In one case (Decision 501/V/2010), HCC examined an alleged abusive practice on behalf of Municipality of Athens regarding the terms of concession of use of pavement to cafes, restaurants etc. It was held that this is not an economic activity and therefore the Municipality of Athens was not considered to be an undertaking in this respect.
What is the relevant market?
In accordance with the EU approach, the first step is to define the relevant product and geographical market and next to estimate the market power of the interested parties therein. A relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer by reason of the products’ characteristics, their prices and their intended use; A relevant geographic market comprises the area in which the firms concerned are involved in the supply of products or services and in which
the conditions of competition are sufficiently homogeneous. In most cases brought before HCC, the relevant geographic market normally involves the whole Greek territory and this, usually being considered as “normally capable of affecting trade between Member States”, also entails application of article 101/102 TFEU.
How are anti-competitive agreements defined?
According to article 1 of L. 3959/2011, all agreements between undertakings, all decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in the Greek territory are prohibited
and, in particular, those which:
- directly or indirectly fix purchase or selling prices or any other trading conditions;
- limit or control production, markets, technical development or investment;
- share markets or sources of supply;
- apply dissimilar conditions to equivalent transactions with other trading parties, thereby impeding competition, in particular by refusing without valid justification, to sell, purchase or conclude any other transaction; or
- make the conclusion of contracts subject to acceptance by other parties of additional obligations which, by their nature or according to commercial usage, have no connection with the object of such contracts.
The prohibition captures both horizontal and vertical behaviors, the difference being that the first ones (“cartels”) are considered to constitute the most serious type of violation and entail more heavy sanctions. As to the vertical agreements, the EU Block Exemption Regulations (see also below) apply also in Greece, the resale price maintenance and the restriction of passive sales constituting the highlight points of concern.
Exemption
Under article 1 par. 3 of L. 3959/2011, the provisions of paragraph 1 may, however, be declared inapplicable in the case of any agreement between undertakings, any decision by associations of undertakings, any concerted practice, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:
- impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
- afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
The above exemption criteria are cumulative, as per the EU model. Up until the enforcement of the new competition law (L. 3959/2011), the system of self-assessment, as introduced by EU Regulation 1/2003, was only partially adopted in Greece, given that a notification system was still remaining mandatory (as per article 21 of L. 703/77). Now this formality has been abolished and exemption applies automatically, once the above criteria are cumulatively fulfilled. The burden of assessment lies with the undertakings involved.
The new law (article 1 par. 4 of L. 3959/2011) has also clarified that the EU Block Exemption Regulations apply also for the purposes of exempting similar behaviors that are conducted in Greece without affecting trade between member-states in the sense of 101 par. 1 TFEU.
Which are the criteria for establishing dominance?
Greek law does not contain a definition of dominance. Its elements have been formulated in European case-law, which is also followed by the HCC. In this respect, the criteria of market share (possibly >40-50%, depending on the allocation of the market power of the rest players) and the ability of a firm to act independently of competitors and customers. Of course, the overall market structure is always of interest (rest competitors, legal or actual barriers to entry etc), so that even undertakings with less market share (even around 30%) could be held dominant, if the degree of market share dispersion is high.
As for collective dominance, this is a concept stemming from EU approach and case-law. It is generally accepted that it presupposes two conditions:
- that there is no substantial competition between the oligopolistic undertakings involved,
- that there are no significant competitive constraints exercised towards this “single entity” by other competitors in this market.
How is abuse of dominance defined?
Article 2 prohibits any abuse by one or more undertakings of a dominant position, within the national market or in a part of it, is prohibited. Such abuse may, in particular, consist in:
- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”
From the above indicative examples, it is confirmed that the provision does not distinguish between horizontal (exclusionary) and vertical (exploitative) practices, therefore both aspects of possible abusive practices are covered. The exact form of abuse of dominance may vary; therefore we would only highlight in short two points that are of particular interest for dominant undertakings: rebates and predatory pricing.
It is true that, with all the evolution of EU case-law, it is a rather hard task for a dominant firm to implement in practice a feasible discount policy, which could stand effectively in the market reality and, at the same time, be in full compliance with competition rules. It is generally accepted that rebates connected with target sales etc are only exceptionally admissible, once they are cost-related and -justified. The rationale is common as per the EU approach, i.e. to prevent dominant firms from any practices that end out to bind the customers and exclude them from potential competitors.
As for predation, proper assessment of such a conduct presupposes a careful cost analysis. As a general rule, the critical threshold is average variable cost, since sales below such cost are deemed to be abusive. Other than that, each case needs to be examined on an ad hoc basis, in the framework of the exact competition conditions of each market.
Defense of abuse
A critical element for defending an alleged abuse of dominance is its objective justification, interrelated with a commercial rationale. Also, potentially overriding interests (more efficient service for the customer) may counterbalance a prima facie abusive behavior. Proportionality is crucial in any case for the overall assessment of a certain conduct.
