Contributed by Boga & Associates.
1. What are the main competition-related pieces of legislation in the Republic of Kosovo?
In the Republic of Kosovo, the main competition-related pieces of legislation include:
The Competition Law (Law no 08/L-056) establishes the legal framework for ensuring fair competition and preventing anti-competitive practices in the market. It outlines the powers and responsibilities of the competition authority in Kosovo (Competition Authority), procedures for investigating and sanctioning anti-competitive behavior, as well as rules governing mergers and acquisitions. The Competition Law is partially aligned with (i) Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty; (ii) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EU Merger Regulation); (iii) Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices; and (iv) Commission Regulation (EC) No 802/2004 of 7 April 2004 implementing Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings.
Also, the Law on State Aid (Law no 05/L-100) regulates the granting of state aid by public authorities to businesses and organizations in Kosovo. It aims to prevent distortions of competition within the internal market by ensuring that state aid is granted in a transparent and non-discriminatory manner and that it complies with EU state aid rules. This law partially complies with Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the implementation of Article 108 of the Treaty on the Functioning of the European Union.
2. Have there been any notable recent (last 24 months) updates of Kosovo competition legislation?
There were no notable amendments to the competition legislation in the Republic of Kosovo in the last 24 months.
3. What are the main concerns of the national competition authority in terms of agreements between undertakings? How is the sanctioning record of the authority?
The main concerns of the Competition Authority regarding agreements between undertakings primarily revolve around ensuring fair competition and preventing anti-competitive practices in the market. The Competition Authority closely monitors agreements between undertakings to detect any potential violations of competition law, such as price-fixing, market allocation, and collusion, which could harm consumers or stifle competition. Additionally, the Competition Authority is vigilant in assessing agreements that may lead to the abuse of dominant market positions, as such behavior can distort competition and harm the overall functioning of the market.
In terms of the Competition Authority’s sanctioning record, there have been relatively few instances of parties being found guilty. Between 2016 and 2023, the authority imposed fines on only 15 petrol companies found to have violated the Competition Law during the months of November and December 2018, specifically for breaches related to prohibited agreements.
4. Which competition law requirements should companies consider when entering into agreements concerning their activities in Kosovo?
When entering into agreements concerning their activities in Kosovo, companies should carefully consider several competition law requirements to ensure compliance with regulations and avoid potential legal consequences. Some of the key considerations include:
(a) Anti-competitive Agreements – Companies must refrain from entering into agreements that restrict competition, such as price-fixing, market allocation, and collusion. These agreements are prohibited under competition law and can lead to severe penalties if detected.
All agreements aimed at preventing, restricting, or distorting competition in the relevant market are strictly prohibited. Specifically, agreements that:
- Directly or indirectly fix prices or manipulate trading conditions;
- Impose limitations or exert control over production, markets, technological advancements, or investments;
- Divide markets or sources of supply among competitors;
- Implement unequal conditions for similar transactions with other trading entities, unfairly disadvantaging them in competition;
- Make the conclusion of a contract contingent upon the acceptance of additional obligations that are unrelated to the contract’s subject matter or commercial purpose.
These prohibitions aim to safeguard fair competition and promote market efficiency and consumer welfare.
(b) Abuse of Dominant Position – Companies with significant market power must avoid abusing their dominant position to eliminate or restrict competition. This includes practices such as predatory pricing, tying, and discriminatory behavior towards competitors or customers.
The abuse of a dominant position is strictly prohibited under the Competition Law.
An enterprise or group of enterprises engages in such abuse if they:
- Directly or indirectly establish unfair purchase or sale prices or impose other unfair trading conditions.
- Restrict production, markets, or technological advancements to the detriment of consumers.
- Apply different conditions to equivalent transactions with other enterprises, placing them at a disadvantage in competition.
- Condition contract agreements with additional obligations that are irrelevant to the contract’s subject by nature or commercial use.
- Set prices or terms with the intent or result of impeding the entry of competitors or their products into the relevant market or expelling them from it.
- Deny access to networks or infrastructure to another enterprise under terms that prevent them from competing effectively.
(c) Merger Control – Companies planning mergers or acquisitions in Kosovo must comply with merger control regulations. They should assess whether their proposed transactions meet the thresholds set out in the competition law and notify the Competition Authority accordingly.
A concentration shall be subject to the clearance and approval of the Competition Authority if the following thresholds are met:
If the participants in the concentration have a combined worldwide turnover:
(i) of at least EUR 20 million and one concentration participant has a domestic turnover of at least EUR 1 million; or
(ii) at least 2 concentration participants have a combined domestic turnover of at least EUR 3 million
By proactively considering and addressing these competition law requirements, companies can mitigate legal risks, safeguard their reputation, and contribute to a competitive and fair business environment in Kosovo.
