During 15 years of independence, Estonia's competition law has gone through several major changes, brought out in three Competition Acts within the said period. Each new act has affected both quantitative and qualitative changes to the competition enforcement in Estonia. This summer another set of substantial amendments will be introduced to the Estonian Competition Act. The amendments to be made to the act will be quite significant and will have an impact on both national and foreign undertakings.
A draft law amending the Competition Act is already in the Parliament and will most likely come to force July 1, 2006. Some provisions of the draft law might undergo some minor changes, but the fundamental principles behind the planned amendments will probably remain unchanged. So it is still possible to have a rough understanding of the future changes in the Competition Act and competition law enforcement in Estonia.
The majority of amendments in the Competition Act, specifically, the provisions regarding control of concentrations, are relevant to many enterprises in the European Union, as the concentrations taking place outside Estonia could trigger national concentration control procedures if certain criteria are met.
The main amendments to the act involve abolishment of the exemption notification system and changes to the criteria of control of concentrations. There are also other minor amendments to the law, but these do not bring along any fundamental changes and are therefore not relevant.
Previously, enterprises that wished to enter into potentially anticompetitive agreements that did not fall under de minimis rule nor were exempted by any of the block exemption regulations were required to obtain a specific permission from the Competition Board. The provision was largely based on a similar system practiced by the European Commission. On the EU level, such a notification system was abolished in 2004 with Council Regulation No 1/2003. After the amendments come into force, the enterprises are no longer required to apply for an individual exemption in Estonia and have to assess themselves whether the criteria for the exemption are met.
These amendments will grant to the enterprises a great deal of freedom but at the same time create certain risks as to the legality of their activities. The biggest risks relate to the fact that in Estonia concluding prohibited agreements is considered a crime for which members of the management and supervisory boards as well as the legal person itself can be punished. Furthermore, another draft law is being prepared that will amend the Penal Code so that in the future all natural persons, not only members of the management and supervisory boards, could be held liable for competition-related crimes.
There will be a number of changes in the control of concentrations chapter of the Competition Act. Some of the changes will simplify the procedure for the concentrating parties. For instance, in the future the concentrating parties may submit a pre-notification of the concentration to the Competition Board. It will also be possible to submit a short version of the notice of concentration instead of the complete one in case it is obvious that the concentration in question does not have a negative impact on the market. A welcomed amendment will be the abolishment of the compulsory one-week term for the submission of the notice of concentration. That term was unnecessary since the concentration cannot be finalized before the clearance from the Competition Board anyway.
There will also be some fundamental changes in the law regarding the criteria triggering concentration notification requirement in Estonia. After the amendments come into force, global turnover of the concentrating parties will not be relevant anymore, nor will the concentrating parties be required to have directly or indirectly (e.g., via an affiliated company) a permanent place of business in Estonia. It will be sufficient if the companies have turnover in Estonia, i.e. the companies have sold goods or rendered services to customers located in Estonia. Also the thresholds of turnover will be considerably lower than they were previously.
Mariana Hagstrom and Risto Ruutel are attornies-at-law at Teder, Glikman & Partnerid, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms which includes Kronbergs & Cukste in Latvia Jurevicius, Balciunas & Bartkus in Lithuania, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics.