It must be noted that, especially in cases of alleged discrimination, the prohibition of dissimilar treatment of similar situations is often misinterpreted as a “flat” equality of treatment. However, the details of a specific practice cannot and must not be disregarded, since e.g. the different credit risk and/or sales volume between customers may well justify their different treatment. Comprehensive understanding of the facts of each case, combining vigorous legal analysis and economic competitive assessment, is a prerequisite for grey areas, which is mostly the rule in competition law.
Which are the competition enforcement authorities in Greece?
Generally the competence for the enforcement of Greek law on the protection of free competition (L. 3959/11) lies with the Hellenic Competition Commission (HCC), which is also the National Competition Authority for the application of the equivalent EU provisions (articles 101, 102 TFEU).
However, according to the EU common framework for the liberalization in the sectors of telecoms, postal services and energy, as implemented in Greece, there are separate authorities (National Regulatory Authorities) for these sectors, namely the Hellenic Telecommunications and Postal Services Commission (“EETT”) and the Regulatory Authority of Energy (“RAE”). Together with the rest regulatory sector-specific powers held by these NRAs, the latter are further accordingly competent for enforcing L. 3959/11 in the above sectors, although co-operation with or referral to HCC is also possible.
What is the structure of the Hellenic Competition Commission?
Under L. 3959/11, the Hellenic Competition Commission (HCC) consists of 8 members, out of whom 6 are full time appointees (the Chairman, the Vice-Chairman and four Commissioners).
Investigations can be initiated either ex officio (e.g. in cases of public interest or in cases that a certain anticompetitive pattern has come to the attention of the authority etc) or upon a complaint submitted by a third party (usually competitor, supplier or customer).
The investigative powers of the General Directorate of Competition (part of HCC) are specifically provided for in L. 3959/11 and are generally in line with the typical similar powers of the European competition authorities. Investigation requires a written mandate from the Chairman of HCC, which defines the scope and legal basis of the investigation and it also mentions the sanctions applicable in case that the enterprise fails to comply and to cooperate. As the case might be, other public officers and/or authorities can also be involved
in the investigation carried out by the officers of the General Directorate of Competition, which also have to comply with constitutional restraints (e.g. in case of investigation in the residence of the representatives of an enterprise, Court authorisation is required).
Failure of an enterprise to comply with the investigation (e.g. refusal to provide information or submission of misleading data or concealment of documents) entails administrative and criminal sanctions.
As soon as the investigation is concluded, the General Directorate of Competition assesses the findings of the investigation and proceeds, in co-operation with one of the Commissioners, with the drafting of a recommendation (similar to Statement of Objections) to the HCC. Such recommendation is notified to the parties involved, in order to express their position both orally and in writing before the HCC (right of prior hearing). Decisions issued by HCC are, at a fist stage, subject to appeal (“prosfygi”) before the competent Administrative Court of Appeal and, subsequently subject to petition for annulment (“anairesi”) before the Conseil d’ Etat.
Sanctions against undertakings and individuals
According to article 25 of L. 3959/11, HCC has the power to:
- oblige the undertakings to cease the violation and refrain from repeating it in the future,
- accept commitments offered by the undertaking and render such commitments mandatory,
- impose behavioural or structural remedies, on a proportional basis,
- address recommendations and threaten the undertakings with fine/penalty in case of repeating the violation,
- forfeit the fine/penalty, in case it is certified by HCC’s decision that the violation has not ceased or has been repeated,
- impose fines against the violating undertakings.
The fine cannot exceed 10% of the aggregate turnover of the undertaking for the previous fiscal year, depending on the gravity and the duration of the infringement. EC guidelines for the calculation of the fine are also followed by HCC.
As per the provisions of L. 3959/2011, there are three new elements on administrative sanctions:
- In case of group of companies, the aggregate group turnover is to be considered.
- In case that the economic benefit enjoyed by the undertaking can be measured, then the fine cannot be less than that (even if it exceeds the threshold of 10%).
- Individuals involved in violations of L. 3595/2011 face a two-fold personal liability: On the one hand, they are jointly liable together with the undertaking for the payment of the above fine (this existed also under L. 703/77). On the other hand, a separate fine ranging from €200.000 to €2.000.000 may be imposed against them, in case that they have been involved in preparing, organizing or committing whatsoever the violation.
Criminal sanctions are also threatened in case of violation of L. 3959/2011 and/or articles 101/102 TFEU. According to article 44 of L. 3959/11, distinction is made, depending on the type of violation:
- horizontal violations imprisonment ranging from 2-5 years and fine ranging from €100.000-€150.000.
- vertical violations fine ranging from €15.000 to €150.000.
- abuse of dominance fine ranging from €30.000 to €300.000.
