Prioritisation Policy of the Antimonopoly Office of the Slovak Republic
The Antimonopoly Office of the Slovak Republic (hereafter also "the Office") is an independent central body of state administration of the Slovak Republic, the task of which is to protect competition and coordinate state aid. The Office intervenes in the cases of cartels, abuse of a dominant position, vertical agreements, it controls mergers that meet notification criteria and assesses the actions of state administration and self-government bodies in the event that by their conduct they restrict competition. It also ensures the protection of competition in the field of state aid. In addition to Slovak law, the Antimonopoly Office of the Slovak Republic also applies the competition law of the European Union. Within the European Competition Network (ECN), it fulfills the tasks that result from the membership of the SR in the European Union.
The Office's competences in the field of antitrust and mergers follow from the Act No. 136/2001 Coll. on Protection of Competition and on Amendments and Supplements to Act of the Slovak National Council No. 347/1990 Coll. on Organisation of Ministries and Other Central Bodies of State Administration of the Slovak Republic as amended as amended (hereafter "the Act on Protection of Competition").
Within its powers, the Antimonopoly Office of the Slovak Republic conducts mainly investigations on a relevant market, in administrative proceedings it decides on the infringements of the Act on Protection of Competition in the matter of agreements restricting competition, abuse of dominant position and restriction of competition by state-administration and local-administratiopn bodies (the Article 39 of the Act on Protection of Competition), performs a control over mergers and at the same time it proposes measures to protect and promote competition.
As all competition authorities in the world, including the European Commission, also the Office strives to use its resources as efficiently as possible in order to focus on addressing meaningful competition issues, which have a significant impact on markets, consumers and economic sectors concerned.
The legislative framework of competition protection has the potential to be significantly affected by the Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market. According to that provision, national competition authorities should be able to set priorities between their proceedings for enforcing the Articles 101 and 102 of the Treaty on the Functioning of the European Union. The aim should be to use resources efficiently and to focus on preventing and eliminating anti-competitive behaviour, which restricts competition in the internal market and on terminating such a behaviour. For this purpose they should be able to reject complaints on the grounds that they are not a priority at the time.
The Office fulfills the following main objectives in the field of competition protection:
- enforcing competition law in its national as well as international dimension, with the application of a regularly reviewed prioritization policy,
- active contributing to the development of legislative and legal framework of competition protection in the SR in coordination with competent European institutions promoting competition protection in the context of cooperation between the Member States of the European Union,
- raising the awareness of competition law and the economic and social consequences of its violation and intensifying communication with the representatives of undertakings, associations and the associations of undertakings,
- developing cooperation with other central state administration bodies in building:
- an effective system for the detection and the administrative punishment of infringements of competition law,
- a business environment stimulating competition,
- initiating and developing cooperation with renowned Slovak universities and institutions focusing on the legal and economic aspects of competition protection.
The enforcement of competition law is realized primarily through a decision-making activity, in which the Office directly intervenes in the individual cases of competition infringements, resp. decides on mergers. Another, but no less important form of the Office's competence is a competition advocacy aimed at prevention in the field of competition protection and raising the awareness of it among the professional and lay public. The Office´s competences are specified in more detail by the Article 22 of the Act on Protection of Competition.
Administrative proceedings, with the exception of merger assessment proceedings, are initiated by the Office on its own initiative. The current legislation creates room for the Office to assess first whether a certain conduct of an undertaking, resp. the complaint is of such a character that it requires the Office´s intervention, and in the next step whether the intervention should be in the form of initiating an administrative proceedings, i. e. usually the most demanding form by time and capacity or it is possible to solve the matter otherwise, e. g. competition advocacy.
In order to fulfill its tasks for the benefit of consumers, it is necessary for the Office to set priorities for its activity, both in long term and in short term. Some competition authorities implement their prioritization policy on the basis of law, others have adopted it in the form of documents that are not legally binding.
The Office has already been applying the prioritization in its practice. The aim of this document is also to evaluate the priorities set in previous periods, the criteria applied, as well as the method of their application.
