Competition supervision

In 2021, one of the keywords in competition supervision was the transposition of the ECN+ Directive. This directive is one of the most fundamental reforms of EU competition law in the last decade. It aims to streamline and harmonise the way Member States deal with infringements. It is necessary to implement especially extensive changes in the Estonian legal system, because our procedural system has historically been quite different from the solutions traditionally used in Europe.

Namely, while in the EU Member States, competition infringements have generally been prosecuted and sanctioned in administrative proceedings, Estonia is one of the few Member States where they have been prosecuted in criminal or misdemeanour proceedings. However, the latter have been considered relatively inefficient, which is why the ECN+ Directive essentially excludes the use of criminal proceedings and makes the use of misdemeanour proceedings quite difficult. With this in mind, Estonia has chosen to create a completely new administrative fine procedure for competition infringement proceedings. This is a fundamental change in the Estonian legal system – we have not used sanctions at all outside criminal and misdemeanour proceedings.

At the end of 2021, the Ministry of Justice submitted for approval a draft amendment to the Competition Act transposing the ECN+ Directive. As this is, as has been said, a fundamental change in the Estonian legal system, the draft will certainly cause a lot of discussions. Hopefully, the Estonian Competition Authority will be able to start investigating competition cases within the new framework within a year.

In 2021, the Estonian Competition Authority processed cases from very different areas of life. More and more competition concerns are emerging in different digital markets. Estonia is no exception – the same can be observed in many other countries. Many digital markets are characterised by very high market concentration, which is clearly a challenge for competition authorities. At the same time, it is often not possible to proceed from the so-called traditional monopoly approach to competition law, which is why competition law in digital markets is still evolving. The reasons why, for example, Google or Facebook have market power are very different from the reasons why, for example, railway infrastructure has market power. Distortions of competition are also of a different nature. With this in mind, legislation on digital markets is being prepared in the European Union. In addition, the new block exemption on vertical restraints addresses more issues related to the sale of goods online.

This yearbook describes a number of events in digital markets. These concern the pricing conditions of online platforms and the automatic exchange of data with online portals for goods or advertisements. These cases are generally characterised by a relatively high level of market concentration, so it is particularly important that undertakings do not restrict competition through their activities.

Cases related to pricing conditions

For several years now, competition authorities have been focusing on various clauses limiting pricing, especially between undertakings who are not competitors and where an online platform is often a party. Such pricing clauses are called price parity clauses and can be broadly divided into two types: Wide price parity clauses and narrow price parity clauses. A broad price parity clause means that the supplier of the goods agrees that the price of the goods on the platform of the counterparty is not higher than in other sales channels (e.g. on other platforms). A narrow price parity clause means that one party agrees to the restriction that the price is not higher on the platform of the counterparty than in other sales channels or in the sales channel of the supplier (e.g. on a website). Although both wide and narrow price parity clauses are covered by the block exemption for vertical agreements, provided that the market share of the parties is within 30%, the general view of competition authorities is that broad price parity clauses are more harmful because it raises horizontal competition concerns. Opinions may differ on narrow price parity clauses – competition authorities have taken into account, in particular, the free-rider problem. The Estonian Competition Authority is of the opinion that the greater the market power of the platform using price parity clauses and the less concentrated the market of the other party, the more likely it is that such an agreement may distort competition.

Although the Authority has not made any final decision on narrow price parity clauses, the Authority analysed two cases related to the use of such clauses by undertakings.

In the summer of 2020, several articles appeared in the press which raised problems regarding the fees for food couriers. Therefore, the Authority initiated an investigation into the activities of the Wolt Eesti OÜ (hereinafter Wolt). Restaurant and retail partners can sell food, beverages, and other products through the platform to its users. In the course of the proceedings, the Authority found that the service agreement of Wolt with restaurant and retail partners contained clause 2.3 of the General Terms and Conditions, pursuant to which, ‘The partner is responsible for updating the prices and menu provided in the Wolt service. The partner independently determines the prices of its products used in the Wolt service. The prices may not be higher than the prices charged by the partner at their own point of sale.’ According to the initial assessment of the Authority, clause 2.3 of the General Terms and Conditions to that contract was a ‘narrow price parity clause’, pursuant to which the prices used in the restaurant and on the platform must be the same for the consumer.

