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2. Prevention of monopolistic activities and unfair competition

2.1 Overview

Article 5 of the Competition Law lists anticompetitive activities prohibited for businesses and public authorities, namely:

  1. Monopolistic activity
    1. abuse of a dominant position on the market
    2. anticompetitive agreements between businesses (monopolistic agreement and concerted actions)
  2. Unfair competition
  3. Public authorities' activity that leads to the restraining of competition.

The involvement of businesses and public authorities in any anticompetitive activity listed above leads to the issuance of binding orders by NAPC and the imposition, on businesses or public authorities, of the sanctions provided for by the Competition Law, as follows:

  • modification, termination or invalidation of anticompetitive agreements or provisions;
  • remedy the consequences of violations and returning to the situation before the infringement;
  • confiscation of a part of unlawfully generated revenue;
  • forced division or separation of the dominant business.

Also, restraint of competition and conducting of unfair competition may result in the criminal liability of a business and its officers.

The application of specific pieces of legislation regulating the prevention of monopolistic activities and unfair competition in particular sectors/industries is insignificant in Moldova. For instance, there are specific rules on the identification of dominant businesses in the electronic communications markets. Moreover, the state and natural monopolies are governed by the Governmental Decision on Regulation of Monopolies, No. 582, dated 17th August 1995, and not regulated by the Competition Law unless the activities of such monopolistic undertakings threaten fair competition in relevant markets.

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2.2. Dominance

The concept of dominance is laid down in Article 2 of the Competition Law and is when a business has an exclusive position in a market for goods, which confers, alone or in collusion with other companies, the possibility to exercise decisive influence on the general conditions of movement of goods on a relevant market or to restrain the access of other businesses to such markets.

From the outset, the law requires that in order for a company to be recognized as being in a dominant position, it has to own at least 35% of market share. The market share of a business is determined at group level, taking into account affiliated businesses.

Identification of a dominant position is done by NAPC, except for the electronic communication market, under the provisions of the Guideline. In accordance with these provisions, the 35% threshold is not enough to qualify a business as dominant. To qualify as dominant a business must also restrain competition in the market.

Dominance itself does not represent an anticompetitive activity and is not subject to prohibition. Only the abuse of dominant position is forbidden under the Competition Law.

Article 6 of the Competition Law qualifies as abuse of dominance as actions of one or more businesses (dominant either alone or together) which restrain, or potentially restrain competition and/or affect the interests of other businesses and/or natural persons on the relevant market, including the following non-exhaustive list of actions:

  1. intentional constraint of the counter-signatory to less favorable conditions or to conditions that have no connection with the subject matter of the agreement (unjustified requests on transfer of funds, other assets or property rights);
  2. Forcing a counterpart to enter into a contract subject to agreement by the counterpart to buy (sell) other goods in addition to the main contract, or to refrain from buying goods from other suppliers, or selling goods to other businesses or consumers;
  3. artificially maintaining a shortage of goods in the market through deliberate reduction, limitation or termination of production regardless of favourable conditions for it, removal of goods from circulation, accumulation of goods, operation of other measures;
  4. undertaking certain discriminatory actions towards a counterpart thereby placing it at a competitive disadvantage;
  5. imposing a cap on the re-sale prices of goods;
  6. creating barriers to entry/exit of the market;
  7. dumping practices;
  8. establishing high monopoly prices;
  9. groundless refusal to conclude contracts with certain buyers/beneficiaries when there is a possibility to manufacture and supply the requested goods;

If, after the investigation of a situation, NAPC concludes that an abuse of dominant position occurred, it will issue a binding order to the relevant business obliging it to terminate illicit actions and/or remedy the consequences of the violation, or to modify or terminate the agreement which led to the abuse of the dominant position.

If a business fails to observe the binding order, NAPC is entitled to file the action with the courts to ensure the remedy of consequences of the breach, modification, termination, invalidation of the unlawful agreement or provision or confiscation of unlawfully generated revenue.

When a business abuses its dominant position two or more times, NAPC is entitled to force its division or separation through the court system, if the conditions provided by the Competition Law for conducting such forced division or separation are met.

There are no exclusions or exceptions for the abuse of a dominant position.

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2.3. Monopolistic agreements and concerted actions

Monopolistic agreements and concerted actions defined as "anticompetitive agreements" under the Competition Law represent both formal agreements and informal practices entered into or conducted by:

  1. competing businesses together holding more than a 35% share of a relevant market;
  2. non-competing businesses one of which holds a dominant position in a relevant market, while the other is its supplier, or purchaser (beneficiary); or
  3. non-competing businesses that are not suppliers or purchasers of each others goods, when each of them (or at least one) holds a dominant position in the relevant market;

In order for the prohibition or the making void entirely or in part, of such agreements (coordinated actions) they should lead, or potentially lead, to the restraint of competition.

Article 7 of the Competition Law includes non-exhaustive lists of forbidden competition restraint practices:

(i) In cases of anticompetitive agreements between competing businesses holding together more than a 35% share of a relevant market:

  1. making (maintaining) of prices (tariffs), discounts, extra charges (additional payments) directed at the infringement of competitors' interests;
  2. increase, reduction or maintenance of prices at auctions;
  3. conducting auctions by collusion;
  4. geographic division of the market, division by volume of sales or purchases, range of sold products, or circle of sellers or purchasers (customers);
  5. limitation of manufacturing, supply, including by establishment of quotas;
  6. limitation of access to the market, or elimination from the market of other sellers of certain products or their purchasers (beneficiaries);
  7. groundless refusal to conclude agreements with certain sellers or purchasers (beneficiaries).

