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Restrictive Agreements and Practices in Macedonia

Restrictive Agreements and Practices in Macedonia

Macedonia
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Restrictive agreements and practices in Macedonia are governed by the Protection of Competition Act (2010) (the “Competition Act”), which entered into force on November 13, 2010.

The Competition Act is entirely aligned with Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and prohibits agreements between undertakings, decisions by associations of undertakings, and concerted practices which have as their object or effect the prevention, restriction, or distortion of competition in the Macedonian market. Moreover, under the Stabilization and Association Agreement concluded between the EU and Macedonia, EU competition rules can be applied directly in Macedonia in the assessment of the forms of distortion of competition that may affect the trade between Macedonia and EU member states.

The competent authority for the investigating and sanctioning of restrictive agreements and practices in Macedonia is the Commission for the Protection of Competition (the “Commission”). The determination of whether an agreement or practice is indeed in breach of the Competition Act is carried out within administrative proceedings based upon suspicion of a misdemeanor. Additionally, the Criminal Code (1996) foresees personal criminal liability and imprisonment from one to ten years for the legal representatives of a company who have entered into cartel agreements or are involved in such agreements or practices resulting in the generation of substantial profits or causing substantial damages.

The Competition Act automatically treats as null and void all agreements and practices that: (i) directly or indirectly fix purchase or selling prices or any other commercial conditions; (ii) limit or control production, markets, technical development, or investment; (iii) share markets or source of supply; (iv) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them in a less favorable competitive position; or (v) make the conclusion of contracts conditional on the acceptance of obligations which are unrelated to the subject matter of the contract in question.

Rules on restrictive agreements and practices apply to both written and oral agreements, non-binding arrangements, and other types of informal collusion. In addition, the exchange of commercially sensitive information between competitors, even in the absence of an agreement to act on it, constitutes a breach of the Competition Act. In this context, it is not necessary for the agreements or practices to be implemented or to have any effect on the market, as long as they were intended to have an anti-competitive effect. Similarly, it does not matter if the agreement or practice was entered into with an innocent intent, if the effect of it is anti-competitive. 

Agreements, decisions of associations of undertakings, and concerted practices that contribute to the promotion of the production or distribution of goods and services or to the promotion of technical or economic development (provided that the consumers have a proportionate share of the resulting benefit), are exempted from the rules on restrictive agreements and practices, subject to the fulfillment of certain conditions set out in the Competition Act. These so-called “block exemptions” apply to: (i) technology transfer, license, or know-how agreements; (ii) horizontal research and development or specialization agreements; (iii) vertical agreements on exclusive distribution rights, selective distribution rights, or exclusive purchase and franchise rights; (iv) insurance agreements; (v) distribution and servicing of motor vehicles agreements; and (iv) transport sector agreements. The Commission is also empowered, upon its own discretion, to exempt a particular agreement, a decision of an association of undertakings, or a concerted practice from the scope of the Competition Act in view of protection of the public interest.

Entrance into restrictive agreements or engaging in restrictive practices can result in fines of up to 10% of the undertakings’ turnover in the previous accounting year. However, the Commission is empowered to grant leniency to undertakings that have entered into restrictive agreements or have engaged in restrictive practices where they admit their participation in a cartel. The Commission may grant full immunity from fines that would otherwise be imposed on that undertaking if it first presents evidence enabling the Commission to initiate a misdemeanor procedure or first presents evidence enabling the Commission to complete the already initiated misdemeanor procedure with a decision establishing the existence of a misdemeanor (if the existence of the misdemeanor could not be created without such evidence).

If the undertaking that has admitted its participation in a cartel fails to meet the requirements for full immunity, the fine may be reduced if the undertaking submits additional relevant evidence to the Commission of decisive importance for the adoption of a decision establishing the existence of a misdemeanor.

By Ana Stojanovska, Partner, ODI Law Macedonia
This Article was originally published in Issue 4.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Macedonia Knowledge Partner

ODI is one of the leading independent corporate law firms in South-Eastern Europe and one of the fastest growing in the region with a team of 40 lawyers which provides legal services to a wide range of premier clients, including local and multinational corporations and financial institutions.  With permanent presence in all ex-Yugoslavia countries by offices in Slovenia, Serbia, Croatia and Macedonia and working desks for Bosnia and Montenegro ODI provides seamless service in the region for all cross-border projects and prides itself on an unmatched understanding of the business cultures in the region. The 4 core practice areas are M&A, Corporate Restructuring, Banking Finance and Dispute Resolution. ODI team has a reputation for successfully managing large and complex multi-jurisdictional transactions, disputes and projects, and delivering outstanding outcomes for clients.

Firm's website: http://www.odilaw.com/

 

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