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Ministry of Economy: Monopoly is not a Crime

What can we expect from the Competition Agency’s activity? What are the mechanisms for identifying monopolies?

For many years, the Competition Agency has operated  in the same structure with  a Public Procurement  Agency, but now it has transformed into an independent service. Previously, the Agency had no real rights in the fight against monopolies, it had no authority to begin a study on its own initiative even in the case when there was a reasonable suspicion that business players abused  their dominant position.

Previously, it was necessary to have a claim against suspected players, but even in this case there were serious obstacles – if the claim  was not consistent with the priorities of the government, it was not considered.

In addition, the plaintiff was ordered to pay a large amount  for the proceedings. Thus, in fact the Agency did not consider the cases of monopolies.

What areas were prioritized, and what was the amount?

The Georgian government was to set the fields of economy, which had to be monitored, but it was never performed. In fact, the Competition Agency did not have any powers. As regards the amount, it has not been clearly defined.

On what basis the new agency will check business? On the basis of the claim of the citizen, other companies, the information disseminated in the media, or on its own initiative? 

Any citizen can file  a lawsuit to the Agency. A study of the information disseminated in the media is not the direct responsibility of the Agency, but if the information is reasoned, it can be further studies.

Today, the  Competition Agency is fully independent structure, it has much more power than before. It can actually conduct a study of  any market segments which, in its  opinion, may have  risks. However, this must be preceded by an analysis of the market, and if there is a reasonable suspicion,  the study should  begin. The claimant will be required to substantiate his  opinion.

A term, which was defined  to  study a case  is 3 months, if it is particularly difficult, it can be increased to 10 months. When  developing the law, we tried to set a deadline that will not interfere with business.

Which sectors will the Agency check? 

The law does not say about any priorities. The Competition Agency will not define them as well. Everything will be checked, including banks, since, according to the law on commercial banks, they are under very strict supervision of the National Bank, that is, it is manageable. Accordingly, the Competition Agency can check them too.

What sanctions can be imposed on the company in the event if  the Agency reveals  the monopoly? 

First of all I will say that the monopoly itself is not a crime, if the economic agent does not abuse them – I mean  such violations of the law as the cartel deal, price collusions and other transactions that are harmful to other economic agents. If this kind of crimes are not discovered, we cannot say a priori that monopolism is  bad.

With regard to sanctions, in the case of violations, a fine will not exceed 5% of the annual turnover of the company.

The exact amount depends on the severity of the offense. In the case of secondary revealing, a penalty will rise to 10% of turnover. The final decision will be taken by the court.

Are  entrepreneurs obliged  to provide information to the Competition Agency

They are obliged to provide information in the event of large companies’ merger, as they may occupy a dominant position in the market.

You said that the Agency is an independent entity. To whom is it accountable?

The Agency is accountable primarily to the Prime Minister, but it provides annual reports on the activities and there will not  be any interference from the government and infringement of independence.