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Amendments to Bulgarian Competition Law: Improvements Towards More Efficient Proceedings or Blank Implementation?

Improvements Towards More Efficient Proceedings or Blank Implementation?

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Amendments to the Competition Protection Act ("CPA") came into force on 26 February 2021. On paper, the changes look good and are another step towards competition rules that are aligned with European regulations. In particular:

The SIEC test is formally introduced as part of the merger control proceedings: The former CPA provided a dominance test for transactions (i.e. a transaction can be prohibited if it strengthens or creates a dominant position in the market). The significant impediment of effective competition (SIEC) test was not formally recognised under the former CPA. In practice, however, the Commission for the Protection of Competition ("CPC") applied the test, so the amendment is more of a formality.

Clearer timeline for the Phase 2 proceeding: The Phase 2 proceeding is now 90 (+40) business days (instead of four months (+40) business days). The amendment again looks merely like a formality, but we expect it will lead to a shortened Phase 2, since the expiry of the four-month period is more open to interpretation.         

New rules on unfair trading practices in relationships in the agricultural and food supply chain: Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain is implemented in the new CPA.

Repeal of the institute of abuse of stronger bargaining power

The new CPC repeals the institute of stronger bargaining power. This legal instrument (largely unknown in other EU Member States) was introduced in 2015 and was criticised by practitioners for its wide scope of application. Until the repeal, the CPC was responsible for interpreting it, which created uncertainty about how larger companies should deal with their smaller partners without breaching the provision.

Dawn raids in private residences and personal vehicles of manages and employees: CPC commissioners are now entitled to search not only the business premises of potential infringers but also private residences and vehicles to obtain evidence of possible competition law violations.

Clearer terms in antitrust proceedings: Previously, after the oral hearing in antitrust proceedings, the CPC had to decide on the case in a closed hearing. However, the CPA was silent as to the term when such a decision should take place. Some proceedings therefore may take more than a year after the oral hearing to be finally resolved with a decision. The new CPA provides for a term of up to six months after the oral hearing when the antitrust case must be resolved.

The amendments are not surprising and follow the trend in Bulgarian competition law to be better aligned with European regulations. For example, pre-notification meetings were introduced in early 2021, and last year short- and long-form merger filings were introduced. Nevertheless, despite the various positive changes in the legislation, we have yet to see substantial improvement in the practice of the CPC. Antitrust and merger proceedings remain comparatively slow and sufficient case law is missing in many important areas (conditional merger approvals, sanctioning of cartels, breaches related to vertical agreements, leniency, etc.). It is to be hoped that the many positive changes in the statutory provisions introduced recently will be followed by improved merger control and antitrust proceedings and not just a blank implementation.

By Galina Petkova, Attorney at Law, Schoenherr

Bulgaria Knowledge Partner

Schoenherr is a leading full-service law firm providing local and international companies stellar advice that is straight to the point. With 15 offices and 4 country desks Schoenherr has a firm footprint in Central and Eastern Europe. Our lawyers are recognised leaders in their specialised areas and have a track record of getting deals done with a can-do, solution-oriented approach. Quality, flexibility, innovation and practical problem-solving in complex commercial mandates are at the core of our philosophy.

Firm's website: www.schoenherr.eu

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