Abstract
This contribution discusses the domestic competition law, policy, and practice towards the grocery retail sector in Bulgaria. The report reflects the law and enforcement practice in existence as of the end of June 2014.
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Notes
- 1.
Commission on Protection of Competition (CPC) decision no. 1125/2012, page 122.
- 2.
A holding is defined as a techno-economic unit under a single management engaged in agricultural production (including the maintenance of land in good agricultural and environmental condition).
- 3.
CPC decision no. 1641/2010, page 15.
- 4.
CPC decision no. 1125/2012, page 123.
- 5.
For example, in the second bread supply chain sector inquiry (CPC Decision no. 1125/2012), it was observed that reduction in prices of wheat is not promptly and equally reflected in the price of flour and bread.
- 6.
So far, the CPC has investigated, found, and penalised cartels in vegetable oils (CPC decision no. 1150/2007), poultry meat and eggs (CPC decision no. 170/2008), dairy products (CPC decision no. 650/2008), and bread & pastry (CPC decision no. 662/2008).
- 7.
- 8.
CPC decision no. 1199/2010, page 13.
- 9.
GfK Shopping Monitor 2010, Bulgaria – The expansion of modern trade.
- 10.
In a GfK survey, made in 2011, consumers respond that they shop in convenience stores/minimarkets in neighbourhoods 18 times per month and at hypermarkets/discounters once per week. About 25 % of consumers do not shop at discounters—usually the youngest and the oldest consumers. Regular consumers of discounters are those at 20–49 years age, households with more than one member, and those with higher income. At the same time, often in smaller towns, groceries are also informal places for socialising (see GAIN Report no. 1203 of 31 January 2012).
- 11.
See GAIN Report no. 1203/31 January 2012.
- 12.
Promulgated in State Gazette 39/17.05.1991, in force as of 20 May 1991.
- 13.
Promulgated in State Gazette 52/08.05.1998, in force as of 11 May 1998.
- 14.
Promulgated in State Gazette 102/28.11.2008, in force as of 2 December 2008, as subsequently amended and supplemented.
- 15.
Autorità Garante della Concorrenza e del Mercato, http://www.agcm.it/.
- 16.
Prior to 2008, advertising messages were regulated by the Consumer Protection Act, but the national legislator concluded that adverse effects of misleading advertising practices damage competitors as much as consumers and decided to implement Directive 2006/114 by consolidating its rules into the PCA’s chapter on unfair competition (see Sec. 2 of the Supplementary Provisions of the PCA).
- 17.
Art. 29 PCA.
- 18.
According the statutory definition (Sec. 1, para. 2 of the Supplementary Provisions of the PCA), “fair business practices” means the rules regulating market behaviour, which originate from laws and common commercial usages and do not infringe the accepted principles of morality.
- 19.
Decision of the Supreme Administrative Court no. 7966/2006 on case no. 3345/2006, 2nd Grand Chamber.
- 20.
CPC decision no. 846/2009.
- 21.
Decision of the Supreme Administrative Court no. 8730/2008 on case no. 5489/2008, 2nd Grand Chamber.
- 22.
See, e.g., CPC decision no. 345/210 and CPC decision no. 375/2010.
- 23.
See http://ec.europa.eu/internal_market/consultations/2013/unfair-trading-practices/index_en.htm (last visited June 2013).
- 24.
Art. 15(1) PCA.
- 25.
CPC decision no. 1150/2007.
- 26.
CPC decision no. 495/2010.
- 27.
CPC decision no. 716/2012.
- 28.
For example, it was intended that the ex ante control over contract templates would follow the CPC procedure for “intercession for the benefit of competition”. However, this procedure was originally intended to allow the NCA to adopt opinions on the compatibility of laws and decisions of other authorities with competition law. Since such opinions have purely advisory character, they are not subject to judicial control. But if the same procedure were to be applied to review and approval of contractual terms, the absence of possibility to appeal the CPC decision would amount to uncontrolled administrative intervention in violation of fundamental economic freedoms and due process rights.
- 29.
According to the Bulgarian Constitution, an absolute majority of all MPs is required to overcome a presidential veto.
- 30.
These observations are valid as of mid-July 2014.
- 31.
Art 38 of the EU Charter of Fundamental Rights.
- 32.
The bill was designed as an amendment to the PCA, but it also supplements the Foods Act, where all new sector-specific rules would be introduced.
- 33.
Green paper on unfair trading practices in the business-to-business food and non-food supply chain in Europe (COM(2013) 37/2), pages 7–8.
- 34.
Arts 49 and 50 of the EU Charter of Fundamental Rights.
- 35.
Transposing into national law the rules of Directive 2011/7 on combating late payment in commercial transactions.