5. Does a leniency policy apply in the Republic of Kosovo?
Yes, a leniency policy does apply in the Republic of Kosovo. Under the provisions of the Competition Law, the Competition Authority possesses the authority to grant leniency to participants of prohibited agreements under certain conditions. This leniency is granted to those who are the first to report the violation and provide substantial evidence that facilitates the initiation or determination of the prohibited agreement. Moreover, even if participants do not meet the criteria for full exemption from fines, they may still receive reduced fines if they provide decisive evidence.
The specific procedures and criteria governing leniency are outlined in Administrative Instruction No. 04/2023, titled “On Determining the Procedure and Criteria for Leniency or Fine Reduction,” issued by the Competition Authority. These criteria include immediate cessation of involvement in the cartel upon request, full and sincere cooperation with the Competition Authority, and the provision of relevant information and evidence regarding the cartel.
Furthermore, enterprises considering a leniency request must adhere to strict guidelines during the process. They must refrain from destroying, falsifying, or concealing evidence related to the cartel and must abstain from disclosing any facts or the content of their intended request until the competition authority issues a notice of findings.
The leniency policy serves as a crucial instrument in uncovering and prosecuting cartel behavior, thereby fostering competition and safeguarding consumer interests in Kosovo. By incentivizing proactive reporting and cooperation, the policy promotes transparency and strengthens enforcement efforts against anticompetitive practices.
The Competition Authority in Kosovo may grant exemption from fines to enterprises involved in a cartel if they fulfill certain conditions outlined in the relevant Administrative Instruction. These conditions include declaring their participation in the cartel and being the first to provide substantial evidence. This evidence should be presented at the time when the Competition Authority receives the request to initiate proceedings regarding the cartel, provided that the Competition Authority lacks sufficient evidence until that moment. The exemption does not apply to the initiator or instigator of the cartel.
6. How is unilateral conduct treated under Kosovo competition rules?
The Competition Authority in Kosovo assesses unilateral conduct to determine if it violates Competition Law and undermines the competitive process in the market. Some forms of unilateral conduct that may be considered abusive include:
(a) directly or indirectly sets unfair purchase or sale prices or other unfair trading conditions;
(b) restricts production, markets, or technological development to the detriment of consumers;
(c) applies different conditions for equivalent transactions with other enterprises, placing them at a competitive disadvantage;
(d) conditions the conclusion of a contract with additional obligations that, by their nature or commercial use, are unrelated to the subject of the contract;
(e) sets prices or other conditions aimed at or resulting in hindering entry into or exit from the relevant market for particular competitors or their products;
(f) denies another enterprise access to the network or infrastructure under appropriate terms, making it impossible for it to act as a competitor.
If the Competition Authority determines that unilateral conduct constitutes an abuse of dominance, it may take enforcement action against the company. This could include imposing fines and ordering behavioral remedies to cease the abusive conduct.
7. Are there any recent local abuse cases of relevance?
As previously mentioned, the Competition Authority in the Republic of Kosovo has recorded relatively few instances of parties found guilty. A notable case involved 15 companies fined for engaging in prohibited agreements. The fines ranged from EUR 50,000 to EUR 989,000, with the latter marking the highest fine ever imposed in such cases.
8. What are the consequences of a competition law infringement?
In Kosovo, the Competition Authority has the authority to impose fines in the event of a violation of the regulations set forth by the Competition Law.
The maximum fine amount cannot surpass ten percent (10%) of the total turnover generated by the enterprise or group of enterprises globally in the last fiscal year, as reported in the financial statements.
When determining the fine, the Competition Authority considers mitigating and aggravating factors, taking into account the severity and duration of the infringement, as well as its impact on other market participants and consumers. Initially, the Competition Authority establishes the base fine amount for the violation, which may then be adjusted based on the circumstances surrounding the case.
9. Is there any competition law requirement in case of mergers & acquisitions occurring or impacting the Kosovo market?
Yes, there are competition law requirements that apply to mergers and acquisitions occurring or impacting on the Kosovo market. Companies engaging in such transactions must comply with the merger control provisions outlined in the Competition Law.
Subject to the Competition Law, the concentration of enterprises is created through:
a. Merger of two or more independent enterprises or parts of these enterprises;
b. Acquisition of direct or indirect control over one or more enterprises or parts of enterprises, by:
- acquiring shares, or a part of them;
- acquiring majority of voting rights; and
- any other way based on the provisions of laws in force.
The acquisition of control is achieved by transferring the rights, by contract or in another way that enables the enterprises, alone or together, to exercise decisive influence over other companies on a permanent basis.
The acquisition of control is realized especially with:
i. transfer of ownership or the right to use all or part of the enterprise’s assets;
ii. transfer of rights or contracts that bring decisive influence on the composition, voting, or decisions of corporate bodies.
