Changes in legislation

Foto: Kersti Telve

Monopolistic undertakings will pay a supervision fee

On 1 January 2022, an amendment to the Competition Act entered into force, pursuant to which part of the budget of the Estonian Competition Authority is financed by supervision fees paid by monopolies with regulated prices. The purpose of the amendment is to better ensure the ability of the Estonian Competition Authority to perform additional tasks and to enhance supervision by providing additional funding. The Authority has a number of new tasks at the level of the European Union and more tasks will be added in the near future, such as organising the functioning of the EU-wide electricity and gas market. In addition, the Authority coordinates EU-wide infrastructure projects on the Estonian side, such as the synchronisation of the electricity system and the Estonian–Finnish gas connection.

The supervision fee will be paid by electricity and gas network operators and network operators and heat producers in the district heating sector. The principle is similar in the water sector. The supervision fee will also paid by universal postal service providers, railway infrastructure managers, and airport and port operators. The amount of supervision fees is 0.02–0.2% of the turnover of the regulated undertaking.

In addition to the Competition Act, the Public Water Supply and Sewerage Act was amended, which now places the price regulation of all water undertakings under the control of the Estonian Competition Authority. In connection with the establishment of supervision fees, a reference was added to the Electricity Market Act, the District Heating Act, the Aviation Act, the Natural Gas Act, the Postal Act, and the Ports Act that supervision fees are paid to the Estonian Competition Authority on the bases and pursuant to the Competition Act. The supervision fee will be included in the price of the services provided to end-users. The fees are set by law and cannot be negotiated. There is no additional administrative burden for the undertaking.

With the implementation of the new financing model, it is possible to regulate the prices of the services of monopolistic undertakings more effectively, so consumers will receive a high-quality service at a reasonable price. The changes will also ensure that the goal of climate neutrality is achieved in a less burdensome way for consumers.
As the supervision fee is paid by the regulated undertakings, the money added to the budget of the Authority will only be used to finance economic regulation. The Authority will keep separate records of the operating costs of competition supervision and economic regulation, as well as records of the receipt of fees.

Unfair trading practices

On 1 November 2021, the Act on Combating Unfair Trading Practices in the Agricultural and Food Supply Chain entered into force, transposing into Estonian law Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain. The Estonian Competition Authority began to supervise compliance with the law.

The purpose of the Act is to protect sellers of agricultural products and food from unfair trading practices of buyers. The Act establishes public legal remedies applicable to the protection of the seller in addition to private legal remedies in the event of the use of an unfair trading practice, and provides the bases and procedure for state and administrative supervision over compliance with the law.

Under this Act, unfair trading practices are transactions or acts carried out by only one party, the buyer, which deviate significantly from good commercial practice, are contrary to the principles of good faith and fair dealing, and are imposed unilaterally on the seller. This is because the buyer is usually in a stronger bargaining position.
The Act affects operators that buy or sell agricultural products and food to another operator. The list of products classified as agricultural products and food within the meaning of the Act is set out in Annex I to the Treaty on the Functioning of the European Union. Products not listed in that Annex but which are processed into food using a product listed in Annex I to the same Treaty are also considered agricultural products and food. For example, in addition to conventional agricultural products and food (milk, bread, white bread, cheese, etc.), agricultural products also include live animals, cut flowers, plants, bulbs, cereals, and animal feed.

The Act lists 16 unfair trading practices, nine of which are in any case and always prohibited (e.g. the buyer is prohibited from paying for the agricultural product and food later than within 30 days as of the date provided in the Act) and seven of which are prohibited unless they have been clearly and unambiguously agreed in advance in a form that can be reproduced in writing (e.g. the buyer is prohibited from requiring the seller to pay for the marketing by the buyer of the agricultural products and food).

In Estonia, unfair trading practices have not been regulated at the legislative level before, so these are completely new tasks for the Estonian Competition Authority in a new field.