The Slovenian media company Pro Plus already experienced the tough approach being applied by the Slovenian Competition Protection Agency ("the Agency") at the beginning of this year, when the Agency sanctioned it with a fine for obstructing an Agency investigation (for more information please see here). According to media reports and as confirmed by the Company, Pro Plus has now been also fined with almost 10% of its 2013 annual turnover for a dominant position abuse on the television advertisement market.
Agency's fining policy
In accordance with the Slovenian Protection of Restrictions of
Competition Act ("the Competition Act"), the Agency may
impose a fine of up to 10% of a company's annual turnover for
infringements of Article 9 of the Competition Act as well as of
Article 102 of the Treaty on the Functioning of the European Union,
both of which in a similar wording prohibit abuses of dominant
position.
However, apart from the general wording contained in the
Competition Act, the Agency has not issued any regulation or
document specifying its fining policy. As infringements of the
Competition Act in their nature represent minor offences, the
provisions of the applicable criminal laws serve as a last –
and only - resort of guidance.
According to the Slovenian Minor Offences Act, the fine shall be
determined within the range prescribed by applicable law, taking
into consideration factors such as the weight of the infringement,
the level of the infringing entity's responsibility, as well as
the reasons for and circumstances of the infringement. Additional
aggravating circumstances that need to be taken into account in the
fine determination process are the company's economic standing
and any fines imposed for possible previous infringements. As to
the mitigating factors, the Minor Offences Act simply states that
they should also be taken into account; however, no specific
circumstances are listed as references.
The fine determination "black box"
Apart from the above-mentioned general principles, there is no
guidance as to how a precise amount of fine should be calculated.
Consequently, the Agency is generally free to impose a fine of
between 1 or 10% of the implicated undertaking's annual
turnover, a range that leaves far too much leeway and legal
uncertainty. A company that is under the Agency's scrutiny
cannot foresee how its fine will be determined in the event that
the Agency establishes that there has been an infringement on the
company's part.
The Agency's website reveals only one decision imposing a
(minor offence) fine for a dominance abuse case. Accordingly,
companies cannot rely even on the Agency's decisional practice
in order to establish what criteria will be taken into account in
case of a potential minor offence proceeding for competition law
infringements.
The practice of the European Commission
The European Commission's fining policy is defined in its
2006 Fining Guidelines (Guidelines on the method of setting fines
imposed pursuant to Article 23(2)(a) of Regulation No 1/2003) and
its fine determination process is structured in significantly
greater detail.
The method as used by the European Commission consists of (a) the
calculation of a basic amount based on the turnover achieved in the
affected territory by the implicated undertaking at the time of the
decision, and the seriousness of the infringement, (b) the
multiplication of such amount by the number of years the
infringement took place, and (c) taking into account different
aggravating and mitigating factors (e.g. where an undertaking
continues or repeats the same or a similar infringement or where
the undertaking concerned provides evidence that it terminated the
infringement as soon as the Commission intervened,
respectively).
Additionally, other European Commission documents and practices
offer further grounds for mitigating the amount of fine determined
in accordance with the Guidelines. In accordance with the Leniency
Notice, the fine can be further decreased should a company apply
for leniency (i.e. companies that self-report and hand over
evidence may benefit from either total immunity from fines or a
reduction of fines which the European Commission would have
otherwise imposed on them). Further to this, the companies are
entitled to a further 10% discount in the event that they decide to
enter into a settlement with the European Commission pursuant to
the Settlement Regulation.
The way forward
The introduction of a transparent and structured fining policy
in Slovenia would significantly enhance the legal certainty that
companies rightfully expect when engaging in business activities in
the country. Such a development would provide the companies and
practitioners with the insight they require into the Agency's
decision making and fine determination practice, as well as better
serve the purpose of efficient deterrence.
Accordingly, the Agency would need to issue some kind of statement
or a piece of secondary legislation with respect to its fine
determination process. For example, the European Commission's
2006 Fining Guidelines could be used as a basis on which to further
elaborate on the principles established by the Slovenian Minor
Offences Act.
Moreover, a decision by the Agency to start regularly publishing
its administrative and minor offence decisions would be a step of
great importance. Only by doing so, will the Agency enable the
companies and legal practitioners to get much-needed insight into
its decision making and fine determination process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.