Joint action of undertakings in the light of competition law

As the economic situation deteriorates and the revenues of undertakings decrease, the desire of undertakings to act together to defend their interests increases. This, however, could put businesses into conflict with competition law. It could happen even if co-operation takes place through a professional organisation. The Authority finds that, in addition to the defending of interests, such cases usually also involve a warning to cease the supply of goods upon non-compliance with wishes. This leads to a situation where undertakings decide together how they behave on the market. Inevitably, there is a conflict with the Competition Act as the individual right of undertakings to decide how to behave on the market serves as the basis for competition law.

Although the Authority here describes the behaviour of bus undertakings, this case was far from being the only one of its kind. For this reason, the Authority wishes to draw the attention of undertakings to the limits of such an action, ie representation of interests and joint activities. It

is important to bear in mind that co-operation or decisions by an association of undertakings that affect or aim to affect the independent (economic) behaviour of the members of the association are prohibited. Although the actions of undertakings in such a situation generally have other objectives (eg compensation of costs due to cost increases), it does not mean that the rules of competition do not apply. In other words, the pursuit of another objective does not prevent it from being regarded as an agreement restricting competition.

Bus undertakings AS GoBus, AS HANSABUSS, Aktsiaselts SEBE, Osaühing M.K. Reis-X and ATKO Transport OÜ sent the joint public declaration ‘Public declaration of five bus undertakings’ to state authorities. In the joint declaration, the bus undertakings announced that they needed additional funding for the performance of the concluded public service contracts and that they had jointly decided to suspend bus traffic on one of the bus routes operated by them and commissioned by the state in Harju County on 11 June 2022. The joint declaration demonstrated that the bus undertakings that had signed the declaration jointly decided their market behaviour with the aim of encouraging the contractor to pay service providers more than the agreed-upon price. To assert their demands, the bus undertakings came to a joint agreement to halt bus traffic on a specific day on the bus route they operated. As such, the bus undertakings did not operate independently, instead they had agreed to act together. Such a joint activity constituted a violation of the Competition Act. Following the intervention of the Authority, the bus undertakings declared that they would proceed with their previously planned suspension of the bus route. The Competition Authority recognises the reasons behind the joint action of bus undertakings, but emphasises that the objectives of the undertakings should not be pursued by violating competition rules or by damaging competition and thereby the interests of consumers.

Therefore, undertakings should refrain from any of the above activities. In the event of any doubt as to the legality of an action, we recommend contacting the Authority before commencing any joint action.