General rules for the application of the Office's prioritisation policy
1. Where does the Office prioritize?
By applying the prioritization correctly, the Office should spend its human, technical and budgetary resources and capacities efficiently so that the intervention it chooses in an assessed case was effective, economical and properly targeted. It is therefore essential that the Office always thoroughly gets acquainted with all the facts and the circumstances of the assessed case.
From the point of view of activities performed, the Office applies the prioritization in:
Prioritization is carried out not only within the procedure for evaluating received initiatives and the forms of intervention pursuant to the Act on Protection of Competition, but also within individual sectors, to which the Office will preferentially direct its capacities.
- the Office´s decision-making activities, including the control over the complying with the Office´s decisions,
- market investigations and survey and the preparation of sector studies,
- activities in the field of competition advocacy, including trainings in the field of competition, issuing guidelines and methodological guidelines.
2. Why does the Office prioritize?
The source for the Office´s activities is the relevant budget chapter of the Office within the state budget. As its activities are provided from public resources, the Office must responsibly approach the redistribution of its personnel, technical and financial resources. The aim is to allocate them to activities that will ensure an intervention in those cases, where the most significant restrictions of competition occur, with all the associated consequences for market participants.
3. How does the Office prioritize?
Prioritization is based on regularly updated prioritization criteria, the aim of which is to establish an efficient and transparent procedure for the selection and the evaluation of cases, in which the Office will apply the prioritization.
At the same time, the Office monitors also the prioritization policy of other competition authorities in the Member States of the European Union, including the prioritization policy of the European Commission. Similarly set and applied prioritization of the Office and other competition authorities will enable their better cooperation and the use of common resources, whether, for example, in monitoring a particular sector of the economy, or in exchanging information and documentation, or sharing capacities.
The evaluation of a case as a priority with the conclusion that the Office will deal with the matter, respectively it will continue to resolve the matter, is based in particular on the following principal criteria:
In terms of gravity, the Office distinguishes cases according to type gravity into:
Priority will be given to very serious and serious offences. The above stated type categorization for the purpose of prioritisation cannot be perceived as fixed and unchangeable. Every infringement is assessed with regard 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.
An equally important aspect in the assessment of the gravity is also a factual gravity, where the Office assesses:
- very serious offences, namely: horizontal agreements on prices, market allocation or the restriction of production, bid rigging, agreeements on prices for further resale, the abuse of a dominant position in particular of an exclusion character, the implementation of a merger that would be probably prohibited without previous merger notification to the Office or the implementation of a merger which is inconsistent with a legally binding decision issued by the Office, the failure to comply with the conditions of a merger imposed by the Office;
- serious offences, namely: the abuse of a dominant position of an exploitative nature, horizontal agreements other than those mentioned in the previous paragraph, for instance a commitment by the parties to the agreement on different conditions related to an identical or comparable performance that 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 commitments that are not related to the subject of these contracts in terms of their nature or according to customary commercial practices, vertical agreements containing the so called hard-core restrictions (e. g. agreements on market allocation), the implementation of a merger, which would probably not be prohibited without a merger notification; the 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 (hereafter „the Article 39“) of a greater importance;
- less serious offences, namely: vertical agreements not containing the so called hard-core restrictions, competition restriction under the Article 39 of a minor importance and other less serious competition distortions.
- the nature of impact of competition infringement, with priority cases being those, which are expected to have an actual or unavoidable impact on a market,
- the geographical extent of area affected by the practice,
- the duration of offence and the duration of infringement,
- the number of consumers affected,
- the impact on disadvantaged and vulnerable consumers, for example in cases of limited market access,
- direct or indirect impact on a consumer, whereby the indirect impact may represent the loss of a consumer and business confidence in the proper functioning of markets,
- the type of a product, where, in terms of cases, the Office may prioritize, for example, everyday consumer products over luxury products,
- the undertaking's share on a relevant market,
- recidivism consisting of the repetition of anti-competitive conduct of the same factual nature,
- the abuse of an emergency situation in relation to the spread of COVID-19, namely by abusing a dominant position or by concluding a prohibited agreement restricting competition with an impact (including also potential) on consumers or other market participants.
