Ministry of the Economy Competition Protection Office Annual Report … · 2015-11-23 · 4.1.6...

Ministry of the EconomyCompetition Protection Office

Annual Report 2006

COMPETITION PROTECTION OFFICE – ANNUAL REPORT 2006

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CONTENTS

CONTENTS ........................................................................................................................................ I

1 DIRECTOR'S ADDRESS............................................................................................... 1

2 ORGANISATION AND WORK OF THE OFFICE........................................................... 32.1 Staff ............................................................................................................................... 3

2.1.1 Staff training................................................................................................................... 52.2 Office activities............................................................................................................... 5

2.2.1 Assessment of the Office work by clients....................................................................... 6

3 COMPETITION PROTECTION SYSTEM...................................................................... 83.1 Administrative procedure ............................................................................................... 8

3.1.1 Restrictive practices....................................................................................................... 83.1.2 Concentrations............................................................................................................... 9

3.2 Minor offences procedure ............................................................................................ 11

4 APPLICATION OF LEGISLATION............................................................................... 124.1 Restrictive practices ..................................................................................................... 14

4.1.1 ZBS.............................................................................................................................. 144.1.2 DDD Koper and ZZV Maribor....................................................................................... 154.1.3 Slopak.......................................................................................................................... 164.1.4 General conditions for functioning of the Slovene book market ................................... 174.1.5 Spas............................................................................................................................. 174.1.6 Mobitel commitments ................................................................................................... 18

4.2 Concentrations............................................................................................................. 194.2.1 Europlakat.................................................................................................................... 194.2.2 GEN-I........................................................................................................................... 204.2.3 UPC Telemach............................................................................................................. 22

4.3 Minor offences ............................................................................................................. 23

5 OTHER ACTIVITIES OF THE OFFICE............................................................................................... 255.1 Implementation of the Act on the Access to Information of Public Character by the Office in the year 2006 25

5.1.1 Information of public character – fundamental human right .................................................. 255.1.2. Requests for communicating and re-use of information of public character, addressed at the

Office in 2006............................................................................................................... 265.1.3 Catalogue of information of public character ........................................................................ 275.1.4 Drafting annual report on implementing ZDIJZ..................................................................... 27

5.2 Advocacy275.2.1 Consultation on liberal professions....................................................................................... 28

5.3 Legislative activities ..................................................................................................................... 285.4 Activities within ECN .................................................................................................................... 295.5 International activities .................................................................................................................. 29

6 YEAR 2007 ..................................................................................................................................... 31


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1 DIRECTOR'S ADDRESS

Mutual intertwining of capital and interests, frequently accompanied by a need to merge in order to reach the economy of scale and consequently better competitiveness are characteristics of small economic systems. Such legitimate intentions may, however, in certain cases turn into a wish to dominate the market in a manner that is legally unacceptable, a manner that by limiting the competition on the market weakens competitiveness, innovation and development of a company, sector and the economy as a whole.

In addition to carrying out tasks pursuant to the law in order to detect (and sanction) restrictive practicesand to control concentrations, the Competition Protection Office in the year 2006 focused on activities that would in an informal way help raise awareness of the need for more competition, for a gradual abolishment of entry barriers and consequently more adequate conditions for the development of competition, in particular in the area of “liberal professions”. A consultation seminar that was organised to this end was an important contribution in a wider framework of activities aimed at making services for which special conditions are required less dependent on possible legislative limitations and more open to innovation on the supply side. This would give the consumer more choice and a better price-quality ratio. In the past competition advocacy, such as this, proved to be useful and important and will continue to be an important activity in the Office.

As the report shows, the control of concentrations represents the largest part of the operational activities carried out by the Office. In comparison to previous years, there were more complete notifications. However, incomplete notifications, late submission of supplements, frequent inaccessibility of information, poor response to questionnaires and a passive attitude of clients prolong procedures as well as put an additional burden on the Office and the clients. The consequence is efficiency that is at a lower level than desired.

The basic mission of the Office is to detect and prevent restrictive agreements and abuse of a dominantposition. Statistical data show that the Office was successful in 2006. Five completed procedures and detected violations in this field should be considered a good result. The question remains, however, how many violations would have been detected, if the legislative framework had been more adequate (in particular with regard to sanctions), if institutions had been more efficient and if the level of competition and legal culture had been higher.

In 2006 the Office started working as an administrative offence authority and imposed sanctions as stipulated by the law. Future development will to a large extent depend on the court decisions regarding the decisions on offences, since that will make clear the attitude of the state towards the violations of the legislation on competition protection. Unfortunately in the past the courts established the practice of not sanctioning restrictive agreements and abuse of a dominant position, regardless of relatively low fines.

Regarding restrictive agreements, it has to be emphasized that in three cases these were decisions byassociations of undertakings. Since this was common practice also in the past it brings up the questions about the role and responsibility of individual chambers and trade associations.

Although the Office has been authorised to conduct procedures on both legal bases, the provisions of the national legislation and the European legal order, since Slovenia became a EU member, it was for the first time established in a procedure on the abuse of a dominant position that such action was a violation of Article 10 of the Prevention of Restriction of Competition Act, as well as a violation of Article 82 of the EC Treaty.


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Since Slovene market is a part of the single European market where the rules of the game are unified, more such cases could be expected in the future. The legal framework will consequently have to provide comparably equal standards, in particular regarding sanctions.

Mention should be made of the participation in the European Competition Network, as well as in Advisory Committees and in other forms of international cooperation. In addition to providing an opportunity to co-decide, such cooperation also upgrades the level of professionalism, which is evident in the work.

The Office carries out tasks stipulated by the legislation, however, it should not overestimate its importance and it has to be interested in the feedback of the clients. To this end a questionnaire was sent out answers to which should serve as our guide in the coming years.

An analysis of work and the feedback from the clients give clear guidelines for our future work and for the urgently needed changes. Legislation needs to be amended in order to facilitate better efficiency, more attention should be paid to the detection of restrictive practices, sensitive areas of liberalised sectors should be monitored, and a more adequate level of staffing should be provided. Only thus an efficient system of competition protection will be able to contribute to a better competitiveness of the system as a whole and work towards reaching the goals of the Lisbon strategy.

ANDREJ PLAHUTNIKDirector


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2 ORGANISATION AND WORK OF THE OFFICE

Competition Protection Office of the Republic of Slovenia (hereinafter: the Office) was established on 21 October 1994. It is organised as a body within the Ministry of the Economy, however, it is independent in carrying out the tasks of competition protection. The headquarters of the Office are at Kotnikova 28/I in Ljubljana, where the Office moved to at the end of 2006. It is headed by Mr Andrej Plahutnik, LLB.

There are two sectors organized within the Office, one for economic analysis and the other for legal affairs and investigative acts, within which there is a department for investigative acts (see Picture 1).

Picture 1: Office organization

2.1 Staff

In 2006 there were 17 persons employed at the Office who were authorised to conduct procedures (hereinafter: officials), and three trainees, of which one became employed at the Office following the end of the trainee period. Half of the officials (see Chart 1) at the Office are law graduates, and half economics graduates. All officials employed at the Office have university education and two have completed a Masters Degree (see Chart 2). There is one person responsible for administrative support. While the Office also makes use of services of the main office of the Ministry of the Economy.

Competition Protection Office of the Republic of Slovenia Kotnikova 28/I1000 Ljubljana, Slovenijawww.uvk.gov.sie-mail: [email protected]

C o m p e titio n P ro te c t io n O ffic e o f th e R S

D irec to r

E c o nom ic a n alyis is s e c to r L e g a l a ffa irs a n d in ve s tig a tivea c ts sec to r

In ve s tig a ti ve a c ts d e p a rtm e n t


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Chart 1: Education structure of officials (on 31 December 2006)

53%

47%economists

lawyers

Chart 2: Number of officials with regard to the level of education (on 31 December 2006)

88%

12%

level VII

level VIII

Regarding the period of employment, the largest share of officials has been employed at the Office from 1 to 3 years (see Chart 3). There is only one other official, in addition to the director, who has been employed at the Office since its establishment. Due to inadequate financial and organisational arrangements, the Office is facing problems when employing new staff.

Chart 3: Number of officials with regard to the length of the employment period at the Office (on 31December 2006)

6%

34%

24%

24%

12% up to 1 year

from 1 to 3 years

from 3 to 5 years

from 5 to 10 years

over 10 years


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2.1.1 Staff training

The staff training is organised in training sessions at the Office and in external seminars. In addition to obligatory participation for the newly employed in seminars organised in preparation for exams on conducting procedures pursuant to the General Administrative Procedure Act1 (Zakon o splošnem upravnem postopku, hereinafter: ZUP) and the Minor Offences Act2 (Zakon o prekrških, hereinafter: ZP-1), the staff in 2006 took part also in other seminars, related to the work of the Office that took place in Slovenia and abroad.

Staff members participated in the following seminars in Slovenia:- seminar on the Decree on administrative operations;- seminar on the Act on the Access to Information of Public Character;- seminar on minor offences law;- technical training at the Bank of Slovenia (payment systems).

Training abroad participating in:- CECI training on remedies;- training on concentrations (EU);- ICN workshops on cartels.

