setting a priority in terms of how the Office will deal with an issue is, in particular, based on following criteria:

  • efficiency of the way of dealing with a case,
     
  • reason of a competition problem, it means, whether a competition problem results from systematic problem in the sector (regulation setting, legislation, etc.),
     
  • frequency of the competition problem occurrence in a particular sector or industry.

Conclusion

It is necessary to emphasize that criteria contained in this document could not be perceived absolutely since every single case will require a complex assessment in the terms of economic and legal context and not mechanical assessment. If it is necessary, the Office will assess also other additional factors which occur as relevant. The Office may also re-assess its published priorities based on justified facts and practical experiences and it will repeatedly publish them on its website.

Prioritisation process will result in setting priority of an issue or a case and the way of dealing with it by the Office, so that the Office gives priority to cases with the largest impact on consumer. Prioritisation should be perceived as way of balancing the individual factors for and against, namely the importance of a case and probability of a positive outcome.

Also the complaints referring to the issues that are not the Office´s priorities may serve as information sources that will be used both for complex assessment of the investigated issues and for prioritisation in future, hence the Office expects the undertakings, consumers, associations or other entities to address their complaints and information to the Office as much as possible.

Assessment of an issue under application of prioritisation criteria so, that  the Office will not deal with it or will not continue in its investigation, does not mean that it will not deal with this issue or the similar one in future, after consideration new development or new circumstances.

II. Short-term priorities

Besides the long-term principles of prioritisation the Office sets the priorities of short-term nature approximately for one year, both in the terms of practices and sectors.

In the terms of practices the priority is given to:
  • cartels, cartel agreements between undertakings belong to the most serious infringement of competition rules that bring benefit exclusively to their participants and according to OECD study, they may result in price increase by 50%. The Office established the Division of Cartels which intensively deals with their detection and sanctioning;
     
  • bid rigging in public procurement, harm resulting from bid rigging is important, particularly if it affects public procurement. These practices may occur in various forms, but all of them prevent the consumers from getting the products and services at the lowest prices, decrease the public trust in competitive process and reduce advantages of the competitive market environment. Hence, these practices still remain the priority of the Office;
     
  • unnotified mergers, the Office monitors economic combining of undertakings resulting both in permanent change of control and market structure and it prohibits the transactions resulting in distortion of competition. This task requires the undertakings to proceed in compliance with the Act and to notify the merger being subject to control by the Office. Recently, the Office has observed unnotified mergers, therefore, with the aim to prevent from competition harm resulting from potentially prohibited mergers and with the aim to increase the undertakings´ discipline, the Office will focus on detection of unnotified mergers.

In the terms of sectors the priority is given to:

  • Public passenger transport

Public passenger transport is the area of the economy that is closely linked to the economic as well as social development of the country. Its development has an impact on large number of consumers and effects their daily lives. Recently this area has encountered certain liberalisation process. This means that the market is opening up for new businesses, which it may enter. The liberalisation process generally brings the risk that the company which has been on the market long established will hinder the development of competition, even at the cost of violation of competition law. Experience from neighbouring countries confirms this assumption also regarding the public passenger sector. For these reasons, the Office considers it important to focus on this sector and assess its functioning. The attention will be paid mainly to opportunities for the competition development, as well as potential associated problems. The intention is primarily to identify possible barriers to entry in this market a recommend measures for their elimination. 

  • Motor vehicle sector

Motor vehicle sector has long been subject to monitoring by the European Commission, as well as national competition authorities. It is one of the sectors characterised by the long-term existence of sector-specific rules, which have progressed and to date they still persist. 

The functioning of the motor vehicle sector, in particular the area of repair and maintenance services and spare parts distribution can therefore require existence of specific rules, which directly relates to the need of the assessment of competition. In general, competition in the aftermarkets is less intense, since these markets are bound to a specific brand of the motor vehicle. It is therefore important that a consumer has the choice and can act effectively.

From the macroeconomic perspective, the motor vehicle sector is an important sector of the economy, while the sector is also important in terms of consumer expenditures. Repair and maintenance of motor vehicles represent an important component of the overall consumer spending on motor vehicles and also significant part of their budget.

Preliminary Office´s monitoring indicates potential competition risks in this area. Therefore, it is appropriate that the Office focuses on this sector within its priorities, continuously monitors conditions of after-sales services and when appropriate, intervenes and removes competition shortcomings.

  •  Food industry

Recent published results of monitoring, investigation or proceeding conducted by the EC and selected Member States show that the competition authorities permanently pay their attention to this sector. It is particularly important because the efficiency of economy in this sector affects directly all of us. Researches show that consumer in Slovakia is extremely price sensitive and not only in times of crisis. Within its powers, the Office monitors this sector on a long-term basis. Relatively high concentration of production in some markets, establishment of various undertakings´ associations (associations, unions), repeated complaints about supranational retail chains, creation of distribution networks or increasing prices of single products may raise the competition concerns. The Office will monitor this sector also in future and it will intervene in justified issues, similarly as it did in past.

The above mentioned does not mean that the Antimonopoly Office will not intervene also in other sectors of the economy. 


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Last update: 06.02.2015