(ii) In cases of anticompetitive agreements between non-competing businesses one of which holds a dominant position in a relevant market, while the other is its supplier, or purchaser (beneficiary):

  1. limitation of the sales territory or the circle of buyers;
  2. establishing restrictions on the resale prices of products sold to buyers;
  3. preventing businesses from selling products manufactured by competitors.

Businesses which intend to enter into horizontal or vertical agreements (coordinated actions) containing competition restraint arrangements may require the clearance of NAPC for the conclusion of such agreements. In cases where approval is given, the agreement is considered consistent with the legislation subject to the observance of the conditions imposed by NAPC.

In exceptional situations (case by case) NAPC may grant an exemption and allow the conclusion of anticompetitive agreements between non-competing businesses that are not suppliers or purchasers of each others goods, and each of them (or at least one) holds a dominant position in a relevant product market, if the benefits resulting from such actions outweigh the restraints of competition on a relevant product market.

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2.4. Unfair competition

According to Article 2 of the Competition Law, "unfair competition" is defined as the actions of a business aimed at obtaining unjustified advantages from its business activity that damages or is likely to cause damages to other businesses or injure their business reputation.

Businesses are banned from conducting unfair competition practices, including:

  • dissemination of false or incomplete information that is likely to damage another business, and/or damage its business reputation;
  • misleading consumers in respect to the nature, method and place of products manufacturing, consumer properties, suitability, quantity and quality of the products;
  • unfair comparison of its manufactured or commercialized products with the products of other businesses for advertising purposes;
  • unauthorized use of trademark, service mark of other objects of industrial property, trade name of another business, as well as to imitate the shape, packaging and general appearance of the goods belonging to other businesses;
  • unlawful receipt, use or disclosure of information representing a commercial secret of another business;
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2.5. Antitrust investigation

Antitrust investigations are started by NAPC, ex officio, or at the request of businesses, their organizations and associations, organizations and associations of consumers or public authorities. The form of application for the commencement of an antitrust investigation is approved by NAPC. The fee for examination of the application is MDL 90 (USD 7).

The procedure for starting, conducting and terminating an antitrust investigation is poorly regulated at the moment. The provisions of the Regulation on Examination of Violations of Antitrust Legislation, approved by Government Resolution No. 619, dated 5th October 1993, are obsolete and not applicable by NAPC, while the new Regulation on the Manner of Investigation of Violations of Legislation on Protection of Competition has not yet been approved properly. However, NAPC applies the provisions of this 'unapproved' regulation as a result the procedure for investigation is completely non-transparent. So, the stages of an antitrust investigation, the time limits, the rights and obligations of the parties involved in the investigation remain a "mystery" for businesses.

Within the investigation procedure, NAPC is entitled to request relevant documents, written and verbal explanations, and other necessary information from businesses, their officers and public authorities. Moreover, NAPC representatives have the right to free access to the premises and to the business' property.

NAPC shall keep commercially sensitive information obtained in the course of investigation confidential. The confidential character of information is determined by the parties involved in the investigation. The parties may also request confidential treatment of some information submitted by NAPC. The damages caused by NAPC officers through dissemination of the confidential data of businesses shall be remedied.

At the end of the investigation, if the violation of competition legislation is determined, NAPC will issue a binding order obliging businesses and/or public authorities:

  1. to stop the violation of the competition legislation;
  2. to amend, terminate or cancel the agreements or decisions;
  3. to remedy the consequences of the violation by restoring the situation existing before the infringement.
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2.6. Implications for infringers

The binding order is submitted by NAPC to the infringer within 5 days as of its adoption. Such order should be implemented by a business / public authority within the term specified in it.

NAPC binding orders may be appealed in the Chisinau Court of Appeal within 6 month period of their issuance.

Failure of the infringer to implement the terms of the binding order issued by NAPC may result in the referral of the case to the competent court.

NAPC is not entitled to amend, terminate or invalidate the anticompetitive agreements or to force remedy of the consequences of the violation by restoring the situation that existed before the infringement or to confiscate a part of the business' revenue by itself. All the above listed sanctions may only be applied by the competent court.

As of July 2009, NAPC has lost its right to apply administrative fines on infringers for violation of the competition legislation due to an amendment of the contraventional legislation which removes the classification of competition restrictive practices as contraventions (petty offences).

At the same time, the restraint of competition by entrance into anticompetitive agreements leads to the criminal liability of the individuals (officers of businesses) who may be punished with a fine between MDL 20,000 (USD 1,675) and MDL 40,000 (USD 3,350) or up to 3 years imprisonment. Also, infringing businesses involved in unfair competition practices are penalised with (i) a fine between MDL 20,000 (USD 1,675) and MDL 40,000 (USD 3,350) or up to 1 year imprisonment on infringing individuals (officers of businesses) and (ii) a fine of MDL 70,000 (USD 5,862) and MDL 100,000 (USD 8,374) with the removal of the right to carry out a business activity from 1 to 5 years.

Moldovan legislation is not lenient towards infringers.

Any party that has suffered from competition restraint actions (abuse of dominance, monopolistic agreements and concerted actions, unfair competition) are entitled to challenge such anticompetitive activities using NAPC or by claims to the competent court seeking to stop competitive restraint actions and the recovery the damages suffered.

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