In 2006 two officials of the Office took part in the training of the European Commission (hereinafter: Commission), Directorate General for Competition, in Brussels. They participated in seminars and took an active part in the work of selected departments at the Directorate General for Competition. Thus they became acquainted with the theoretical and practical aspects of the Commission’s work in the field of competition protection. The following were the topics of the seminars: fundamentals of the EU competition law, conducting antitrust procedures, conducting procedures in case of violations of Articles 81 and 82 of the Treaty establishing the European Community3 (hereinafter: EC Treaty), cooperation of the Commission and national bodies (competition authorities and national courts), conducting procedures related to cartel agreements, and the implementation of legislation in the field of concentrations.

2.2 Office activities

In 2006 the Office dedicated most of its time to the application of legislation, as is shown in Chart 4. Other activities carried out by the Office included advising clients and competition advocacy, carrying out sector inquiries and applying Act on the Access to Information of Public Character4 (Zakon o dostopu do informacij javnega značaja, hereinafter: ZDIJZ). The application of legislation includes detection of violations in the administrative and in the minor offences procedures.

1 Official Gazette RS, No 80/99, 70/00, 52/02, 73/04, 119/05 in 105/06- ZUS-1.2 Official Gazette RS No. 7/03 and cont.3 Official Gazette RS MP, No 3/044 Official Gazette RS, No 51/2006 – UPB2 and 117/2006


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Chart 4: Office activities in 2006

Data in Chart 5 show that in 2006 the amount of time spent by the Office on the implementation oflegislation decreased in comparison to the previous year, due to the advocacy. There was a decrease also in the number of received complaints for which the Office is not competent to deal with and had to refer them to other bodies. The largest share of such referred complaints was sent to the Trade Inspectorate of the Republic of Slovenia. A decrease was recorded also in the number of requests for the access to information of public character.

Chart 5: Comparison of the Office activities in 2005 and 2006

2.2.1 Assessment of the Office work by clients

The Office conducted a survey among clients that in 2006 took part in the procedures at the Office. The aim of the survey titled Assessment of the Work of the Competition Protection Office in 2006 was to establish whether the clients were satisfied with the work of the Office and to receive proposals and comments that would facilitate an improvement in our services. The clients assessed each activity with the scores: 5 (very good), 4 (good), 3 (average), 2 (poor), and 1 (very poor).

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2005

2006Application of Legislation

Advocacy

Application of ZDIJZprovisionsSector Inquiries

Refferal of Complaints

Other

61%22%

3%

2%

5%

7%Application of Legislation

Advocacy

Application of ZDIJZ

Sector inquiries

Referral of Complaints

Other


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The Office sent the questionnaire to 53 clients and received in total 29 answers. On the basis of a limited number of received answers, the Office concluded that the total average score for the work of the Office in 2006 amounted to 4.14. This means that the work of the Office was assessed as “good”. Individual average scores for each activity are shown in the table below.

Table 1: Average scores for the work of the Office by activity

In the second part of the questionnaire clients listed their comments and proposals related to the publication of the following data on the web page of the Office:

- publication of decisions, without classified data;- publication of opinions or practice on the definition of relevant markets;- publication of articles in the field of competition protection;- publication of different templates to assist clients in procedure at the Office.

Due to a small number of received answers, it is difficult to asses the work of the Office. Although the comments of the clients make it clear that clients complain mostly about the length of procedures at the Office.

Activity: Average mark: Accessibility and readability of general information 4Possibility to obtain information related to procedures 4,2Unbiased and legally correct dealing with cases 4,2Speed of dealing with cases 3,6Respecting confidentiality in procedures 4,5Accessibility of officials 4,4Technical expertise of officials 4,2Understanding positions of clients and the sector at issue 4Correctness and readability of issued decisions 4,1


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3 COMPETITION PROTECTION SYSTEM

The protection of competition is a constitutional category defined in the third paragraph of Article 74 of the Constitution of the Republic of Slovenia, which prohibits acts that would contrary to the law limit competition.

Material provisions on the protection of competition are regulated in the Prevention of Restriction of Competition Act (Zakon o preprečevanju omejevanja konkurence, hereinafter: ZPOmK)5 and a Decree on block exemptions.6 Since Slovenia’s membership in the European Union, the Community rules also apply in the territory of the Republic of Slovenia, namely Article 81 and 82 of the EC Treaty regarding restrictive practices and Merger Regulation.7

The protection of competition is enforced through the administrative procedure and minor offences procedure conducted by the Office, and civil and criminal procedure at courts. In case of violations of competition rules of the Community, the Commission is also competent. Bodies, competent for the competition protection are: the Office, the Commission and courts.

3.1 Administrative procedure

In accordance with ZPOmK, the Office is in the administrative procedure competent for investigating restrictive practices, i.e. possible violations of Articles 5 and 10 of ZPOmK, and Articles 81 and 82 of the EC Treaty, which prohibit restrictive agreements and prohibit the abuse of a dominant position, and for control of concentrations (Articles 11 and 13 of ZPOmK).

The decision-making procedure of the Office regarding the administrative procedure is regulated by part VI of ZPOmK, whereas pursuant to the second paragraph of Article 18 of ZPOmK, ZUP provisions areused as subsidiary.

3.1.1 Restrictive practices

A procedure at the Office begins with an obligatory order on the commencement of procedure, which may start ex officio (when the Office learns of circumstances implying probability that ZPOmK provisions have been violated) or based on the complaint (if complainant demonstrates a legal interest in the conduct of the procedure and if the submitted application implies the probability that ZPOmK provisions have been violated). A summary of the order on the commencement of procedure is published in the Official Gazette of the RS, and within 30 days of its publication any natural or legal person that demonstrates a legal interest may register for the participation in the procedure. Following the completion of the investigative procedure, the Office issues a decision that is served on all participants in the procedure, and its operative part is published in the Official Gazette of the RS. Judicial protection against final decisions of the Office is provided in administrative disputes. If acts that are inadmissible pursuant to ZPOmK cause harm to somebody, that person may demand damages in accordance with the law of obligation.

When restrictive practices of undertakings have an actual or potential influence on trade between member states and the procedure is conducted by the Office8, the Office has to apply Community law, 5 Official Gazette RS, No 56/99, 37/04 and 40/07.6 Official Gazette RS, No 69/02, 109/02 and (6/03-corr.).7 Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings .8 The authority to decide on Articles 81 and 82 of the EC Treaty is given also to national courts.


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in addition to national law. Restrictive practices that may have a considerable effect on trade between member states may be reported either to the Office or the Commission. If authorities in several member states launch a procedure regarding the same restrictive practice, authority may suspend the procedure or dismiss the complaint on the basis of the fact that another authority is already dealing with the case. The Commission may dismiss the case for the same reason. Attention should be brought also to the fact that when national courts are deciding on a restrictive practice pursuant to Articles 81 and 82 of the EC Treaty and the Commission had already taken a decision in the case, they may not adopt a decision contrary to the one adopted by the Commission. Delimitation of competences and the manner of cooperation of national authorities and the Commission are regulated by the Regulation 1/2003.9

3.1.2 Concentrations

In the control of concentrations, some special procedural rules apply, in addition to the aforementioned general procedural rules. A procedure starts with a notification in a particular form for the notification of company concentrations.10 Of course, the Office may start a procedure also ex officio.

Concentration must be notified to the Office when pursuant to ZPOmK two conditions are fulfilled, legal and at least one economic condition. After the receipt of a notification, the Office examines it. If concentration does not raise serious doubts as to its compatibility with the competition rules, the Office has to issue a decision declaring its compatibility within 30 days. In the opposite case, the Office issues an order commencing procedure and it has additional 90 days to issue a decision. If notified concentration does not fall within the scope of ZPOmK the Office issues a decision stating this. After issuing an order to commence the procedure the Office may order companies involved in the concentration and the competent authorities to withhold the implementation of the concentration until the decision is issued.

There are some particular features also with regard to parties to a procedure. The law explicitly stipulates that in procedures involving concentrations of banks, savings banks and other financial institutions, the Bank of Slovenia is a party to the procedure, whereas in procedures involving concentrations of insurance companies, the Ministry of Finance is a party to the procedure. These are the so-called legal participants, who do not need to apply for the status of a party to the procedure and who do not have to demonstrate a legal interest, as are the rules for other legal and natural persons. This particular provision applies also to procedures involving concentrations of media houses and media operators, where the Ministry of culture is a party to the procedure. In case of entities broadcasting radio 9 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of competition rules of Articles 81 and 82 of the Treaty. 10 Decree on the contents and required elements of the form for the notification of company concentrations (Uredba o vsebini in zahtevanih elementih obrazca za priglasitev koncentracije podjetij, Official Gazette RS, No 4/2000)

There is a duty to notify concentrations to the Office if: an operation is a concentration (legal condition), if the combined aggregate annual turnover of all the undertakings concerned (together with

affiliated undertakings) in each of the past two years surpassed the threshold of eight billion tolars before tax in the Slovene market (economic condition) or

if all the undertakings concerned (including affiliated undertakings) jointly achieve more than 40 per cent of sales, purchases or other transactions in a substantial part of the Slovene market with products that are the subject of a transaction or with their substitutes(economic condition).


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and television programmes, the Agency for post and electronic communications of the Republic of Slovenia is also a party to the procedure11.

Concentrations with Community dimension are as a rule reviewed at the Community level and are entirely decided upon by the Commission, whereas a national body may decide on concentrations that do not have such effect.

