Control of concentrations as ex ante regulation plays an essential role in the functioning of competition. By controlling concentrations, it is possible to prevent anti-competitive concentrations and acquisitions, which in turn prevents the creation of a dominant (monopolistic) position.
Controlling concentrations helps prevent damage that a monopolistic undertaking could cause consumers or society by ensuring the preservation of competition and preventing the development of a dominant (including monopolistic) position. Since a monopolistic market structure can be expected to lead to output limitation and a decrease in economic efficiency, its natural consequence should be the intolerance of the competition policy to any activities that harm the market structure (in particular activities preventing access to the market or concentrations that reduce the number of market participants)1 . However, it is important to note that controlling concentrations can only limit the growth of undertakings through concentrations and acquisitions, not their organic growth, so concentration control does not eliminate the emergence monopolies.
But concentration control is not just about the prevention of potential abuses of dominant positions that may take place in the future. Controlling concentrations helps maintain market structures that promote competition, which in turn leads to increased consumer welfare. Markets with effective competition have many undertakings, and consumers have the opportunity to choose products and services of the price and quality that suits them. The absence of competitive pressure, however, allows undertakings to profitably increase prices, reduce the volume, range or quality of goods and services, and lessen innovation, product development, etc.
Concentration control applies if the parties’ total turnover of the previous financial year in Estonia exceeds 6,000,000 euros and the turnover of at least two concentration parties in Estonia exceeds 2,000,000 euros each. A concentration that is subject to control by the Competition Authority may not be brought into force before a decision authorising the concentration has been made.
The Competition Authority must be notified of the concentration after the agreement has been signed, the transaction or operation to acquire control or the announcement of a public bid, but before the concentration takes effect. The Competition Authority may also be notified of the concentration as soon as parties to the concentration indicate with sufficient certainty their intention to complete the concentration. 2022 was a record year in terms of the number of concentration notifications. The number of concentration notifications submitted in 2022 was 54, with two additional proceedings transferring from 2021. Therefore, there were 56 pending concentration notices in 2022. The Competition Authority made a total of 50 concentration decisions, with 47 permitting decisions made within the 30 days prescribed by law. Supplementary proceedings were launched for six concentrations, and one supplementary proceeding carried over from the previous year.
Supplementary proceedings are carried out to gather additional data and determine whether the concentration subject to control includes any anti-competitive circumstances. Supplementary proceedings may last up to four months. In terms of concentrations subject to supplementary proceedings in 2022, the Competition Authority prohibited the concentration in one case (AS Eesti Post / AS EXPRESS POST), permitted the concentration in three cases on the condition that the parties fulfil the assumed commitments (A/S Dobeles Dzirnavnieks / AB Baltic Mill; RAGN-SELLS AS / AS Väätsa Prügila; SCHWENK EESTI OÜ / Betoonimeister AS), in two cases the parties withdrew from the concentration (OÜ Biofuel, OÜ CRANFELD INVEST / OÜ Renalis, OÜ Fresenius Medical Care Estonia; Estover SPT OÜ / AS Saaremaa Piimatööstus), and in one case the Competition Authority permitted the concentration (Margus Linnamäe / Confido Healthcare Group OÜ).
By type, the distribution of concentrations notified in 2022 is as follows:
48 concentrations concerned an undertaking acquiring control of the whole or a part of another undertaking (clause 2 of subsection 1 of § 19 of the Competition Act);
four concentrations concerned undertakings jointly acquiring control of the whole or a part of another undertaking (clause 3 of subsection 1 of § 19 of the Competition Act);
two concentrations concerned previously independent undertakings merging (clause 1 of subsection 1 of § 19 of the Competition Act).
Subtopics:
- Prohibition of concentration of AS Eesti Post and AS EXPRESS POST
- Granting of permission to concentrate to A/S Dobeles Dzirnavnieks and AB Baltic Mill with obligations
- Granting of permission to concentrate to RAGN-SELLS AS and AS Väätsa Prügila with obligations
1 Richard Whish, Competition Law, 6th edition (Oxford University Press, 2009), p 6