- 36.
See, e.g., CPC decision no. 284/2013.
- 37.
Transposing into national law the rules of Directive 2000/31 on electronic commerce.
- 38.
Transposing into national law the rules of Directive 97/7 on the protection of consumers in respect of distance contracts.
- 39.
In fact, the statement of objections in the Retail Cartel case (discussed in Sect. 6.2.1.2 below) highlighted the asymmetry in reductions in procurement prices with respect to retail prices as a principal anticompetitive effect of the alleged concerted practice.
- 40.
The PCA distinguishes between dumping as a form of unfair trade practice and predatory pricing as a form of abuse of monopoly or dominant position. Herein we only address dumping as a form of unfair trade practice.
- 41.
First in 2005 – CPC decision no. 50/2005, and again in 2012 – CPC decision no. 1125/2012.
- 42.
CPC decision no. 1641/2010.
- 43.
CPC decision no. 686/2012.
- 44.
CPC decision no. 50/2005, pp. 143–145.
- 45.
CPC decision no. 50/2005, pp. 35–38.
- 46.
CPC decision no. 50/2005, p. 41.
- 47.
CPC decision no. 50/2005, p. 151.
- 48.
CPC decision no. 1641/2010, p. 78.
- 49.
CPC decision no. 686/2012, p. 10.
- 50.
In fact, for the analysed period (2007–2010), none of them had reached a share in excess of 20 %.
- 51.
CPC decision no. 686/2012, p. 18.
- 52.
CPC decision no. 686/2012, p. 53.
- 53.
During the period of investigation, the 15 largest producers account for less than 5 % cultivated area and none of them has individual share exceeding 0.5 % (CPC decision no. 1125/2012, p. 19).
- 54.
In 2009 and 2010, the 12 largest milling companies processed more than 65 % of all grain sold on the national market. However, there is no actual concentration on this level either since only the three largest companies have shares in excess of 10 %, but the СRЗ index for 2009 was lower than 40. Indeed, in 2010, СRЗ exceeded 40, but the market could still qualify as relatively competitive (see CPC decision no. 1125/2012, pp. 49–50).
- 55.
CPC decision no. 1125/2012, p. 71.
- 56.
CR4 for 2009 amounted to of 27 %.
- 57.
CPC decision no. 1125/2012, p. 124 and CPC decision no. 958/2012.
- 58.
CPC decision no. 50/2005, p. 53.
- 59.
CPC decision no. 50/2005, p. 54.
- 60.
CPC decision no. 50/2005, p. 109.
- 61.
CPC decision no. 50/2005, p. 149.
- 62.
In 2009, for example, there were about 2,500 milk-producing farms that supplied 20 milk processing companies (CPC decision no. 1641/2010, p. 78).
- 63.
CPC decision no. 1641/2010, p. 79.
- 64.
CPC decision no. 686/2012, p. 55.
- 65.
CPC decision no. 1125/2012, p. 124.
- 66.
CPC decision no. 1125/2012, p. 125.
- 67.
CPC decision no. 601/2008.
- 68.
CPC decision no. 833/2012 on case no. 404/2009.
- 69.
Defendants in the case were Metro Cash & Carry Bulgaria EOOD, Billa Bulgaria EOOD, Kaufland Bulgaria EOOD, Kaufland Bulgaria EOOD & Co KD, Piccadilly AD, Maxima Bulgaria EOOD, and Hit Hypermarket EOOD.
- 70.
Some of them had already done so in 2009; thus, the only commitments offered were “not to implement such clauses in the future”.
- 71.
CPC decision no. 39/2012.
- 72.
CPC decision no. 622/2008.
- 73.
CPC decision no. 205/2005.
- 74.
CPC decision no. 1292/2012.
- 75.
CPC decision no. 576/2008.
- 76.
CPC decision no. 1150/2007.
- 77.
The best example where price recommendations were treated by the CPC as prohibited price fixing is provided by the 2010 investigation against the National Chamber of Construction Companies, which was penalised for publishing and maintaining price benchmarks that were considered anticompetitive because of the existence of disciplinary powers and mechanisms against noncompliant members (see CPC decision no. 496/2010).
- 78.
CPC decision no. 139/2000.
- 79.
In Danone, the CPC fell short of establishing a per se rule with regard to minimum resale price maintenance. Rather, it suggested that there may be instances where setting minimum or fixed prices would be permissible, provided that such vertical restraints stimulated inter-brand competition. This proposition, however, does not seem to have been further developed in the practice of the CPC, which has since Danone applied a uniform per se rule with respect to price fixing (see CPC decision no. 1292/2012).
- 80.