Prior to the notification of a concentration with Community dimension, companies may file a reasoned

submission with the Commission, claiming that a concentration may significantly affect competition in a market within member state which presents all the characteristics of a distinct market. They may consequently propose to the Commission that the concentration in question be in whole or in partexamined by this member state. Furthermore, before the notification to the competent authorities of member states, companies may inform the Commission by means of a reasoned submission that the concentration, which does not have Community dimensions, should be reviewed by the Commission, under the condition that it has to be filed in at least three member states.

The Commission may, by means of a decision, refer the notified concentration to the competent authorities of the member state if the member state informs the Commission that:

- a concentration threatens to affect significantly competition in a market within this member state, or

- a concentration affects competition in a market within this member state, which has all the characteristics of a distinct market and does not constitute a substantial part of the Common market.

If the Commission is of the opinion that a distinct market and the aforementioned threat exist, it either deals with the case itself or refers the case entirely or partly to the competent authorities of the member

11 Article 62 of the Media Act (Zakon o medijih, official consolidated text, ZMed-UPB1, Official Gazette RS, No 110/06).

Conditions for notification to the Commission: the combined aggregate worldwide turnover of all the undertakings concerned is more than 5

billion euros, the aggregate Community-wide turnover of each of at least two undertakings concerned is

more than 250 million euros, unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same member state.

If a concentration does not reach the aforementioned thresholds, it is still regarded a concentration of Community dimension, if the following conditions are met:

the combined aggregate worldwide turnover of all the undertakings concerned is more than 2500 million euros,

in each of at least three member states, the combined aggregate turnover of all the undertakings concerned is more than 100 million euros,

in each of at least three member states the aggregate turnover of each of at least two of the undertakings concerned is more than 25 million euros,

the aggregate Community-wide turnover of each of at least two undertakings concerned ismore than 100 million euros, unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same member state.


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state in question to apply provisions of national legislation on competition. If its opinion is different, it adopts a decision addressed to the member state in question, and deals with the case itself.

If a concentration affects competition in a distinct market within the territory of a member state, which does not form a substantial part of the common market, the Commission refers the whole or part of the case relating to this distinct market to the competent authority of the member state in question, if it considers that such distinct market is affected.

3.2 Minor offences procedure

On 1 January 2005 the Office became the competent body for minor offences and is as such pursuant to ZP-1 competent for deciding on minor offences regulated by ZPOmK. According to new rules, the Office issues a decision on a minor offence in a fast-track procedure. It may impose fine on infringer, who concludes a restrictive agreement, abuses a dominant position or fails to notify intended concentration or does not notify it in due time. Prior to issuing a decision on a minor offence, the Office has to send written notice to the infringer, informing him about the minor offence. Within 5 days of the receipt of the notice infringer has an opportunity to submit a written statement about the facts or circumstances of the minor offence. The right to judicial protection at the local court is guaranteed against a decision by the Office.


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4 APPLICATION OF LEGISLATION

The Office dedicates most of its time to the application of the legislation, i.e. detecting violations of the ZPOmK provisions and the compliance of the notified concentrations within administrative procedures, and the implementation of powers pursuant to ZP-1 with regard to the minor offences procedure.

The largest part of the application of legislation represents control of concentrations. In the year 2006 there were 51 decisions issued, of which 46 were procedures regarding control of concentrations and 5 procedures finding restrictive practices. There were no major differences with the previous year (see Chart 6).

Chart 6: Comparison of application of legislation activities in 2005 and 2006 – number of issued decisions

05

1015202530354045505560

RestrictiveAgreements

Abuse of DominantPosition

Concetrations

Num

ber o

f Iss

ued

Dec

isio

ns

2005

2006

ZPOmK does not explicitly specify a due time period in which decisions should be issued on restrictive practices. Whereas due time periods of 30 or 90 days are prescribed for decisions in the control of concentrations. In the cases of concentrations, the Office thus has to issue in 30 days either a compliance decision or an order to commence the procedure and in further 90 days reach a decision in the initiated procedure.

In the cases of concentrations where an order to commence the procedure is not issued, it takes on average 30 days between the concentration being reported and notification completed, and 20 days from complete notification to the issue of a decision. In the cases of concentrations where an order to commence the procedure was issued, these periods are slightly longer. It takes on average 49 days from reporting a concentration to complete notification, and a further 119 days for the issue of a decision. Whereas it takes on average 10 days between the complete notification and the order to commence the procedure (see Chart 7).

In the case of restrictive practices procedures are slightly longer due to their subject matter. From the date of complaint to the commencement of procedure it takes on average 158 days, and a further 216 days from commencement of procedure to the issue of a decision (see Chart 7).

Procedures on concentrations are longer also due to the fact that 64% of received notifications are incomplete (see Chart 8). These are notifications that do not have all the elements stipulated by the


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Decree on the subject matter and required elements of the form for the notification of company concentrations.12 The Office cannot decide on the notified concentration until it receives all the data.This means that in practice the Office has to call on those submitting notifications to amend their notification. This considerably prolongs the decision-making procedure.

Chart 7: Duration of procedures at the Office (in days)

30

49

20

119

158 216

0 100 200 300 400

Procedures completed without an order tocommence a procedure

Procedures completed following theissuing of an order to commence a

procedure

Con

cent

ratio

nsR

estri

ctiv

e Pr

actic

es

Time elapsed fromreceiving a notification tonotification being complete

Time elapsed fromreceiving completenotification to the issue ofa decision

Time elapsed fromreceiving a complaint toissuing an order tocommence a procedure

Time elapsed from issuingan order to commence aprocedure to the issue of adecision

Chart 8: Concentration notifications

12 Official Gazette RS, No 4/00

36%

64%

Complete Notifications

Incomplete notifications


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4.1 Restrictive practices

The Office monitors the following restrictive practices: restrictive agreements, decisions by associations of undertakings or concerted practices (Article 5 of ZPOmK, or Article 81 of the EC Treaty) and abuse of a dominant position (Article 10 of ZPOmK or Article 82 of EC Treaty).

In the year 2006 there were 5 decisions issued. In four cases violations of Article 5 of ZPOmK were established, and in one case abuse, a violation of Article 10 of ZPOmK. The predominant type of Article 5 violations are still decisions by associations of undertakings, since three out of four violations were of this type. Fourth violation was bid-rigging.

The reason that the majority of violations detected are decisions by associations of undertakings lies probably in the fact that it is easier to detect and prove such violations. These are agreements that are often adopted in a formal manner and publicly accessible. This implies, however, that competition rules are either not well known in Slovenia or fines are too small to play a preventive role on potential infringers.

The only case of an abuse that was completed in 2006 was also the first case where the Community rules were used and a violation of Article 82 of the EC Treaty was established (the Slopak case). There was another procedure launched on violation of Article 82, which was not yet completed in 2006.

In 2006 a deadline passed for the first report on the implementation of commitments adopted in the procedure against the company Mobitel.

Important power given to the Office for the investigation of restrictive practices is the right of the Office to carry out an investigation in companies. The Office only rarely chooses to use this possibility. In 2006 the Office carried out an investigation in companies when investigating restrictive practices in DDD Koper and ZZV Maribor case.

Following are descriptions of cases.

4.1.1 ZBS

In the procedure against the Bank Association of Slovenia – GIZ (hereinafter: ZBS), initiated ex officio, the Office found that a violation of Article 5 in relation to Article 3 of ZPOmK took place. The supervisory board of ZBS adopted a decision calling on banks to cancel contracts for standing orders at the time of launching a common bank product – BanKredit. After conducting a procedure, the Office established that the object of provisions of the aforementioned decision was to cancel an efficient service for paying goods or services in instalments and consequently to exclude competitors (points of sale) from offering the possibility of paying in instalments or of crediting at points of sale. A standing order is a modern payment instrument that served as an efficient mechanism to provide the possibility of paying in instalments or crediting. ZBS wanted to start an efficient marketing campaign of its product by excluding from the market of instalment payments (crediting) at selling points the offer of instalment payments with standing orders and thus excluded the possibility that sellers would offer to their customers the instalment payments with standing orders as a more favourable alternative. When buying goods or services in instalments using a standing order, the customer was able to pay the price of goods or services in several instalments without any additional costs, whereas in the case of the BanKredit service, they have to pay a high price for the application approval, insurance and interest rates. At the


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cost of consumers, ZBS members replaced a less expensive manner of crediting with a more expensive one.

On 15 November 2006 the Office issued a decision ordering ZBS to re-establish circumstances comparable to those that existed before cancellation of the possibility to pay in instalments or crediting with a standing order at a selling point. In the decision the Office established that the disputed decision of ZBS represents a decision by an association of undertakings on the conditions of operating in a market, whose object is prevention, restriction and distortion of competition in the Republic of Slovenia, which makes it prohibited and null. By the decision the Office imposed on ZBS the following duties: to inform in writing all its members that the decision in question was null, to call on all its members in writing to facilitate the establishment of such contractual relations with business partners (traders and others) that would allow them to independently offer sale in instalments or crediting at a point of salewith the use of a standing order or any other adequate payment instrument, and to inform in writing all its members that statements sent to be signed in accordance with the decision of the supervisory board are null and void in the part referring to the launch of the activity. The decision is not yet final, since ZBS filed action against the Office decision at the Administrative court in Ljubljana, and the court has not yet made its ruling.

