Amendments to the Law on Protection of Competition (LPC) were promulgated in the State Gazette, no. 17 of 26.02.2021 and shall enter into force on that same date, except the amendments regarding the unfair trading practices in business-to-business relationships in the agricultural and food supply chain, which shall enter into force on 1 November 2021. The amendments aim to harmonize the legal framework with the provisions of Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market and with 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.
Powers of the CPC
The Commission for Protection of Competition (CPC) is the national body in the Republic of Bulgaria, responsible for the application of the Union law in the field of competition. The amendments guarantee the effectiveness of the CPC in the performance of its functions as they provide it with the ability to act in complete independence of all the state authorities. The grounds for termination of the powers of the members of the CPC are explicitly supplemented by a prohibition to terminate them due to the exercise of powers to apply the LPC and Article 101 and Article 102 of the Treaty on the Functioning of the European Union. In addition, the amendments provide for the necessary qualified staff, financial resources, and technical equipment in order to ensure that the Commission has sufficient resources to carry out its tasks effectively. A period is explicitly introduced in which the members of the commission and the employees of its administration must refrain from participating in pending proceedings under the law, as otherwise there would be a conflict of interest.
The current powers of the CPC are extended by the right to carry out on-site inspections in private premises. In addition, upon a request to initiate proceedings under the law, the CPC will have the opportunity to conduct a preliminary investigation. It provides for the possibility for an association of undertakings to which a sanction has been imposed but which is unable to pay it to require its members to make contributions to cover the amount of the sanction within the time limit set by the Commission. It will be possible for the CPC to refuse to initiate proceedings with a motivated refusal, in the cases in which, although a regular request has been received, it falls outside the set of priorities. The interested persons will be able to appeal the order for refusal to initiate proceedings before the Administrative Court – Sofia District in the manner prescribed by the law.
Unfair trading practices in business-to-business relationships in the agricultural and food supply chain
The amendments aim at overcoming significant imbalances in the negotiating position between suppliers and buyers of agricultural and food products. Two types of bans on unfair commercial practices are introduced:
- Absolute prohibitions – payments for agricultural and food products, including perishable ones, with a term longer than 30 days from the delivery / determination of the amount payable, notices of refusal of orders for perishable products of less than 30 days with a short storage period, a 14-day notice period is provided), unilateral change of the terms of the contract by the buyer, charging the supplier with payments not related to the sale, restrictions for the supplier, etc.
- Conditional prohibitions, which are not prohibited in principle, if agreed in advance with clear and unambiguous conditions in the supply contract or in a subsequent agreement between the supplier and the buyer – return by the buyer to the supplier of unsold products without paying for them and / or for their disposal, charging by the buyer to the supplier with payment as a condition of storage, display or inclusion in the product range of its products or for placing on the market of such products, request from the buyer to pay the costs for reduced prices within the promotion , the costs of advertising the products, etc.
In case of established violation of the absolute or conditional prohibitions, the CPC will impose a property sanction on the violators.
“Abuse of a stronger bargaining position” is repealed. Proceedings initiated and unfinished before the entry into force of the current amendments under Chapter Seven “a” shall be completed in the current order. When the commission issues a decision establishing that no violation has been committed, or when the proceedings have been terminated due to the withdrawal of the request, the commission shall assign the costs incurred to the person at whose request the proceedings were instituted, if requested by the other party. In all other cases, the costs remain with the parties as incurred. The competence regarding the control over legality of acts of the Commission is assigned to the Administrative Court – Sofia District, which is already establishing a practice on competition disputes. The amendments now grant the CPC the possibility to hold open meetings at a distance. The term for the initiation of proceedings for assessment of the concentration shall be changed to 5 working days from the receipt of the notification.