2. Importance of a market investigated
The market affected by an anti-competitive practice is another factor taken into account while evaluating priority cases and in which the Office examines:
- the nature of an industry, while the priority of a case has been increasing in recently liberalized and network industries or in markets, where the Office has repeatedly detected the negative development of competition intensity, structure changes threatening a competition, the high degree of a merger or existing barriers to entry on such markets,
- the probable total amount of a damage caused to by affected market participants, if it is possible to identify or estimate such a damage in a given case,
- the existence of actions brought in private law disputes for damages in connection with the anti-competitive conduct of defendant undertakings.
3. Probability of a success
The Office often learns of the infringements of the Act on Protection of Competition only over some time, namely on the basis of complaints or its own sector inquiries. The evidence showing such infringements are kept secret by the infringers, stored at hard-to-reach accessible places, technically and physically, and, in the event of fear of detection of their anti-competitive behaviour they may destroy such an evidence. It comes out that when setting priorities it is necessary that the Office takes into account also:
In selected cases, in the final phase of evaluating the priority of a case, it is also necessary to assess whether there is another body that could solve the matter more effectively (for example, a regulator, another country's competition authority, the European Commission or a court). The Office may also decide to deal with the matter if it considers that it has a strategic importance from the competition point of view, either:
- the availability of relevant information and evidence, resp. the possibility of securing them by the Office,
- the existing decision-making practice of courts in the matter of standard of evidence and the sufficiency of documentation obtained by the Office for the issuance of a decision.
- in terms of the Office´s current aims and visions in the given period,
- in terms of the need to build the credibility of the Office in relation to the public, or due to strengthening competition enforcement rules, or
- it is a precedent case that can prevent the infringements of competition rules in the future due to its deterrent or educational effect, and thus it may be important also as an "interpretative rule" in the case of a newly adopted legislation amendment.
As a part of evaluating a priority, it is necessary to consider the method of subsequent solution of identified competition problems, and thus to consider whether a certain competition problem should be solved by an administrative proceedings or a competition advocacy. Likewise, the Office will consider the degree of the need for general prevention with regard to the effect of its anticipated pro-competition intervention in the interest of a remedy of a widerly occuring competition problems.
The above-mentioned assessment is performed by the Office on the basis of the following criteria:
- the effectiveness of way of solution,
- the causes of competition problem with the evaluation of whether the competition problem is the result of systemic errors in a sector (regulation setting, legal regulation, etc.) or of individual anti-competitive behaviour of selected undertakings,
- the frequency of occurance of competition problems in a particular sector or a field.
In addition to the long-term principles of prioritization, the Office also sets short-term priorities for a period of approximately two or three years, both in terms of practices and sectors. This does not mean that the Office will not intervene also in the cases of detection of other practices, respectively in other sectors of the economy.
In terms of practices, the Office considers the following to be a priority:
With regard to sectors, the Office considers the following priorities in the near future:
- cartels: cartel agreements between undertakings are ranked among the most serious infringements of competition rules, which bring benefit exclusively to their participants, while, according to OECD studies, they can cause the increase of prices by up to 50 % and their importance increases in cases, when there comes to areal market partitioning and an agreement on the prices of goods and services, resp. on other conditions between the substantial part of market participants in the form of long-term schemes,
- bid rigging in public procurement: the practice of bid rigging is particularly harmful in a public procurement process, as it undoubtedly has a detrimental effect on public funds spending efficiency and, as the most of anti-competitive practices, it can have a lot of forms, and thus it can be indicated by a large number of observable external expressions1,
- unnotified mergers: the Office monitors the economic combining of undertakings resulting in the lasting change of control and thus also market structure, while some unnotified mergers may pose the significant risk of irreparable damages to merger-affected markets, which the Office seeks to prevent by detecting them and severely penalizing them.
Internet sale/e-commerce is an important and growing part of the economy of the European Union and the Slovak Republic. Consumers buy and use an ever-widening range of products and services through online channels. In view of this, for the efficient functioning of e-commerce markets for the benefit of consumers, it is also necessary to ensure the effective enforcement of principles of competition law. The sector inquiry opened by the Office at the end of 2018 is an investigation conducted with the aim to obtain information on the state of competition in the application of these distribution and communication channels. Its aim is also to gather data and information on the functioning of e-commerce in specific markets and to identify potential competition problems affecting suppliers, retailers and consumers themselves. It is focused on the area of online sale of various product categories, such as white goods, brown goods, mobile devices, baby transport, sports/outdoor and house/garden.
