Georgian Competition
and Consumer
Agency

Georgian Competition and Consumer Agency implements competition policy in Georgia. The main task of the Agency is to create and protect conditions to promote competition. For this purpose, the Agency studies the behavior of economic agents, as well as government agencies and administrative bodies, in particular: • Abuse of a dominant position;

• A restrictive agreement, decision or concerted action;

• Unfair Competition;

• Facts of restriction of competition by state authorities, authorities of the Autonomous Republics and/or municipal authorities, and other administrative bodies;

• Controls concentrations;

• Agrees to grant state aid;

• Monitors commodity and service markets;

• Develops binding proposals and recommendations for improving the competitive environment in the Georgian commodity and service markets.

Regulated sectors of the economy are the sectors defined by the Organic Law on the National Bank of Georgia, the Law of Georgia on the Activities of Commercial banks, the Law of Georgia on Investment Funds, the Law of Georgia on Electronic Communication, the Law of Georgia on Broadcasting and the Law of Georgia on Energy and Water Supply, as well as municipal service sectors, where free pricing and competition are restricted, and which are defined as regulated sectors of the economy under an ordinance of the Government of Georgia and are subject to tariff regulations. The main provisions of the Georgian Law "on Competition" apply to the regulated sector of the economy, in particular, the norms regulating concentrations, the norms defining the abuse of a dominant position, the agreements restricting competition, and determining the relevant fines. Consequently, in matters of competition, the regulatory bodies are guided by the main postulates of the Law of Georgia "on Competition" and study the issues if the entities are economic agents of the same regulated sector.

In turn the Agency will examine the issue if there are at least one of the following provisions:

1. The alleged violator of the Law, or one of the parties to the concentration is not an undertaking in the regulated sector of the economy

2. The alleged violators of the Law and the parties to the concentration are the undertakings of various regulated sectors of the economy

3. the entity/entities allegedly violating the Law is/are the undertaking(s) of the regulated sector of the economy, but the said action (subject of dispute) has not been carried out in the regulated sector of the economy.

In order to enforce competition law in the regulated field, the Agency and the regulatory bodies of the economy cooperate, which is reflected in the mandatory participation of the second agency in the administrative proceedings conducted by each agency. For this purpose, the memorandums of cooperation with regulatory bodies have been signed.

For the Agency to initiate an investigation based on a complaint, a standard of reasonable suspicion must be met. In particular, there should be a reasonable suspicion that the law "on Competition" has been violated and there should be no the following grounds for refusing to investigate:

• a complaint is not submitted by an authorised person;

• there is no legal basis provided for by this Law;

• the requested information and/or evidence is not provided within the time limit set under Article 23(5) of this Law;

• insolvency procedures are pending against the respondent undertaking;

• as a result of the investigation of the case, the Agency has made a decision on the subject of the same dispute between the same parties and there are no new circumstances;

• the Agency has made a decision to reject the admissibility of the complaint on the same dispute between the same parties, and there are no new circumstances, except for the decision to refuse to admit the complaint on the grounds provided for by subparagraph (c) of this article;

• the dispute is between the same parties on the same subject, or the court has made a decision on the same subject, or other decision to reject the claim by the plaintiff, to recognize the claim by the defendant, or to approve the settlement of the parties;

• while examining the admissibility of a complaint, the Agency agrees to accept contingent liabilities offered by the undertaking to take specific action to eliminate an alleged violation of the Law.

The dominant position in the market may be held by one economic agent (individual dominant position) or by a group of several economic agents (group dominant position). In the case of individual dominance - an undertaking which market share exceeds 40% deems that holds a dominant position. In determining this position, in addition to market share, the competitors' market shares, market entry barriers, production expansion barriers, buyer market power, access to the raw material source, degree of vertical integration, network effects, and other market power determinants are taken into account.

Each out of two or more undertakings shall be considered to be in a dominant position if:

• the joint market share of not more than 3 undertakings exceeds 50%, and, at the same time, the market share of each of them is at least 15%;

• the joint market share of not more than 5 undertakings holding the most significant market share exceeds 80%, and, at the same time, the market share of each of them is at least 15%;

The dominant position is not a violation of the law. Only the abuse of a dominant position is prohibited. Specific cases on abuse of a dominant position are given in Article 6 of the Law of Georgia "on Competition".

The following may be regarded as the abuse of dominant position: imposing, directly or indirectly, unfair purchase or selling prices or other unfair trading conditions; margin limitation; refusal to supply; price discrimination; use of restrictive discounts; joining and grouping. Definitions of individual types of abuse and international practice regarding each type are provided in a guidance document issued by the Agency.

Any agreement, decision or concerted practice of undertakings that have as their object or effect the prevention, restriction and/or distortion of competition within the relevant market, shall be prohibited.

Any agreement, decision or concerted practice of undertakings, or association of undertakings that have as their object or effect the prevention, restriction and/or distortion of competition within the relevant market, shall be prohibited.

Specific cases of anti-competitive agreements are given in Article 7 of the Law of Georgia "on Competition" and it includes: directly or indirectly fix purchase or selling prices or any other trading conditions (fixing); limit production, markets, technical development, or investment; share markets or sources of supply by consumers, location or other characteristics; apply dissimilar conditions to equivalent transactions with the particular trade parties, thereby placing them at noncompetitive conditions; establishing an additional condition/obligation for a party to enter into a transaction that has no substantive or commercial connection with the subject of the transaction. Definitions of these types and international practice for each type are provided in a guidance document issued by the Agency.

By the Leniency Program a person shall be fully or partially exempted from the imposition of a fine for the violation of the law if he/she meets all of the following conditions: admits, in writing, participation in the agreements provided for by Article 7 the law; provides to the Agency, orally or in writing, important information and evidence known to him/her on the agreement provided for by Article 7 of the law, before the Agency receives this information and evidence from other sources; during an investigation process, continuously and unrestrictedly cooperates with the Agency; terminate its participation in an agreement against the law, unless the Agency considers that the continued participation of the person in the agreement will facilitate the investigation of the case; does not destroy documents and evidence relevant to the case; does not disclose information about the participation in the leniency program. The benefits provided by this article shall not apply to the sole organizers and/or initiators of the agreements or to persons who coerced other persons to participate in the agreements.

• Merger of two or more independent undertakings resulting in the formation of a single undertaking;

• Gaining of direct or indirect control over an undertaking or its business share through the purchase of securities or interests, or through an agreement or otherwise, by a person already controlling at least one undertaking;

• Participation of one and the same person in the management boards of different undertakings.

The fee set by the Agency for the consideration of the notification on concentration shall be GEL 5,000, which shall be paid into the budget of the Agency. Payment is made at the following code: Code: Service fee provided by the Georgian National Competition Agency Recipient Name - Unified Treasury Account

Bank Code- TRESGE22 Account number / treasury code – 707747124

If a substantial restriction of effective competition is expected as a result of the concentration to be exercised, an undertaking(s) may propose to the Agency the change of operation (modification) as a structural and/or behavioral measure.

A structural measure - is a commitment made by a party to change the structure of the market (e.g., part of a business may be sold, etc.);

A behavioral measure - is a commitment of the part to take any specific action. If the Agency considers that after the implementation of these obligations, the concentration will no longer affect effective competition, it will make a positive decision on the concentration and will set a deadline for the parties to fulfill their obligations.