Competition supervision

The primary task of the Supervisory Department of the Competition Authority is the investigation of anti-competitive agreements and undertakings in a dominant position on the market. In 2022, a large number of different cases were dealt with. The Annual Report describes in more detail the so-called dryer cartel case, which stands as one of the largest cases of its kind in the history of the Authority. The takeaway from this case under competition law is that competing undertakings cannot agree amongst themselves on non-competitive offers. In addition, the Annual Report details the case of a joint tender of timber transport undertakings in terms of co-operation between competitors in public procurement. This was a precedent-setting case in Estonia, where the majority of undertakings operating in this field decided to join forces and submit a joint tender in a large-scale public procurement. Although such joint tenders are reasonable under certain circumstances, the high level of co-operation in this case was undoubtedly anti-competitive.

Similarly to previous years, one of the keywords for 2022 was the anticipation of the Administrative Fine Procedure Act. Estonia’s approach to handling competition matters is widely recognised as unique, as it involves both criminal and misdemeanour procedures, which are often perceived as less effective than the administrative fine procedure more commonly used across the EU. For this reason, the ECN+ Directive, which is aimed at reforming the way competition matters are handled in Europe, essentially calls for criminal procedures to be abandoned. While the Directive does not preclude the use of a misdemeanour procedure, it calls for such fundamental changes that the feasibility of such an approach is debatable. As a result, Estonia has opted for the introduction of an administrative fine procedure. The majority of EU Member States that have traditionally used a procedural system similar to that of Estonia have followed the same path. The Estonian Competition Authority, as one of the smallest national competition authorities in Europe, considers the strengthening of the procedural system to be of the essence. At the same time, we acknowledge that this represents a groundbreaking change in the legal system of Estonia, the shaping of which inevitably requires time.

The year 2022 will hopefully go down in history as the year that saw an end to the COVID-19 pandemic. While concerns were raised in the early days of the pandemic that lockdowns could result in numerous new types of competition problems, in reality, there were only a few cases. For instance, in Europe, there was concern that disruptions to production and supply chains could lead to the issue of the permissibility of so-called crisis cartels aimed at tackling these challenges. However, the Authority did not identify any instances where the pandemic could be used to directly justify anti-competitive practices.

The turbulent economic situation of recent years has undoubtedly created challenges for both consumers and businesses alike. Although crises are a normal and inevitable part of a market economy, it is important not to address them in a way that undermines competition. As an example, the Annual Report describes the unlawful co-operation of financially struggling bus undertakings to compel the state to provide additional funds to them. As prices, particularly for energy, continue to rise, an increasing number of voices argue that competition in these fields is no longer sustainable. It is important to differentiate between situations where competition fails to function and situations where it functions, but in a way that is undesirable for society. It is a basic principle of the market economy that when demand exceeds supply, price increases occur, stimulating new investment in the sector and eventually leading to lower prices. Competition supervision seeks to eliminate barriers that impede the functioning of the market mechanism, without challenging the mechanism itself.