In addition to the administrative procedure minor offences procedure was launched simultaneously ex officio against ZBS and the responsible person at the ZBS because of the suspicion that a minor offence was committed pursuant to the first and third paragraph of Article 52 of ZPOmK.

4.1.2 DDD Koper and ZZV Maribor

In the procedure to establish the existence of a prohibited restrictive agreement, which was initiated ex officio on 24 March 2006 against the company DDD, Dezinfekcija, dezinsekcija, deratizacija, d.o.o. Koper (hereinafter: DDD Koper) and against the Health Care Institute Maribor (Zavod za zdravstveno varstvo Maribor, hereinafter: ZZV Maribor), a decision was issued on 26 October 2006. It established that Article 5 of ZPOmK was violated when DDD Koper and ZZV Maribor in the procedures to submit a bid to a tender for the implementation of measures to protect the goods in the period 2000-2005 agreed to make only joint bids in a manner that one submitted a bid and the other was its sub-contractor and would not bid itself. Thus they avoided being each other’s competition in a tender, although they had the capability to submit two independent bids to a tender. As a result they limited the competition on the market of implementing measures to protect goods (services of disinfection, disinsection and deratization) and in the aforementioned period divided between them tenders for the implementation of goods protection, the calls for which was made by ZRSBR. The object of this agreement was to divide the market.

Bidding in tender procedures with a sub-contractor is not necessarily contrary to competition law, however, this was a case of bid rigging (pre-arranged bids), which is one of the most serious violations of competition law. Bid rigging or collusive tendering is a form of a restrictive agreement (cartel), whereby companies cooperate in submitting bids as a response to a call for tenders. These are different forms of agreements among bidding companies (competitors), the object of which is to reach the highest price in a situation where the contracting authority (usually national or local authority) buys goods or services on the basis of a public tender. The object of such agreements is to exclude in advance competition, which could otherwise take place or would be present to a considerably larger extent. The consequence of bid rigging are higher costs of the budget users that are buying products or services through a public tender procedure system, since the price that the contracting authority has to pay to the selected supplier is usually higher than it would have been otherwise. If (some) bidders agree in advance about the subject matter of their bids and even about the winning bid, the aim of public


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tenders is prevented, and the competition among bidders that would exist in the absence of such agreements is distorted and sometimes completely prevented. One of the forms of bid rigging is also when in the relation bidder – sub-contractor, competitors do not submit a bid or submit a non-competitive bid in return for getting subcontracting work.

In the course of the procedure, the Office conducted investigative activities in both companies. It reviewed business documentation and mutual correspondence between DDD Koper and ZZV Maribor.

The Office also conducted a minor offence procedure against DDD Koper and ZZV Maribor and their responsible persons and imposed fines in the total amount of 62,000,000 tolars. The decision on the minor offence is not yet final, since requests for judicial protection were filed.

4.1.3 Slopak

The Slopak case is the only case of abuse of a dominant position, which was completed in 2006. At the same time this was the only case where a violation of the Community law was established – Article 82 of the EC Treaty.

First information of alleged irregularities on the market for collecting and recycling commercial waste packaging was received by the Office in December 2005 from the company Interseroh d.o.o., Trzin, a competitor of the company Slopak d.o.o., Ljubljana, on the aforementioned market. The procedure was launched ex officio on 27 February 2006.

The decision, which was issued on 26 December 2006, established that Slopak abused the dominant position in the market for collecting and recycling commercial packaging waste by preventing since January 2005 its customers on the relevant market from freely joining competing waste management system indirectly with actions and directly on the basis of provisions in the standard contract on the transfer of duties. Disputed provisions of the contract are in particular the provisions tying the transfer of duties to manage commercial packaging waste and household packaging waste, the request to transfer the entire volume of packaging of the contractor to Slopak with planned sanctions for derogations of the announced annual volume, and an unjustifiably long, 12-month notice period with the possibility to cancel a contract at the end of each quarter in the case of contracts concluded for an unlimited period. The action that is considered to be an abuse is in particular the requirement for the entry of contractors into the Slopak system in the case when packaging put into circulation on the territory of the Republic of Slovenia carries the green dot mark.

In order to remedy the violations, the following measures were ordered: to amend the provisions of the standard contract regarding the separation of both types of packaging waste, to determine the quantity of transferred waste packaging, to shorten the period of notice and to modify relations with other systems for the management of packaging waste regarding the use of the green dot mark. The deadline for amending the provisions of the standard agreement is 3 months from receiving the decision and for modification of relations, one year.

A procedure was launched also with regard to the alleged cross-subsidisation among different services of management of packaging waste. However, on the basis of gathered information it was assessed that probability for such actions did not exist. Therefore the procedure was stopped in this part.

In this case the conditions for the application of Article 82 of the EC Treaty were fulfilled, since this was abuse affecting trade between member states. The fact that Slopak has a dominant position on the market for collecting and recycling commercial waste packaging on the entire territory of the Republic of


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Slovenia, may have a considerable influence on trading among member states. In addition, this influence is shown also in the fact that among contractors and suppliers of services there may be companies from other member states, which are prevented from operating in a normal manner due to the abuses by Slopak.

Slopak has filled a legal action in an administrative dispute against the decision, which is final.

A minor offence procedure was launched against the legal entity and the responsible person, however, it was not completed in 2006.

4.1.4 General conditions for functioning of the Slovene book market

The company Piano, Jože Piano s.p., Ljubljana, filed a complaint on 10 February 2005 to launch a procedure to establish an alleged violation against the Professional Association of Publishers and Booksellers of Slovenia (Strokovno združenje založnikov in knjigotržcev Slovenije, hereinafter: SZZKS) and the Society of Slovenian Publishers, for adopting General conditions for functioning of the Slovenebook market (hereinafter: General conditions).

On 14 April 2005 a procedure was launched ex officio against different parties and only with regard to some provisions of the General conditions. In the procedure it was established that some provisions of the General conditions which entered into force on 3 August 2004 and were adopted by the Chamber of Commerce of Slovenia (Gospodarska zbornica Slovenije, hereinafter: GZS), Association for print and media (Združenje za tisk in medije, hereinafter: ZTM), and SZZKS, represent a decision by an association of undertakings, which limits competition.

In the decision issued on 1 February 2006 the following disputed provisions of General conditions were proclaimed null and prohibited: provisions regarding a unified book price set by a publisher prior to publishing a book for the entire territory of the Republic of Slovenia, for all selling routes, valid for 12 months from date of publishing, a unified discount, which was limited to at least 5% and then changed on 3 December 2005 into an unlimited discount, which was still unified for all customers, and determining a unified sales price. The object of each disputed provision alone and of all the provisions combined is to exclude competition among publishers and through them among booksellers and selling routes, which limits companies in freely setting operating conditions. The requirement for a unified price and unified discounts is put in place, regardless of the business policy of each company and regardless of costs that they bare when using different selling routes, which is contrary to the constitutional right of a publisher to free economic initiative, to freely set a price to a book and other business conditions.

Against the decision all three parties filed legal action in an administrative dispute, in which the court has not yet ruled.

A minor offence procedure was launched against the GZS and the responsible person in which the fine of 11 million tolars was imposed. The parties have filed a request for judicial protection against the decision.

4.1.5 Spas

On the basis of complaint by the company Zdravilišče Laško, d. d., Laško, on 10 October 2005 a procedure was launched against the Association of Slovenian Natural Spas (Skupnosti slovenskih


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naravnih zdravilišč, hereinafter: SSNZ), g. i. z., Celje to ascertain the existence of a restrictive agreement.

In the procedure it was established that competition was restricted by the adoption of three decisions at the assembly of SSNZ. These are decisions by an association of undertakings and resulted in the division of the market. Decisions adopted on 9 May 2001, 9 August 2005, and 8 September 2005 prevented spas from expanding their activities within the contract with the Health Insurance Institute of Slovenia (Zavod za zdravstveno zavarovanje Slovenije: hereinafter: ZZZS), by obtaining the required standard without a conclusion by the SSNZ assembly that the existing capacities are not sufficient for carrying out an individual programme and without a preliminary approval of those spas that already obtained the required standard.

In the first decision there was a general provision on the condition for expanding the activities of a spa, the second decision was an example when the applying spa was prohibited to expand its activity. Thelast one was a rejection of the request made by the complainant to proclaim the first conclusion null and void. All three decisions enable market sharing on the implementation of spa activities market, within the contract with ZZZS among SSNZ members. This is an example of sharing services market.

The Office decision, which was issued on 19 January 2006, established that the three aforementioned decisions were prohibited and null and void. Against the decision SSNZ filed legal action in an administrative dispute.

A minor offence procedure was launched against the legal entity and the responsible person, and the fine in the total amount of 31 million tolars was levied. A request for judicial protection was filed against the decision.

4.1.6 Mobitel commitments

In the procedure of establishing a possible abuse of a dominant position on the mobile telephone market by the company Mobitel d.d., the Office on 13 June 2005 adopted the proposed commitments decision and set a fulfilment date of 1 May 2009.

Commitments are a new institute in the Slovenian system. Their purpose is to reach a fast and efficient settlement of a market situation. Their introduction and continuing implementation dispels all doubts about possible anti-competition operations of Mobitel d.d. in the field of business practices to which the commitments refer.

The Office believes that the commitments ensure the conditions for migrations of users among different operators. In particular with regard to shortening the contract period and lowering costs in the case of cancelling a contractual relationship, which consequently gives the user more possibilities to choose the most favourable supplier of mobile services.

