In mid-May, the Slovak Antimonopoly Office (AMO) introduced a new prioritisation policy. Compared to its previous prioritisation policy, the AMO has decided to make substantial changes. This shift naturally raises questions for the undertakings concerned about the future direction of competition law enforcement in Slovakia. In this post, we will discuss the most significant changes and provide practical insights on how to interpret them.
End of sector-specific prioritisation
One of the most significant differences in the new policy, when compared to the AMO’s previous prioritisation policies, is the level of detail with which the AMO defines its priorities. In past, the AMO always identified specific sectors under its scrutiny, last time it was e-commerce, digital platforms, automotive, IT, and healthcare.
The new policy no longer specifies these sectors, except for the digital market in cases of abuse of dominance. The AMO officials have stated that defining sectors was unsustainable as it limited the AMO’s scope regardless of external changes.
From a practical perspective, this means no sector is off the AMO's radar. Even if your business operates in a sector previously unaffected by the AMO’s activities, it does not mean you won't be targeted in the future. Increased emphasis will be placed on compliance programs and assessing intended business steps across all areas.
However, the end of sector specification does not mean the AMO will not monitor certain sectors more closely. The long-term monitoring of the AMO’s activities indicates that such sectors as healthcare, telecommunications, food industry, and labour market are likely to remain under scrutiny.
De-prioritisation of the extraordinary situation rule
The AMO also mentioned an area that will no longer be a priority – infringements related to the failure to notify concentrations under the special rule for extraordinary situations, states of emergency, or exceptional states (the extraordinary situation rule). This rule requires undertakings to take into account not only the last completed fiscal year but also 2019 when assessing their obligation to notify. The rule was initially applied due to the COVID-19 pandemic, and it is still in use due to the war in Ukraine, though the AMO now considers it economically unjustified.
This is a step in the right direction on the AMO’s part. The extraordinary situation rule, introduced during the pandemic, is now truly unnecessary. Foreign companies, accustomed to the standard of the last completed fiscal year, find this rule confusing.
However, de-prioritisation is not the same as a legal exemption. Undertakings must still notify concentrations based on 2019 turnovers, and the AMO retains the authority to decide on them. The AMO will likely exercise this authority in cases of concentrations that give rise to competition concerns. In our opinion, notification to the AMO or at least consultation and obtaining a comfort letter remains essential for undertakings to have legal certainty in specific cases.
Specific conducts – ambiguities in abuses and a return to verticals?
The AMO continues to define the conducts it will monitor. It is no surprise that the AMO will focus on price cartels, market sharing, and concentrations that give rise to competition concerns. It has redefined the priorities for sector studies, based on key sectors for Slovakia where the risk of monopoly or oligopoly exists. However, two priorities deserve closer attention.
In cases of abuse of dominance, the AMO has stated it will focus on exclusionary practices (e.g., refusal to deal or predatory pricing). However, exploitative practices (e.g. unreasonably high prices) will also “remain at centre stage”.
How should this statement be interpreted? According to the AMO, exclusionary practices are more harmful, hence it will give them more attention. At the same time, it will not overlook exploitative practices.
The broader context offers an explanation. In the EU, competition authorities sometimes assess certain practices as exploitative if they cannot prove exclusionary effects. Such an approach by the AMO cannot be ruled out either. There is less case law on exploitative abuses, making the conditions for proving infringements less clear than for exclusionary practices. This gives competition authorities more room for their own “inventions” and legal discretion. These inventions may not always go in the right direction. Nevertheless, it will be up to undertakings to defend themselves and courts to limit the scope of competition authorities’ interventions to a reasonable level.
Abuse of dominance will therefore remain a very dynamic area in which we expect a lot of the AMO’s activity.
The AMO has also set priorities in the area of vertical agreements. Historically, the AMO has been less active in this area compared to other CEE competition authorities, with the last fine imposed in 2019. Recently, some cases have been addressed through competition advocacy. Now, the AMO has also established priorities in this area.
The priorities in vertical agreements will include resale price maintenance (RPM) and territorial or customer restrictions. The AMO has also included restrictions on sales to end users in selective distribution systems among priorities. Given that other restrictions (e.g., cross-selling) are prohibited in selective distribution systems, this is a fairly precise specification. If you operate a selective distribution system in Slovakia, it is advisable to ensure that such restrictions on sales to end users do not occur in practice.
Private enforcement as another effective and deterrent measure?
The AMO has described the criteria it will use to select its cases. Criteria such as the severity of a potential infringement, the likelihood of success, and the AMO's capacity did not surprise. It is also not surprising that a criterion to select a case also includes the availability of another effective and deterrent measure, such as interventions by other regulators.
The AMO also mentions damages actions for competition law infringements as an example. However, such actions are limited in Slovakia. According to the civil courts, they cannot assess whether a competition law infringement occurred without an AMO’s decision (Supreme Court’s judgment in case 3Obdo/108/2019).
Potential complainants may find themselves in a vicious circle – the AMO will say that a damages action is sufficient, but Slovak courts will not assess the action without an AMO’s decision.
Therefore, private enforcement will not function as an effective measure under the current interpretation. The most suitable solution would be a change in this courts’ interpretation, which could be facilitated by the AMO raising awareness about this issue.
Conclusion
It is clear that the AMO plans to be active across a broad scope and does not want to limit itself to specific areas. This is indicated by the abandonment of sector-specific prioritisation and the focus on both exclusionary and exploitative practices in cases of abuse of dominance.
The new prioritisation policy is a clear signal that all undertakings should avoid potential competition law infringements.