As the platform charges a commission from the final price of the user, the platform can increase the commission for the restaurant and the restaurant cannot increase the price to the customer (by transferring the commission) only on the platform due to the narrow price parity clause. The restaurant can only increase the prices used in the restaurant and therefore consumers who do not use the platform will pay for some of the sales on the platform. If a platform using a narrow price parity clause has some market power, it is all the more likely that restaurants will not be able to cover the increasing commissions other than by raising prices in the restaurants.

If the restaurant is unable to increase the price of the product due to the competitive situation, it must cover the commission at its own expense and there will be no significant competitive pressure on the commission of Wolt as a result of this provision. Therefore, the Estonian Competition Authority was of the preliminary opinion that the relevant clause of Wolt’s General Terms and Conditions is in conflict with competition law. However, the Authority clarified that an exemption is possible if all conditions are met. In the course of the proceedings, Wolt informed the Authority that, although it still considered that it did not infringe competition law, it had decided to amend the standard terms and conditions of the service contract for partners and to remove the narrow price parity clause. As the undertaking changed the terms of the contract, the Authority terminated the procedure.

The second case concerned the IIZI Kindlustusmaakler AS (hereinafter IIZI), which asked the Authority whether agreements where the insurer undertakes to offer its insurance products to the customers of the insurance broker on at least the same basis and at the same prices as are available in the campaigns or sales channels of the insurer to the public are in accordance with competition law. The Authority found that some cooperation agreements concluded by IIZI contained a similar provision. According to the initial assessment of the Authority, the conditions listed above were narrow price parity clauses used in vertical agreements and falling within the scope of competition law. However, the Authority clarified that if the agreement fulfils the conditions for exemption under the Competition Act, the agreement may be allowed. In its reply, IIZI disagreed with the preliminary views of the Authority on price parity. IIZI explained that with this condition, the broker wanted to avoid the insurers pricing the insurance service in such a way that the price of the insurance service offered in the direct sales channel of the insurer would be higher.

In other words, they did not want to increase or agree on the price of the insurance service, but to create the conditions to meet the reasonable expectation of the policyholder that when assessing the insurance risk and concluding an insurance contract with their broker, they would be offered the same gross insurance premium (not much larger) for the same insurance risk by the same undertaking as they would be offered from the direct sales channel of the undertaking, such as the website of the undertaking. They also wanted to prevent situations where the undertaking charges an unreasonably high price for equivalent insurance cover for the service of the broker, i.e. independent analysis and the recommendation to use preferred customers (policyholders), including a price that is significantly higher than the price the undertaking charges for equivalent insurance coverage offered through other so-called insurance intermediaries, i.e. through so-called insurance agents.

The procedure was terminated as IIZI stated that the parties to the cooperation agreement revoked the relevant clauses to remove any suspicion that this might be an anti-competitive practice.

Access to advertising portals via automatic data exchange (XML)

In 2021, the Estonian Competition Authority processed a number of cases concerning the conditions of access to online advertising portals. The emergence of such portals with high market power on the Internet is a new challenge for competition law. Often, the market power of these undertakings and their potential anti-competitive behaviour are significantly different from the so-called traditional monopolies. The corresponding competition law is still evolving in Europe in some respects.

Below are two cases in which the automatic exchange of data with a portal with market power was investigated. For example, the average consumer enters a real estate sale advertisement on the respective portal manually. However, in the case of a real estate agency, it can be arranged so that the advertisements automatically move from their website to the portal. Special technical solutions are used for such automatic data exchange. On the one hand, automatic data exchange makes the work of real estate agencies easier. Secondly – and this is particularly important in terms of competition law – it makes it easier for competing portals to enter the market. If the advertisement were to be entered manually on each portal, real estate agencies would probably not be willing to use many portals. However, if the data is shared automatically in the market, the additional cost of adding advertisements to new portals is minimal.