On 25 April 2006 the Office received a report by the company Mobitel d.d. about fulfilling the commitments. The Office carefully reviewed the report and established that the company Mobitel d.d. has fulfilled all the commitments stipulated in item 2 of the decision, whereby the fulfilment of commitments on the mobile telephone markets provides the conditions for a better migration of users among different mobile telephone operators. The Office assesses that the most evident results ofcommitments could be observed in the shortening of the average contract period of a subscriber with the company Mobitel d.d.. In the period from 1 April 2005 to 12 April 2006 it was reduced by more than 40%, and currently amounts to less than 10 months.


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The Office concludes that the company Mobitel d.d. in the year 2006 fulfilled all obligations and that the results on the market attain the goals set by the Office on their adoption. Consequently the Office retained the validity of the adopted commitments and intends to monitor carefully their implementation until the set deadline, i.e. by 1 May 2009.

4.2 Concentrations

In the year 2006 the Office reviewed 47 concentrations and issued 40 decisions declaringconcentrations compatible with the competition rules (third paragraph of Article 38 of ZPOmK) and 7 decisions finding that the concentrations do not fall within the scope of ZPOmK (second paragraph of Article 38, ZPOmK). In the year 2006 the Office did not issue any decision on prohibiting concentration (third paragraph of Article 41, ZPOmK), and did also not issue any decisions with remedies (second paragraph, Article 41, ZPOmK).

Concentrations notified in 2006 took place in different economic sectors: the construction industry, car industry, printed media sector, market (market programme and technical goods), pharmaceuticals industry, advertising, telecommunications, the financial sector (banking and insurance sector), the energy sector and others. Several concentrations were conglomerates, where activities of participants in a concentration did not overlap horizontally and were also not linked vertically. In some such concentrations financial holdings purchased the majority share in a certain company.

In the following there are summaries of the cases.

4.2.1 Europlakat

On 5 June 2006 the Office received a complete notification of a concentration of companies Europlakat d.o.o. (hereinafter: Europlakat) and Metropolis Media d.o.o. (hereinafter: Metropolis Media), which took place when the company Europlakat purchased 100% ownership share of the company Metropolis Media.

The company Europlakat is in the business of outdoor advertising and offers the following advertising spaces: jumbo panels or billboards in the size of 12 m2, self-standing city-lights (illuminated display cases), city-lights at bus stops, metro-lights, roto panels and rollback lights. The company Metropolis Media is also in the business of outdoor advertising. It offers advertising spaces on jumbo panels or billboards in the size of 12 m2, on frontlights, on metro-lights, on self-standing city-lights, at bus stop city-lights, on roll-light panels and on bigboards up to 100 m2 in size.

Due to the characteristics of the advertising market, the Office found it difficult to define relevant product market. The applicant first defined the market as the advertising market, basing this definition on the standard classification of activities; however a study submitted by the applicant latter defined the market in a narrower sense as the market of outdoor advertising, which is the basic activity of both companies concerned.

When defining the relevant market, the Office took into consideration in particular specific characteristicsof outdoor advertising compared to other advertising, Commission’s practice and four additional criteria. Additional criteria being: accessibility of advertising spaces, target audience and size and substitutability of advertising spaces. On the basis of this, the Office defined the relevant market as the market supplying advertising space for advertising outdoors, which includes the following forms of advertising space: jumbo billboards, roto panels, illuminated display cases, melita panels, poster panels, bigboards,


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hanging panels, advertising spaces on the outside of trains and buses, rollback lights, poster pillars and facades. The concerned market was defined by the Office as the national market.

The Office decided to commence a procedure assessing possible negative effects on the competition, because the annexed documentation made it clear that the total market share of the companies concerned on the relevant market of outside advertising would be more than 60% following the concentration, by which the power of these companies would increase considerably.

The Office gathered detailed data for assessing the position of Europlakat and Metropolis Media on the market supplying advertising space for outside advertising from the participants in the concentration, their competitors, city municipalities, users of advertising space and from advertising agencies, to which the Office sent out a questionnaire. The Office received also an opinion by the Institute for the research of the market and media, Mediana, which in the period 2000-2005 gathered data on the gross value of outdoor advertising from the companies Europlakat and Metropolis Media. This made it impossible to specify the exact market shares of participants on the market supplying advertising spaces for outsideadvertising.

On the basis of gathered data, by taking into account the level of competition on the relevant market, the negotiating power of users and forecasts about the market development in the future, the Office issued a decision on 27 September 2006 declaring the concentration compatible with the competition rules. The Office established that even though the concentration increases the power of the merged companies, a serious suspicion on the non-compliance with the competition rules does not exist, since this is a dynamic market that has great development potential and where there are no significant entry barriers (relatively low costs of market entry, accessible private land, transparent access to municipal land), which has been confirmed by the entry of many companies in recent years, and the fact that themost important users are large companies and advertising agencies with a large buying power.

Against the issued decision the company Outdoor Akzent oglaševanje in storitve d.o.o. on 4 October 2006 filed a legal action at the Administrative court.

4.2.2 GEN-I

In the year 2006 the Office was reviewing a transaction where a change was made from a situation of sole control of the company Istrabenz Gorenje energetski sistemi, energetske storitve, d.o.o. (hereinafter: IGES) over the company Istrabenz – Gorenje, trgovanje in prodaja električne energije, d.o.o. (hereinafter: Istrabenz – Gorenje) to a situation of a joint control of companies IGES and GEN energija, d.o.o (hereinafter: GEN energija) over the company Istrabenz – Gorenje.

Companies IGES and GEN energija signed a Contract on the sale and purchase of business shares and the settlement of other relations among contracting parties, according to which the company IGES, which was prior to signing the aforementioned contract the sole partner and consequently owner of 100% of the share capital in the company Istrabenz – Gorenje, sold to the company GEN a 50 % business share in the company Istrabenz – Gorenje. The company Istrabenz – Gorenje was renamed GEN – I, trgovanje in prodaja električne energije, d.o.o. This transaction represents a change in the quality of control over the company Istrabenz – Gorenje and consequently a concentration in the sense of the ZPOmK provisions.

Economic fields of activity of the company IGES are: energy services, production and marketing of enhanced biomass products, production, marketing and sale of electric power through subsidiaries and


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research and development in the field of the energy sector. Istrabenz, d.d. and Gorenje, d.d. have each a 49,95 % business share in the company IGES.

GEN energija is the legal successor of the Slovenian investors in the Krško nuclear power plant (Nuklearna elektrarna Krško, hereinafter: NEK) regarding the rights and duties related to its exploitation and dismantlement. It has power of disposal of over 50% of the produced electric power in NEK, which represents about 25% of the electric power produced in Slovenia. The company GEN is active in the following business fields: holdings, production of electric power in hydro-power plants, electric power production in thermo power plants and nuclear power plants, other types of electric power generation, transmission of electric power, distribution of electric power, and marketing of electric power. GEN energija will contribute to the joint company in particular electric power which is already at its disposal and will continue to be at its disposal in the future. The Republic of Slovenia is a 100% owner of the company GEN energija.

The main activity of the company Istrabenz – Gorenje is wholesale trading with electric power on the domestic and foreign markets, and retail sale of electric power on the national market.

The Office established from the available data that in the case of the transaction at issue there is no overlapping among activities and services of the companies involved in the concentration, however, there are vertical connections among participants in the concentration, i.e. there is vertical integration of production, trading and sale of electric power to end users. Since this concentration even in the case of a narrow definition of the relevant market does not raise suspicion about the non-compliance with the competition rules or a danger of exclusion or a substantial decrease of efficient competition, the Office did not decide on the final definition of the relevant market in question. Due to a lack of suspicion on the non-compliance of this concentration with the competition rules, the Office did not decide on the final definition of the relevant geographical market either.

From the data submitted with the notification and other available data on the electric power market in the Republic of Slovenia, it is clear that Slovenia is an extremely small and insolvent market, which in combination with limited cross-border transmission capabilities, the structure of production sources, the structure of companies and ownership structure is in fact not an efficient electric power market. At the time of reviewing the aforementioned concentration, the majority of production sources in the Republic of Slovenia, over 60 %, were under the control of the company Holding slovenske elektrarne, d.o.o. (HSE). The HSE group comprises: Holding Slovenske elektrarne (umbrella company), Dravske elektrarne Maribor, Savske elektrarne Ljubljana, Soške elektrarne Nova Gorica, Termoelektrarna Šoštanj, Termoelektrarna Brestanica, Premogovnik Velenje, HSE Invest, TDR – Metalurgija Ruše, HSE Italia, HSE Balkan Energy, HSE Hungary13 .

The concentration in question enables a vertical integration of activity in the electric power market. The merging of the functions of production, trading and sale to end users will facilitate a direct link between the source and the use of electric power. This lowers market risks and at the same time via market instruments enables the optimisation of production and design of electric power products that meet the needs of clients. In addition to HSE, which is the first energy pillar, Istrabenz – Gorenje has all the needed infrastructure, sale networks, technical knowledge and experience in the field of sale and trading with electric power in Slovenia and abroad. The concentration at issue will thus become a basis for the second energy pillar, which will enable competition in trading and sale of electric power to eligible customers (customers who are pursuant to legislation free to choose the electric power supplier), which will consequently give the users more choice.