Key requirements and procedures related to mergers and acquisitions under the Competition Law include:
Notification Requirement – Companies meeting the above thresholds must notify the Competition Authority of Kosovo of their proposed mergers or acquisitions before completing the transaction. The thresholds are typically based on the combined turnover or market share of the merging parties and are designed to capture transactions that may significantly affect competition in the market.
Pre-merger Notification – The merging parties are required to submit a notification to the Competition Authority detailing the transaction’s specifics, including information on the parties involved, the relevant markets affected, and the potential competitive impact of the merger or acquisition.
Review Process – Upon receiving a merger notification, the Competition Authority will assess the transaction’s potential impact on competition in the relevant markets. This may involve conducting a thorough investigation, gathering additional information from the parties and third parties, and analyzing the competitive effects of the proposed merger or acquisition. During the assessment for the clearance of concentration, the Competition Authority evaluates whether the notified concentration would not significantly impede effective competition in the relevant market, particularly as a result of the creation or strengthening of a dominant position. The effects of concentrations among current or potential competitors in the same relevant market are assessed based on the Competition Authority’s Administrative Instruction on the Assessment of Horizontal Concentrations. The effects of concentrations among enterprises active in different relevant markets are assessed based on the Competition Authority’s Administrative Instruction on the Assessment of Non-Horizontal Concentrations.
Clearance Decision – Following its review, the Competition Authority will issue a decision either clearing the merger or acquisition if it determines that it does not raise significant competition concerns, or issuing conditions or remedies to address any identified anti-competitive effects.
Prohibition – In cases where the Competition Authority finds that a proposed merger or acquisition would significantly harm competition in the market, it may prohibit the transaction from proceeding.
It’s important for companies involved in mergers and acquisitions in Kosovo to carefully assess whether their transactions trigger merger control obligations under the Competition Law and to comply with the notification requirements and procedures accordingly. Failure to do so could result in significant penalties.
10. What is the normal merger review period?
The normal merger review period in Kosovo can vary depending on the complexity of the transaction and the specific circumstances of the case. However, as per the Competition Law, the Competition Authority in cases of a simplified review process (when the notified transaction would not give rise to any competition concerns) completes the process within 30 calendar days from the date of receiving a complete notification to review a merger or acquisition transaction.
If the Competition Authority requires additional information or determines that the transaction raises significant competition concerns, it may extend the review period by issuing a formal request for further information. In such cases, the authority has an additional 60 days from the date of issuing such a conclusion to complete its review and issue a final decision.
11. Are there any fees applicable where transactions are subject to local competition review?
Yes, there are fees applicable when transactions are subject to local competition review in the Republic of Kosovo. Specifically, for the clearance of concentration requests, procedural expenses are incurred. These fees vary depending on the stage of the review process.
Initially, there is a fee of EUR 1,000 for the submission of a request for concentration clearance, as outlined in Article 15 of the Competition Law, which applies to participating enterprises.
Subsequently, upon verification and issuance of clearance by the Commission, a fee of EUR 6,000 is charged. It’s important to note that these fees must be paid at the time of submission of the request or notification by the enterprises, respectively.
These fees contribute to covering the administrative costs associated with the competition review process, ensuring effective oversight and enforcement of competition laws in Kosovo.
12. Is there any possibility for companies to obtain State Aid in the Republic of Kosovo?
Yes, companies in the Republic of Kosovo may have the possibility to obtain state aid, subject to certain conditions and regulations. State aid refers to financial assistance or other benefits granted by a government or public authority to specific companies or sectors, which can include subsidies, tax breaks, grants, or favorable loan terms.
In Kosovo, state aid is regulated by the Law on State Aid Control, which aims to ensure that state aid granted by public authorities complies with European Union (EU) regulations and does not distort competition within the internal market. The law establishes procedures for the notification, assessment, and monitoring of state aid measures to prevent any adverse effects on competition or trade.
Companies seeking to obtain state aid in Kosovo must typically submit a notification to the relevant authority, providing details of the proposed aid measure and demonstrating how it complies with the legal requirements, including criteria related to the necessity, proportionality, and compatibility of the aid with EU state aid rules.
The authority in Kosovo is responsible for overseeing state aid measures and ensuring their compliance with national and EU regulations. The authority assesses notified state aid measures to determine whether they meet the legal criteria and may require adjustments or impose conditions on the aid to address any potential distortions of competition.
Overall, while companies in Kosovo may have the possibility to obtain state aid to support their activities or investment projects, it is essential to adhere to the legal requirements and procedures established by the Law on State Aid Control to avoid any violations of competition law and ensure compliance with EU regulations.
13. What were the major changes brought by the COVID-19 pandemic? Have any of them stuck and how likely is it for these changes to continue to do so in the foreseeable future?
In Kosovo, the COVID-19 pandemic did not cause any substantial alterations in competition legislation.