- Internet sale/e-commerce and digital platforms
The sector of motor vehicles manufacture and sale has long been a subject to monitoring by the European Commission as well as by national competition authorities. It is one of the sectors, in which sector-specific rules have existed in long term view, and these have undergone some development and still persist to this day. At the same time, the Office perceives the significant orientation of Slovak economy towards the motor vehicles manufacture sector and the risk that any distortion of its competition characteristics and the anti-competitive practices of entities involved in its operation may have an adverse impact on a number of affected markets and the structure and health of the national economy.
- automotive/the manufacture and the sale of motor vehicles
Due to the high intensity of informatization and digitization, the sector is permanently in the center of attention of competition authorities. At the same time, as a part of significant investments and operating costs, it has the potential to be reflected in the price of most products and services in the national economy or public administration expenditures. In connection with existing problems with the applied license conditions, as well as the compatibility of established technologies and systems, the cases of the so-called lock-in are not rare. In these cases, users, clients or operators are in the future also dependent on current solutions and related fulfillment, whether in the form of other technologies and systems or additional, complementary, respectively induced services.
The sector is characterized by an information asymmetry, services provided in health care are the so-called "credence goods" - goods, where a consumer is not able to assess the quality before or after a purchase. The demand in the field of a healthcare is the so-called "derived demand" - doctors make decisions for a patient and the patients usually do not pay the full cost of services, resp. the essential health care is provided to them free of charge, the payers are health insurance companies, which distribute public resources. For these reasons, the degree of regulation is needed in the sector. There are many areas in the sector that are in mutual relations - health insurance companies providing public health insurance, institutional health care - hospitals, outpatient health care, joint medical and examination units - "SVaLZ" - laboratories, imaging equipments (MR, CT, sono, X-ray), pharmaceutical field, pharmacies, the wholesale distribution of drugs. This area is currently a subject to changes that entail new legislation across the whole sector - in all of the above areas and the setting of the regulatory framework, as well as the position of a state in all its functions and the interrelationships of entities through which it is represented and has the potential to intervene in the health care sector. On this basis, this can create a certain space for the emergence of competition problems and the role of the Office is to minimize this space not only through competition advocacy, but also in the framework of administrative punishment and thoroughful assessment of emerging mergers.
- information technologies and systems
The criteria contained in this document must be seen in the context of circumstances and phenomena in each individual case, with the comprehensive assessment of all economic and legal connections. In each individual case, the Office will evaluate also other additional factors that will be proved as relevant. The Office will also reconsider the published priorities on the basis of justified and practical experience. This document cannot be understood as a guide for the potential infringers of the Act on Protection of Competition while considering the risk of punishing, both intended and in practice already applied anti-competitive practices in selected sectors or situations.
With the interest to maintain and strengthen the necessary degree of transparency in the prioritization process, the Office will establish a prioritization commission. The Office seeks to exclude the possibility of existence of space of an employee, dealing with a complaint or a case, to subjectively evaluate the case and to decide based exclusively on its own discretion or the purposeful use of prioritization policy for the benefit of the entity concerned, either by stopping the assessment of a complaint received or the Office´s own initiative, resp. stopping an initiated investigation or failing to initiate an administrative proceedings in the matter. The prioritization commission will carry out an ex ante control and the evaluation of relevant facts and determine whether this is a priority or a non-priority case. In modifying the rules of assessment activities of the prioritisation commission, the Office will, among other things, come out also from the settings and the experience of competition authorities of other states.
The fact, that the Office comes to a conclusion that it will further not deal with a certain matter, does not mean that it will not deal with it in the future if it takes into account a new development or new circumstances in the given case.
1 Through several competition-advocacy materials and methodological guidelines, the Office paid a special attention to bid rigging in public procurement, as well as adjusted the procedure for imposing fines in such cases in order to effectively punish the infringers of competition rules. Details (in Slovak language) are available at the following links: