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Amendments to the Competition Protection Act

Amendments to the Competition Protection Act

Important amendments to the Competition Protection Act (the “CPA”) were adopted in State Gazette, issue 17 dated 26 February 2021. The amendments shall enter into force as of the date of their promulgation in the State Gazette, except for the new rules on unfair trading practices which shall enter into force as of 1 November 2021.

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Most of the amendments are aimed to bring the national legislation in line with the requirements 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
  • Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair trading practices in business-tobusiness relationships in the agricultural and food supply chain.

The amendments cover the areas described below.

New rules on unfair trading practices in the business-tobusiness relationships in the agricultural and food supply chain 

The amendments in the CPA suspends the application of the existing chapter seven “a” “Abuse of a superior bargaining position” and introduces new rules on unfair trading practices between economic operators in the agricultural and supply chain in accordance with Directive (EU) 2019/633. 

The purpose of the new rules is to provide a higher level of protection to the agricultural producers and suppliers of food from the economically stronger buyers. The new rules will apply in the relations between the suppliers and buyers of the food products depending on their respective annual turnovers. 

Absolute and conditional prohibitions have been introduced with regard to the application of trading practices between suppliers and buyers of agricultural and food products. 

Absolutely prohibited are unfair trading practices such as: payments from the buyer to the supplier later than 30 days after the end of an agreed delivery period or a delivery date, cancellation of orders of perishable products with a notice of less than 30 days, unilateral change of the terms of a supply agreement, requests for payments by the buyer that are not related to the sale of the products, etc.

The conditional prohibitions are prohibitions for applying certain trading practices, unless they have been previously agreed in clear and unambiguous terms in the supply agreement. Among the explicitly listed prohibitions are: return by the buyer of unsold products to the supplier without paying for those products, requirements for payment by the supplier of the buyer’s advertising or marketing activities, or transportation of logistic costs, etc.

A number of exceptions from the prohibitions have also been provided in the CPA, including the agreements between the suppliers and consumers. A sanction may be imposed to a buyer of food products in case of infringement of the absolute and conditional prohibitions at the amount between BGN 5,000 and BGN 300,000.

As per the Transitional and final provisions of the Act for amendment and supplement of the CPA, the agreements for supply of agricultural and food products concluded before 1 November 2021 shall be brought in line with the new rules within 12 months as of the date of entry of the law in force. 

Independence and wider powers of the Commission on Protection of Competition

In accordance with Directive (EU) 2019/1 certain provisions have been introduced in the CPA, aimed to ensure that the CPC shall exercise its powers without any influence or instruction from government or local authorities, or any private entities.

The CPC members may not be dismissed from their authorities for reasons related to the proper performance of their duties, as well as powers to apply Article 101 and 102 of the Treaty on Functioning of the European Union.

The mandate of the CPC members is extended from five to seven years. The CPC members shall be elected after a public procedure and shall not be re-elected for a new mandate upon termination of their existing mandate. 

The CPC shall have wider and new powers to investigate infringements of the CPA, as follows:

  • Imposing fines to persons who do not appear to give explanations, oppose dawn raids or provide incorrect, incomplete or misleading information. 
  • Inspection of private premises, such as homes of managers and other members of staff, if a reasonable suspicion exists that in any such premises official documents are being kept. 
  • Imposing penalties and fines in case of infringements of competition also to the economic successors of the undertakings which have induced an infringement, as well as to associations of undertakings, where the infringement is related to the activities of its members. 
  • Cooperation with the other competition authorities in the Member States in case of delivery of notifications and enforcement of decisions imposing penalties and fines. 
  • Refusing to initiate proceedings for finding of an infringement under the CPA, regardless of a submitted complaint, if the CPC decides that the case is outside the scope of its enforcement priorities. 

For questions, please do not hesitate to get in touch with us.

 

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