Commitments
The “commitments decision” procedure under Regulation 1/2003 and Greek competition law, provides HCC with a mechanism to dispose of competition law cases by way of a formal “settlement”, similar to a US consent decree.
The involved undertaking may voluntarily propose HCC to undertake certain behavioural or structural commitments to terminate the alleged infringement (either anti-competitive agreement/decision/concerted practice or abuse of dominance).
HCC can consider such commitments and render them mandatory if and when: (a) they remove HCC’s initial competition concerns, (b) the case is not one where a fine would be appropriate (this therefore excludes commitment decisions in hardcore cartel cases), (c) efficiency reasons justify that the Commission limits itself to making the commitments binding, and does not issue a formal prohibition decision.
It must be noted that HCC is considered to have wide discretion in accepting commitments. Recently, the HCC rendered Decision No. 588/2014 on Commitments.
Leniency
As from 2005, leniency has been introduced in Greek competition law. HCC has rendered Decision No. 526/VΙ/2011 on Leniency, following in general terms the respective EC Leniency
Notice.
Leniency applies only in horizontal cartel cases and not in cases of vertical cartel cases or in cases of abuse of dominant position. As per the EU approach, distinction is made between:
- full immunity from fines, in case the undertaking is the first to submit evidence for a cartel that the HCC did not have, at the time of submission, sufficient evidence to carry out an investigation or find out the infringement, and
- reduction of fines, in case the undertaking provides the HCC with evidence of the alleged infringement, which represent a “significant added value” when compared with other information already possessed by the HCC.
The undertaking must also: (a) co-operate fully, actively and on a continuous basis throughout the investigation procedure and provide the HCC with all information and evidence which are at its possession or might become later available to it. (b) end its participation in the alleged infringement, as soon as it submits the information to the HCC. (c) not have encouraged other undertakings to participate in the infringement. (d) treat with full confidentiality the fact that it has applied for leniency, until the completion of the investigation and the drafting of the Report of the HCC on the case (e) not have participated in the past in any cartel case, detected and confirmed by a National Competition Authority or the European Commission.
As far as we know, there has only been one leniency request in the last few years before the HCC in a major cartel case (construction sector), which has led to full immunity of the applicant.
Settlement procedure
The HCC has recently issued decision 628/2016 by which it formally established a settlement procedure for cartel infringements, thus further bringing its practice in line with that of the European Commission, which first introduced this procedure in 2008. Pursuant to this HCC decision, companies may express their interest, in writing, to partake in the settlement procedure, either before to the issue of a statement of objections or after, within a maximum of 35 days prior to the date set for an oral hearing (in contrast to the European Commission, which will always carry out the procedure prior to the issue of a statement of objections). The HCC meets in plenary session to approve or reject these expressions of interest, and, if it approves them, proceeds to holding bilateral meetings with each implicated company, wherein it set outs the facts of the case, the scope of the infringement and the extent of the participation of the company concerned, the key evidence on which it bases its findings, as well as the range in which the fine can be expected to fall.
Following the conclusion of these meetings, which can be as few or as many as the HCC deems necessary in each case, a company is then given a 30-day deadline within which to file its Settlement Submissions, by which it must unreservedly admit its participation in, and liability for, the cartel, accept the (maximum) range of the fine which may be imposed, and forego the right to receive full access to the file and to an oral hearing before the HCC. The HCC then issues a Proposal accepting or rejecting the Settlement Submissions and setting out the conclusions of the meetings and, if the company concerned accepts this Proposal, a Settlement Decision is issued officially by the HCC.
Prior to the issue of the Settlement Decision, the HCC is neither bound nor limited by anything which took place during the procedure and maintains the right to terminate it. Upon so doing, the Settlement Submissions and Proposal are wholly revoked and may not be used as evidence against the implicated company, neither by the HCC nor by the competent courts on appeal. Unlike the European Commission which offers a 10% reduction, the HCC offers a 15% reduction of the fine for cases which successfully complete the settlement procedure. Viewed in light of the ongoing financial crisis in Greece, which has hit businesses especially hard, it is anticipated that this settlement tool will be put to use often.
As far as we know, two cases have already been settled (cosmetics and construction sector), while a couple of more cases are under way to be settled.
Private enforcement
Private enforcement is possible according to the general provisions. In this sense, it is possible to seek compensation before Civil Courts for any damage suffered due to the prohibited abusive conduct. Such claim is grounded on article 914 of Civil Code. The damages could
cover any proven losses suffered thereof, i.e. both direct losses and loss profits, but not punitive damages.
The upcoming adoption of the recent EU Directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of the member states and of the European Union is very much expected.
There have been some rare Court cases, regarding refusal to deal and access to essential facilities in telecoms sector, which combined abuse of dominance with the general provisions for abuse of right (Civil Code 281).
Other than that, there are some competition cases that have been brought before Civil Courts, but judges mostly lack expertise and this creates significant hurdles to effective judicial protection.