In Danone, the CPC suggested that a more stringent test for review should be applied to price recommendations issued by a dominant undertaking. In its subsequent practice, the CPC has taken this proposition further to suggest that analysis under Art. 15 PCA would always require a higher level of scrutiny with regard to vertical agreements involving a dominant undertaking (see, in particular, CPC decision no. 174/2006).
- 81.
CPC press release from 24 April 2013, available at www.cpc.bg.
- 82.
CPC decision no. 147/2004.
- 83.
CPC decision no. 628/2007.
- 84.
CPC decision no. 268/2008.
- 85.
CPC decision no. 187/2003 on case no. 26/2003; reversed on appeal – decision no. 6584/2004, Supreme Administrative Court, 5th Chamber; reversal confirmed on cassation – decision no. 6595/2005, Supreme Administrative Court, 2nd Grand Chamber; proceedings reopened on case no. 170/2005, ending with CPC decision no. 293/2005; reversed on appeal – decision no. 7404/2006, Supreme Administrative Court, 5th Chamber; reversal confirmed on cassation – decision no. 11909/2006, Supreme Administrative Court, 2nd Grand Chamber; proceedings reopened on case no. 309/2006 ending with CPC decision no. 257/2007, which was not appealed.
- 86.
Procedure was governed by PCA 1998, which did not provide for two stages separated by a statement of objections—this system was introduced in Bulgarian only in 2008 with the third PCA.
- 87.
In sharp contrast with its own practice on merger control cases in the retail sector.
- 88.
CPC decision no. 88/2005, reversed on appeal – decision no. 6894/2006, Supreme Administrative Court, 5th Chamber.
- 89.
Under Bulgarian law, “dominance” is defined as a position of market strength enjoyed by an undertaking, which with a view of its market share, financial resources, access to markets, level of technological development, and business relation to other undertakings is independent from its competitors, suppliers, and customers and may hinder competition on the relevant market (Art. 20 PCA).
- 90.
CPC decision no. 187/2003.
- 91.
CPC decision no. 833/2012.
- 92.
Defined in Art. 24 PCA as a lasting change of control over an undertaking as a result of (i) the merger of two or more independent undertakings or (ii) the acquisition of control over an undertaking by person(s) who already control one or more other undertakings or (iii) the creation of a full-function joint venture company.
- 93.
For example, in 2008, only Maxima was involved in 5 merger control proceedings, related to acquisition of assets of various size, ranging from part of the existing network of the “Evropa” retail chain to large buildings and even individual neighbourhood stores.
- 94.
Previously in its case law under the 1998 PCA, for undertakings domiciled in Bulgaria the CPC was using their aggregate turnover—both from national sources and sales abroad.
- 95.
Sec. 1, para. 15 (a) of the Supplementary provisions to the PCA.
- 96.
The acquisition of the local “Piccadilly” chain by the Serbian Delta Maxy group in 2007 (CPC decision no. 784/2007), the acquisition of the local “Evropa” chain by Maxima (CPC decision no. 1057/2008), the acquisition of the local Plus franchise by LIDL in 2010 (CPC decision no. 1199/2010), the acquisition of Delta Maxy by Delhaize in 2011 (CPC decision no. 456/2011).
- 97.
E.g., CPC decision no. 416/2007 and CPC decision no. 794/2007.
- 98.
See CPC decision no. 1199/2010, p. 17.
- 99.
See CPC decision no. 416/2007, footnote 7 at page 8, and CPC decision no. 794/2007, footnote 2 on p. 7.
- 100.
Sec. 1, para. 15 (b) of the Supplementary provisions to the PCA.
- 101.
See, e.g., CPC decision no. 794/2007 (referring to several relevant markets on “the territory of the cities of Sofia, Varna, Burgas, Veliko Tarnovo”), CPC decision no. 1244/2010 (“the territory of Sofia”); CPC decision no. 1545/2012 (“the territory of the city of Varna”); CPC decision no. 284/2013 (“the territory of the cities of Sofia and Varna”).
- 102.
It should be noted that there is no representative association of small retailers on national level. The Bulgarian Retail Association is composed primarily of SMP retail merchants operating stores in malls and prime city locations. Some “traditional” retailers are members of the National Association of Small and Medium Businesses, which comprises primarily companies from the light industry sectors (food processing and textiles).
- 103.
CPC decision no. 284/2013, p. 11, referring to CPC decision no. 1244/2010 and CPC decision no. 1199/2010.
- 104.
See CPC decision no. 284/2013 and CPC decision no. 456/2011.
- 105.
CPC decision no. 284/2013, p. 18.
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Petrov, A. (2015). Bulgaria. In: Kobel, P., Këllezi, P., Kilpatrick, B. (eds) Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social Responsibility. LIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-45753-5_6
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