In the first case, the Estonian Competition Authority investigated the conditions for the automatic exchange of data applied by the real estate portals of AllePal OÜ ( and Kinnisvaraportaal OÜ ( on the basis of a complaint from five real estate agencies. These real estate portals had imposed various restrictions on the free use of the XML service for automatic data exchange. The service could be used only by real estate agencies with more than 10 users, which is why smaller real estate agencies did not have access to the service. The portal did not allow the export of advertisements via XML. The contracts of restricted the use of the XML export interface only for exporting advertisements to the official website of the real estate company, which means that real estate agencies could no longer export data to competing portals via XML. It also turned out that and added their own trade mark to the photos published by the customers on the portals. Third parties (including competing real estate portals) may not use the registered trade mark of, so other portals cannot receive such photos from customers or benefit from the XML service.

In the course of the proceedings, and removed all restrictions. The Authority therefore terminated the surveillance procedure for XML imports and exports due to a significant improvement in the competitive situation.

Another example is the supervision procedure against AllePal OÜ (the car purchase and sale advertisement portal Auto24). According to the data submitted to the Authority, Auto24 offered the possibility to transmit data and advertisements in XML format only to certain undertakings, but not to all interested parties.

During the supervision process, Auto24 explained that it has previously allowed a few trusted and long-standing customers to enter advertisements through the XML service, but this service was not offered to new customers. According to Auto24, extending the provision of the XML service to new customers would have caused a number of technical and commercial problems, as the existing system did not allow for a large-scale XML service provision. Despite several problems related to the XML service, Auto24 was willing to offer the XML service to all customers, making the necessary investments. As the service was thus provided to all customers who requested it, the procedure was terminated due to a significant improvement in the competitive situation.

Organisation of border services on the Estonian railway

AS E.R.S asked the Estonian Competition Authority for an opinion on the manner in which AS Eesti Raudtee (hereinafter Eesti Raudtee) found a provider of border services. The border service is a set of services provided at the Estonian border to trains arriving there, the purpose of which is to ensure that all trains running on Estonian railways are safe for both traffic and infrastructure. The service set includes the technical and commercial delivery and receipt of trains, including technical and commercial inspection, rectification of deficiencies, preparation of documents, data processing, etc. In practice, the provision of this service is primarily organised by the freight operators themselves. At the time of initiating the procedure, Eesti Raudtee used a public procurement procedure to find a provider of border services, as a result of which the right to provide the service was granted only to one or two undertakings. As a result of the tendering procedure, the remaining carriers had to purchase border services from the winning undertakings, which could mean an obligation to purchase border services from their competitors. The goal of the Authority was to check whether such a restriction of the list of undertakings providing the service is justified or whether all persons wishing to provide the service should be able to do so.

During the procedure, it became clear that all railway undertakings purchasing border services wished to provide those services themselves. The Public Procurement Act also does not explicitly prescribe that Eesti Raudtee should, in any case, organise a concession procurement that restricts the circle of service providers. According to the Ministry of Finance, Eesti Raudtee has two alternatives – to carry out the transaction on the basis of a concession agreement or a procurement contract, or alternatively to enter into authorisation agreements with all eligible undertakings.

The Competition Authority sent a preliminary position and a precept warning to Eesti Raudtee, pursuant to which the restriction of the list of border service providers by the procurement procedure by Eesti Raudtee is in conflict with subsection 18 (1) of the Competition Act. The purpose of the provision is to protect free competition in access to essential facilities, i.e. to place market participants in a position as similar as possible to free competition. This means that Eesti Raudtee must make the least restrictive choices when organising access to the railway infrastructure and restrict competition only if there are clear and overriding reasons for doing so. The Authority found that finding a provider of border services through a procurement procedure that closes the goods market to other undertakings for a period fixed in the contract is restrictive of the market compared to a situation of free competition, where all undertakings have the right to provide the service themselves if the conditions prescribed by Eesti Raudtee are met.

In accordance with the Competition Act, such restrictions must have clear and overriding reasons. The objectives of the Competition Act are met to a greater extent if an undertaking is able to enter and exit the market as flexibly as possible. However, the number of service providers is limited as a result of the public procurement. In addition, restricting the list of border service providers leads to a situation where a carrier may need to purchase border services from a competitor. In the opinion of the Authority, the creation of a new dominant undertaking in a situation where there could be free competition in the goods market is not permissible, apart from exceptional and clearly justified situations.