13 Source: http://www.hse.si.


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On the basis of the market structure and other available data, the Office concluded that concentration does not represent a danger of creating or strengthening a dominant position. Consequently, on 22 November 2006 the Office issued a decision declaring the concentration compatible with the competition rules.

4.2.3 UPC Telemach

In the field of telecommunications, the Office in 2006 assessed the compatibility of the concentration by companies UPC Telemach, širokopasovne komunikacije, d.o.o., and Kabelsko razdelilni sistem Rotovž, d.d., with the competition rules.

In comparison to the concentrations involving company Telemach, which the Office assessed in the past, this decision of the Office is interesting particularly because of a different, broader definition of the relevant service and geographical markets. This is a consequence of fast technological development in the field of electronic communications and the market dynamics. In making the assessment the Office took into account the valid regulatory framework in the field of electronic communications in Slovenia, and the actual data on the current situation in the market of access to the cable communication network, the transmission of radio and television signals via the cable network, the access to internet, and data transmission over the cable network.

In assessing the effects of the concentration on the market of access by alternative operators to the cable communication network of the company Telemach, the Office established that the company Telemach may no longer behave on this market independently from alternative operators and competition. It is obliged on the basis of the regulatory framework alone to reach agreements with the operators that would wish to have access to its network. This means that even following the concentration, the company Telemach will not have the opportunity to unilaterally prevent efficient competition on the market of access to the cable communication network.

Furthermore, the Office established that despite some technical restrictions that limit complete interchangeability of cable and xDSL television from the customer’s point of view, data convincingly confirm an increasingly larger interchangeability of these services and a strong competition pressure on cable operators by companies SIOL and T-2 to the extent that the service market in question may be defined in broader terms than in the past. In all larger cities where there are available cable television services by the company Telemach, there are also available services by ADSL TV companies SIOL and T-2, and in Koper, Kranj and a part of Ljubljana also IP TV services are available via the optical network of the company T-2. Quality and prices of these services are completely comparable to the services of the company Telemach. In these areas a customer would be able to change operator without any limitations, if the price of TV subscription increased. The Office therefore decided to assess the consequences of the concentration on the entire national market.

In the case of broadband internet access the situation on the market also changed considerably. It can be said that there is an increasing interchangeability of services and a strong competition pressure on cable operators by the company SIOL and other internet providers via the ADSL technological platform.

On the basis of the aforementioned the Office concluded that the concentration between the companies Telemach and KRS Rotovž will not prevent or distort efficient competition on the market of access to the cable communication network, the market of radio and television signal transmission via the cable network and the market of services of access to internet via the cable network, since in larger cities, where the concentration participants are present, there is competition at the level of the xDSL


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technological platform, through which services of access to internet and radio and television signal transmission are also available.

The Office therefore decided that it would not object to the concentration and that it is compatible with the competition rules.

4.3 Minor offences

Pursuant to ZP-1, the Office is an authorised administrative offence body, competent for deciding on minor offences regulated by ZPOmK. Prior to that, the Office had to submit a proposal for launching a minor offences procedure. The sanctions that the Office may apply pursuant to the law in force are a fine and a reprimand. Instead of launching a minor offences procedure or issuing a decision on a minor offence, the Office may decide to only give a warning to an infringer.

ZPOmK stipulates fines in the following range: for restrictive practices of a legal entity from 30,000,000 to 90,000,000 tolars, for an individual independent entrepreneur from 10,000,000 to 50,000,000 tolars, for the responsible person of a legal entity from 1,000,000 to 3,000,000 tolars and for the responsible person of an individual independent entrepreneur from 500,000 to 1,500,000 tolars. In the case of a late notification or failure to notify a concentration, fines are slightly lower: for a legal entity from 6,000,000 to 20,000,000, for and individual independent entrepreneur from 2,000,000 to 10,000,000 tolars, for the responsible person of a legal entity from 600,000 to 1,000,000 tolars and for the responsible person of an individual independent entrepreneur from 200,000 to 600,000 tolars.

A reprimand may be issued by the administrative offence body, if the minor offence was committed in extenuating circumstances, which make it less serious, and if the minor offence is that the stipulated duty was not carried out, or damage was caused by the minor offence, and the infringer carried out the stipulated duty or remedied and compensated for the cased damage prior to the issue of a decision.

A warning may be given by the administrative offence body, if the committed minor offence is of negligible significance and if the authorised official assesses that a warning is a sufficient measure with regard to the significance of the action. A minor offence of negligible significance is a minor offence for which only a fine is stipulated, that was committed in circumstances that make it insignificant and in which harmful consequences have not been caused and will not be caused.

The Office was given the authority to conduct minor offences procedures already in 2005, however, it first conducted such procedures in 2006. In 2006 the Office issued four oral warnings for the violation of the second paragraph of Article 12 of ZPOmK (late notification of a concentration) and in four cases imposed fines on legal entities and responsible persons of legal entities in the total amount of 115 million tolars (479,886.50 euros), for a violation of Article 5 of ZPOmK (concluding a restrictive agreement). In all four decisions on fines a request for judicial protection was filed. The courts have not yet ruled on the cases.

For comparison, during the period from 2000 to 2004 the Office submitted 62 proposals for launching a minor offence procedure. Of these 10 were cases of restrictive practices (5 restrictive agreements and 5 abuses of a dominant position) and 52 were cases of a late notification or failure to notify a concentration.

In the case of restrictive practices courts stopped the procedure in 7 cases, of which in four cases statute of limitations applied, in one case the act was not a minor offence, in one case the act was of


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little significance, and in one case there was a lack of proof. The courts have not yet ruled on the remaining proposals: two are proposals from the year 2000 and one from 2004.

In the case of concentrations in 23 cases the procedure was stopped or was not launched at all, the reason for which was in 20 cases the statute of limitations, in one case the fact that the act was not a minor offence, in one case there was not enough evidence, and in one case the reason was the abolition of minor offences in the year 2004. Sanctions were imposed only in 13 cases, of which 7 were reprimands and 6 fines, whereby four cases were merged and only one fine was imposed. In 15 cases the court has not ruled yet, in one case a request for judicial protection was filed.

Chart 9: Court decisions on proposals for minor offences in the period 2000 to 2004

40%

10%

31%

12%7%

Statue of Limitations

Procedure stopped or not launchedfor other reasons

Not decided yet

Sanction imposed - a Reprimand

Sanction imposed - a Fine

The minor offences procedure was in the period 2000 – 2004 not launched or stopped in half of the cases, a third of the cases are still waiting to be ruled upon by courts, in about one fifth of the cases sanctions were imposed. The courts have not yet established or confirmed any ZPOmK violation in the case of restrictive practices, including decisions on requests for judicial protection against the decisions issued by the Office in 2006.


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5 OTHER ACTIVITIES OF THE OFFICE

5.1 Implementation of the Act on the Access to Information of Public Character by the Office in the year 2006

5.1.1 Information of public character – fundamental human right

Free access to information of public character is a well established legal institute in the contemporary world. This is one of more recent fundamental human rights, which first appeared in 1766 in the Kingdom of Sweden and Finland. Its aim is to enable individuals and legal entities to be informed about the work of public bodies and thus make their operations public and transparent. The majority of countries put that right into their respective legislations only in the 20th century, and there are several countries where this area remains to be regulated.

Slovenia is bound by two international legal acts, pursuant to which it has to provide the right of access to information of public character: the UN International Pact on Citizen’s Rights and the Convention on the protection of human rights and fundamental freedoms by the Council of Europe. The Aarhus Convention – on access to information, public participation in decision-making and access to justice in environmental matters, and the Recommendation by the Council of Europe (Rec (2002) 2) are also important.

The right to information of public character is in Slovenia regulated as a fundamental human right. The Constitution of the Republic of Slovenia stipulates in Article 39 that anybody has the right to obtain information of a public nature in which they have a well founded legal interest under law, except in such cases as are provided by law. This right is in more detail regulated by the ZDIJZ, which entirely follows the guidelines of the European Union and the Council of Europe in this area. The law broadens the minimal constitutional right, since the applicant does not have to prove a well founded legal interest in order to obtain information of public character pursuant to ZDIJZ.

In Article 4 ZDIJZ defines the information of public character as information from the working area of abody, which is in the form of a document, case, file, register, records or other documentary material and which was produced by that body alone, in cooperation with other bodies or received from other persons; archives material kept by the competent public archives body as a part of public archives services in accordance with the law on archives is not considered to be information of public character. In principle this is information at the disposal of a body, which is in a material form (including an electronic form), although the law lists some exceptions.

Bodies that have to make available information of public character on the basis of ZDIJZ are state bodies, bodies of local communities, public agencies, public funds and other entities of public law, and those having public authorizations and carrying out public services. Except special cases stipulated by law, all bodies have to provide access to information of public character they have to anybody. Furthermore, each body is responsible for regular maintenance and adequate publication and access to applicants of a catalogue of information of public character arranged according to subject topics, which is at the disposal of the body. Some information has to be made available on the internet. Information from individual catalogues of bodies are merged in the national catalogue of information of public character, which has to be publicly published on the internet and regularly maintained by the Ministry of Public Administration. This Ministry is responsible also for preparing a joint annual report on the implementation of ZDIJZ in order to monitor the implementation of this law.