In the course of the proceedings, Eesti Raudtee proposed to the Authority a solution that waived the procurement procedure so that any undertaking meeting certain conditions could provide border services. Border services will henceforth be regulated through the annual network statement of the traffic schedule period, and each carrier is obliged to enter into a corresponding agreement to regulate the conditions for the provision of border services. This solution achieved a situation that was considered reasonable by all carriers operating in the market. Consequently, the Authority terminated the supervision proceedings against Eesti Raudtee in connection with the significant improvement of the competition situation.

Recommendation for granting the right to import medicinal products to hospital pharmacies

The Estonian Competition Authority has repeatedly raised the question of why hospitals are not allowed to import medicinal products into the country independently under the Medicinal Products Act, as this right is reserved for wholesalers of medicinal products. The Authority has previously published its respective positions in letters sent to the Minister of Social Affairs on 8 August 2019 and to the Minister of Justice on 8 November 2019.

In its letter to the Economic Affairs Committee of the Riigikogu of 8 December 2021, the Authority reiterated its recommendation to grant the right to import medicinal products to hospital pharmacies in the procedure of the draft 205 SE The intent provided for the granting of the right to import medicinal products without a marketing authorisation and active substances necessary for the manufacture of medicinal products to hospital pharmacies. The bill pending before the Riigikogu no longer contained this right. This choice was not substantiated. However, the issue is on the agenda and market participants have expressed their views on it during the draft procedure. The Authority found that the dependence of hospitals on pharmaceutical wholesalers is too high and should be reduced, taking into account, inter alia, the following considerations:

  • in Estonia, the competitive situation in the field of pharmaceutical wholesale is poor, as the market is concentrated in the hands of a small number of undertakings. Despite the ban on the integration of the general pharmacy and the pharmaceutical wholesaler, which entered into force on 1 April 2020, there has been no real recovery in the wholesale market or a decrease in the market power of large wholesalers. On the contrary, the role and bargaining power of the market leader have increased. According to the State Agency of Medicines, in 2020, 31 undertakings with the right to wholesale medicinal products sold human medicinal products to general and hospital pharmacies and other institutions. The three largest wholesalers accounted for 81% of the market share for human medicinal products: Tamro Eesti OÜ (32%), Magnum Medical OÜ (32%), and Apteekide Koostöö Hulgimüük OÜ (17%). The latter ceased operations at the end of 2020, increasing the market share of Magnum Medical to around 50%.
  • The review of the pharmaceutical market  shows that sales to hospital pharmacies account for 107.1 million euros of the sales turnover of Estonian wholesalers, which is 30% of the market volume of human medicinal products (compared to 69% or 247.8 million euros for sales to general pharmacies). This is a significant part of the pharmaceutical market with significant potential for competition.
  • If hospital pharmacies were given the right to buy medicinal products not only from wholesalers in Estonia, but also from other EU Member States, as well as directly from manufacturers, they could buy medicinal products at a lower price. In addition, the resulting price competition would put pressure on Estonian wholesalers to offer medicinal products at lower prices to hospitals and the health and social care institutions they supply.

In the case of a hospital pharmacy, the organisation of the handling of medicinal products is fundamentally different from the situation outside the hospital in the doctor–pharmacy–patient triangle. In the latter case, it is important to ensure strict separation between the prescriber on the one hand and the seller on the other, so that doctors remain independent of the sellers and manufacturers of medicinal products when choosing which products to prescribe. The choice of medicinal products used in hospitals, however, becomes clear as a result of the procurement, and regardless of whether the hospital has the right to import or not, the hospital doctor will not be faced with such choices. Hospital pharmacies are used to supply the health care provider with the medicinal products necessary for hospital treatment – the main activity of the hospital is the provision of health care services and not the trade in medicinal products.

In view of the above, the Authority found that granting the right to import medicinal products without a marketing authorisation to hospital pharmacies in combination with the right to supply provided for in subsection 30 (4) of the Medicinal Products Act would be a step in the right direction to improve the availability of medicinal products to hospital patients. To stimulate competition, further consideration should be given to extending the right of hospital pharmacies to import medicinal products with a marketing authorisation in addition to those without a marketing authorisation (less than 2%).