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Article 1 of ZDIJZ stipulates that the Office is also a body that has to provide information of public character. In addition to the aforementioned legislation, the activities of the Office in this area are regulated by a Decree on communication and re-use of information of public character (Uredba o posredovanju in ponovni uporabi informacij javnega značaja14). Furthermore, in the year 2006 Rules on the procedure of communicating information of public character at the RS Ministry of the Economy and its attached bodies (Pravilnik o postopku posredovanja informacij javnega značaja na Ministrstvu RS za gospodarstvo in v organih v sestavi15) were issued by the Minister of the Economy that specify for the Ministry of the Economy and the attached bodies the procedures of communicating information of public character to applicants and on the world wide web on the basis of ZDIJZ, the Decree and duties of all the employees in this area.

5.1.2. Requests for communicating and re-use of information of public character, addressed at the Office in 2006

In the year 2006 the Office in accordance with the provisions of ZDIJZ and the Decree on communication and re-use of information of public character received three requests for information of public character. In comparison to the previous year (2005), when there were 12 requests, that is a considerable decrease. All three requests in 2006 were submitted in writing. Two requests were related to the access to information of public character, whereas the third one was about their re-use (i.e. use for the purpose that is different from the primary purpose of the public task for which documents were made).

In two cases applicants requested as information of public character a decision issued by the Office on the assessment of compatibility of concentration with the competition rules, whereas in the third case the request was for court decisions in which the Office was a defendant and were related to the application of Articles 81 and 82 of the EC Treaty and of the EC Regulation on Concentrations, and of equivalent provisions of the competition law in the Republic of Slovenia.

The Office established that the required documents in all three cases referred to exceptions stipulated by Article 6 of ZDIJZ, to which the access has to be denied in accordance with the provisions of ZDIJZ:

- data defined as business secret in accordance with the law regulating business companies (item 2 of the first paragraph of Article 6 of ZDIJZ), in all three cases, and

- in one case also personal data, the disclosure of which would be a violation of personal data protection pursuant to the law regulating the protection of personal data (item 3 of the first paragraph of Article 6 of ZDIJZ).

Since it was possible to exclude the aforementioned data from documents without threatening their secrecy, the Office decided to exclude them from the documents in accordance with Article 7 of ZDIJZ and allowed applicants of two requests to have partial access to documents, whereas in the third case the Office allowed partial access and in that part also the re-use of the required documents.

The request for the re-use of information of public character was to be used for a non-commercialpurpose – for an international analysis of EU member states. Pursuant to the Decree on communication and re-use of information of public character and the Rules on the procedure of communicating information of public character at the RS Ministry of the Economy and its attached bodies, the Office ordered as a condition for the re-use the quote of the data source that has to include the text “Public

14 Official Gazette RS, No 78/200515 No.: 017-194/2002-85 of 11 July 2006


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information of Slovenia” and the title of the body. The Office did not impose any other conditions on the applicant for the re-use of the information of public character.

5.1.3 Catalogue of information of public character

At its web page (http://www.uvk.gov.si/) the Office has published the catalogue of information of public character, where it published information from its work field also in 2006.

5.1.4 Drafting annual report on implementing ZDIJZ

Pursuant to legislation, the Office drafted in 2006 the annual report on implementing ZDIJZ in the previous year (2005) and submitted it to the Ministry of the Economy for further processing – for drafting the joint annual report on implementing ZDIJZ.

5.2 Advocacy

The Office advises clients on competition rules, mostly prior to a notification of a concentration. Opinions given in advisory role, however, are not legally binding.

In general the majority of questions from the field of concentrations refer to questions as to whether a certain legal or economic situation calls for a notification of a concentration pursuant to ZPOmK. In the year 2006 there were thus asked questions about the need to notify a concentration in the case of transactions within a group of related and mutually dependant companies that form a connected economic group, the question about the need to notify a concentration when the seller sells only a part of the entire company share, as well as questions about the duty of companies to submit information to the European Commission, when the latter is conducting market surveys.

One of the more interesting questions was the question about the sale or purchase of a trade mark or a licence. Companies are obliged to notify a concentration in accordance with ZPOmK in the case of the sale or purchase of a trade mark or a licence to exploit the right to intellectual property that have an independent market value and bring regular income. More specifically, these are the cases when one or more companies with purchase of a trade mark or a licence gain control over a part of a company. Gaining control over an entire company is therefore not the indispensable definition element of a concentration. However, the part over which control has been gained, has to be capable of independent business operations or there has to be regular income linked to it. This means that the activity arising from the use of a trade mark or a licence, has to exist independently after the completed transaction and has to have as such potential influence on the markets in question.

With regard to the provision from the first paragraph of Article 12 of ZPOmK, the following question has been often raised: Is there a duty to report a concentration in the case when the majority share of a company was gained (the control share), however the company is not registered or active in the Republic of Slovenia or the European Union. Concentrations are being assessed in order to protect the structure of the RS market. When assessing a concentration the Office establishes whether efficient competition on the Slovenian market would be limited, distorted or prevented due to a concentration. In cases of gaining control over a company not operating in the RS, there will not be direct influence on the competition on its territory and therefore there is no threat to the competition in the Republic of Slovenia. Since such a transaction will not cause structural changes in the Republic of Slovenia and will consequently not have influence on the Slovenian market, the provisions of ZPOmK do not apply, and such a concentration does not have to be assessed. If, however, a foreign company generates a turnover in the RS and would consequently have a market share here, such a concentration would have


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to be reported to the Office due to the influence on the Slovenian market, provided that economic conditions for notification would be met. The key is therefore the amount of turnover and the market share on the Slovenian market, and not the place where a company is registered.

5.2.1 Consultation on liberal professions

On 20 and 21 June 2006 the Office organized together with representatives of the European Commission a consultation about liberal professions. Participants were representatives of professional associations (Bar Association of Slovenia, Association of Notaries, Association of Pharmacies, the Slovenian Institute for Auditing, Association of Engineers, Association for Architecture and Spatial Planning of Slovenia) and representatives of ministries.

At the consultation an outline was given of professional restrictions in the area of liberal professions in the Republic of Slovenia (fixed and recommended prices, restrictions on advertising, entry barriers and organisational restrictions), their negative influence on the national and European economy and possibilities for their abolition.

A dialogue was established among representatives of professional associations and representatives of different ministries, and the basis was laid for cooperation with the Office in amending the existing legislation and drafting a new one.

Liberal professions (lawyers, notaries, pharmacists, physicians, auditors, accountants, engineers and architects) are professions aimed at providing highly specialized services in a manner that is in agreement with a broader public interest. The carrying out of services of liberal professions is in the majority of the European Union countries highly regulated. The regulation of liberal professions should result in a professional level and independence of their implementation and prevent deficiencies that may exist in the case of completely liberalised markets. It should complement classical market mechanisms, however, it should never replace such mechanisms.

The Office establishes that national and professional regulations in the Republic of Slovenia often intervene in market mechanisms in a manner that is contrary to public interest and the principle of free and efficient competition. On the basis of data gathered in 2005 the European Commission reached similar conclusions. Liberalization of liberal professions is a demanding and long-term process. When amending national and professional regulation, it is necessary to take into account proposals of all interest groups and assess the effects of the amended regulation on the market.

The Office is aware of how important it is to introduce changes gradually, taking into account a broad consensus on all matters. In the future it therefore plans to act as an advisory and coordinating body in the field of the liberalization of liberal professions.

5.3 Legislative activities

In the year 2006 the Office analyzed deficiencies in the existing ZPOmK, which it is facing in the daily application of the law in practice. Two of the biggest problems with the current legislation are the two procedures that the Office has to conduct in assessing restrictive practices (i.e. minor offences and administrative procedure), since this is, first, a case when the work of the Office is duplicated, and second, a legal remedy may be filed with different courts against the decision issued by the Office. The Office is also facing the problem of not having enough measures at its disposal (procedural punishment, fines) that it could use in order to ensure cooperation of parties to the procedure and other market participants. The amount of the fine that the Office may impose is also not sufficiently high to have a


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deterring effect. The Office analysed decisions by judges for minor offences and established that minor offences mostly reach the statute of limitation, which calls for longer periods of limitation.

Furthermore, membership in the EU brought about additional duties that have to be respected in the field of competition law. Sanctioning of Articles 81 and 82 of the EC Treaty has to be specified, there is also a need to define in more detail the cooperation between the Office and the Commission, and the Office and national courts.

In the field of concentrations, there is a need for an even clearer separation of the procedural part with regard to the procedure of restrictive practices, and to examine whether the deadline set for reporting concentrations is still needed. The institute of commitments is also not defined clearly enough (neither with regard to the procedure, nor the subject matter).

Finally, increasing the number of regulations would also contribute to better transparency and more efficient work of the Office. Such regulations would help companies and associations of companies to take part in procedures at the Office and in their operations.

5.4 Activities within ECN

The European Competition Network was established as a forum for cooperation among European competition bodies with regard to the application of Articles 81 and 82 of the EC Treaty. The goal of the ECN is to establish an efficient legal framework for the implementation of the European competitionlegislation with the aim of taking measures against companies which in a broader European market limit competition with their business operations

The European Commission and national competition bodies of individual EU member states cooperate within the ECN in particular in the following fields:

- exchange of information about new cases of violations and about planned decisions,- coordination of joint investigations, when necessary,- mutual cooperation in investigative actions,- exchange of evidence and other information, and - discussions about issues of common significance.

In ECN operational working groups sectoral experts from different fields (banking, insurance, pharmaceuticals, trade, professional services, the health sector, environment, and telecommunications) discuss competition issues in individual sectors, and at the same time formulate joint solutions. The ECN thus helps competition bodies to exchange experience directly and thus establish the best practice rules.

The Office has been taking an active part in the majority of sectoral working groups. In the field of implementation it issued in 2006 the first decision on the violation of the EC Treaty (the Slopak case).

5.5 International activities

International technical cooperation has up to the present time considerably contributed to faster training and consequently better efficiency of the Office. In the year 2006 the Office therefore actively participated in several international projects. Here special mention should be made of the participation of the Office in the project introducing competition in the area of South-east Europe, where the Officeworked together with TAIEX in organizing training for staff in Montenegro.


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Cooperation with the OECD is also an important international activity of the Office, since it has the status of an observer at the Committee on Competition. The Office outlined its work practice at international training sessions, for example at the CRESSE (Competition and Regulation Economic Summer School for Executives), in Krf, which took place in July 2006.


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6 YEAR 2007

For the year 2007 the Office is planning considerable amendments to the sectoral legislation. In the first half of the year the current ZPOmK will be amended, in order to remedy the major deficiencies (sanctioning violations of Articles 81 and 82 of the EC Treaty, limiting the access to file, protecting the source of information, extending the statute of limitations). By the end of the year it is planned that a new law will be adopted for the area of competition protection, which will replace ZPOmK. The new law is expected to change the organisation of the Office and to specify in more detail the procedure at the Office. The change will bring about rationalisation of the work by the Office and facilitate a more efficient implementation of the rules on the protection of competition.

A considerable part of the work by the Office will thus be legislative activities. At the same time the Office will carry out all other tasks. In 2007 the still open cases of restrictive practices will be completed. It is also not expected that the number of reported concentrations would considerably change.


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ANNEX: LIST OF DECISIONS ISSUED BY THE OFFICE IN THE YEAR 2006


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Decisions issued by the Office in year 2006

Nr.Date of Issue Parties Type

Initiation of Procedure Decision Notes

1. 19.01.06 Zdravilišče Laško d.d./Skupnost slovenskih naravnih zdravilišč g.i.z.

Decision by Association of Undertakings Complaint Violation of Article 5 in relation to Article 3 of ZPOmK

Legal action filled against the decision in administrative dispute; Fine imposed in minor offences procedure – request for juidical protection filled

2. 31.01.06 Zlata Moneta II d.d., Medaljon d.d., Probanka d.d., Probanka leasing Ljubljana d.o.o., Holding Trimo Investment d.d. + Trimo d.d.

Concentration Notification Compatible

3. 01.02.06 Jože Piano s.p./Gospodarska Zbornica Slovenije, Združenje za tisk in medije in Strokovno združenje založnikov in knjigotržcev Slovenije

Decision by Association of Undertakings Complaint Violation of Article 5 in relation to Article 3 of ZPOmK

Legal action filled against the decision in administrative dispute; Fine imposed in minor offences procedure – request for juidical protection filled

4. 02.02.06 Siemens Ag + Corporate Development Investment d.o.o.+ TVT Nova d.o.o.


5. 15.02.06 Iskra Avtoelektrika d.d. + Iskra d.d. Concentration Notification Compatible

6. 17.02.06 Express-Interfacht Internationale Spedition GmbH, Intereuropa + Intereuropa FLG d.o.o.


7. 17.02.06 Delo d.d. + Salomon 2000 d.o.o. Concentration Notification Compatible8. 17.02.06 Titus International PLC + Lama d.d. Concentration Notification Compatible

9. 28.02.06 Kolektor Group d.o.o. + LIV Postojna d.d. Concentration Notification Compatible10. 09.03.06 Maos d.o.o. + Iskra d.d. Concentration Notification Compatible

11. 22.03.06 SCT d.d. + Merkur d.d. Concentration Notification Compatible

12. 12.04.06 Telekom Slovenije d.d. Abuse of a Dominant Position Complaint Rejection of proposal topronounce decision null and void

Legal action filled against the decision in administrative dispute.

13. 03.05.06 PS Mercator d.d. + Era d.d. Concentration Notification Compatible

14. 11.05.06 Henkel KGaA + Imperial Chemical Industries PLC Concentration Notification Compatible

15. 23.05.06 Schefenacker AG + Alfred Engelmann Holding GmbH Concentration Notification Concentration does not fall within the scope of ZPOmK

16. 09.06.06 Zvon Dva holding d.d. + Mladinska knjiga Založba d.d.


17. 03.07.06 Primorje Holding d.d., Vipa Holding d.d. + Primorje Concentration Notification Compatible

18. 05.07.06 Merkur d.d. + Sava Trade d.d. Concentration Notification Compatible

19. 11.07.06 Tušmobil d.o.o.+ WWI d.o.o. Concentration Notification Concentration does not fall within the scope of ZPOmK

20. 13.07.06 Primorje d.d. + GZL-GS d.d. Concentration Notification Compatible21. 13.07.06 Infond holding 2 d.d. + Alpina Žiri d.d. Concentration Notification Compatible22. 14.07.06 BASF Ag + Lanxess GmbH Concentration Notification Compatible23. 20.07.06 Barr Pharmaceuticals Inc. + Pliva d.d. Concentration Notification Compatible


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24. 23.08.06 Istrabenz d.d. + Golf Istra d.o.o. Concentration Notification Compatible25. 25.08.06 Salonit Anhovo d.d. + Sector Trade d.o.o. Concentration Notification Compatible26. 28.08.06 Siemens AG + Diagnostic Products Corporation Concentration Notification Compatible27. 01.09.06 Adriatica.net d.o.o. + Kompas d.d. Concentration Notification Compatible

28. 06.09.06 Istrabenz d.d. + CGP d.d. + Primorje d.d. Concentration Notification Concentration does not fall within the scope of ZPOmK

29. 07.09.06 Voestalpine Austria Draht GmbH + Drahtwerk und Stahlhandel Finsterwalde GmbH


30. 08.09.06 Pozavarovalnica Sava d.d. + Polis Osiguranje a.d.o. Concentration Notification Concentration does not fall within the scope of ZPOmK

31. 11.09.06 A&E InternationaI B.V. + TSP d.d. Concentration Notification Compatible32. 13.09.06 Gradis Skupina G d.d. + Gradis G1 d.d. Concentration Notification Concentration does not fall

within the scope of ZPOmK33. 14.09.06 DZS MEDIJI d.o.o. + Dnevnik d.d. Concentration Notification Concentration does not fall

within the scope of ZPOmK34. 14.09.06 OBI d.o.o. + OBI trgovine (MG Market d.o.o.) Concentration Notification Compatible

35. 18.09.06 Pozavarovalnica Sava d.d. + Dukagjini Kosovo Concentration Notification Concentration does not fall within the scope of ZPOmK

36. 19.09.06 Actavis Group hf + Pliva d.d. Concentration Notification Compatible37. 27.09.06 Pfizer Consumer Health Products + Glaxo Group

LimitedConcentration Notification Compatible

38. 02.10.06 Salonit Anhovo d.d. + SCT d.d. Concentration Notification Compatible

39. 04.10.06 Europlakat d.o.o.+ Metropolis Media d.o.o. Concentration Notification Compatible Legal action filled against the decision in administrative dispute.

40. 13.10.06 Istrabenz d.d., Gorenje d.d. + Istrabenz Gorenje d.o.o.


41. 18.10.06 Thyssenkrupp Austria Beteligungs GmbH + DVG d.o.o.


42. 18.10.06 DDD d.o.o. Koper + ZZV Maribor Restrictive Agreement Ex officio Violation of Article 5. of ZPOmK Legal action filled against the decision in administrative dispute; Fine imposed in minor offences procedure – request for juidical protection filled

43. 26.10.06 Pekarna Blatnik d.o.o. + Mlinotest d.d. Concentration Priglasitev Compatible44. 15.11.06 Združenje bank Slovenije, g.i.z. Decision by Association of Undertakings Ex officio Violation of Article 5 in relation to

Article 3 of ZPOmKLegal action filled against the decision in administrative dispute.

45. 16.11.06 KD Holding d.d. + Deželna banka Slovenije d.d. Concentration Notification Compatible46. 21.11.06 SanPaolo IMI S.p.A.+ Banca Intesa S.p.A. Concentration Notification Compatible47. 21.11.06 Istrabenz Gorenje d.o.o., GEN energija d.o.o. + GEN-I

d.o.o.Concentration Notification Compatible

48. 22.11.06 Vektor d.o.o., Petin d.o.o. + Skupina Viator & Vektor d.d.



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49. 27.11.06 UPC Telemach d.o.o.+ KRS Rotovž d.d. Concentration Notification Compatible

50. 07.12.06 TGP Advisors IV, Inc, TGP Advisors V, Inc + Baxter Healthcare Corporation Transfusion Therapies


51. 14.12.06 NOVA KBM d.d.+ Infond ID 1 d.d. Concentration Notification Compatible

52. 21.12.06 Interseroh d.o.o./ Slopak d.o.o. Abuse of a Dominant Position Complaint Violation of Article 10 of ZPOmK and Article 82 of the EC Treaty

Legal action filled against the decision in administrative dispute.

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