Recent Competition Law Developments in Bulgaria
On 24 July 2015 amendments to the Competition Protection Act has been promulgated in the Bulgarian official journal “State Gazette”.
New Chapter 7a called “Abuse of strong bargaining position” was enacted.
The new chapter consists of two articles. The first one prohibits any act or omission of an undertaking enjoying stronger bargaining position, which is contrary to the good faith commercial practice and damage or may damage the interests of the weaker counterparty and of the consumers. As “contradictory to the good faith commercial practice” are qualified actions or omissions, which have no objective justification, such as ungrounded refusal of supply or of purchase of goods or services, imposition of ungrounded onerous or discriminatory conditions, or unfounded termination of commercial relations.
The second article provides that the existence of strong bargaining position shall be defined on the basis of the relevant market structure and the particular relation between the concerned undertakings, the nature of their activity and the difference between the size, the possibility of finding an alternative trade partner, including the existence of alternative source of supply, distribution channels and/or clients.
Breach of the prohibition is punished by a monetary fine amounting up to 10 % of the turnover for the previous year from the sale of the product subject of such breach, but not less than BGN 10,000. If the undertaking has no relevant turnover, the fine is defined in the range of BGN 10,000 – BGN 50,000.
CPC shall bring its internal regulations and secondary legislation in compliance with the newly enacted provisions within three months as from the enactment.
Through the same amendments (to the transitional provisions of the act) the Foods Act has been also amended to introduce a new council on better functioning the foods supply chain and reflect the purpose of those changes, as certain type of clauses in a contract on purchase of food intended for further resale were declared as prohibited and thus invalid. Such are clauses which:
prohibit or restrict any of the parties to the contract to sell or purchase goods or services to or from third parties;
prohibit or restrict any of the parties to the contract from providing the same or better commercial terms to third parties;
stipulate sanctions in case of provision of the same or better commercial terms to third parties;
stipulate payments for services, which has not been actually provided;
stipulate transfer of unfounded or non-proportional commercial risk to one of the parties;
provides for payment period longer than 30 days as form the date of receipt of the invoice or other invitation for payment; in case the invoice has been received before the delivery of the goods, the period starts counting as from the day, following the day the goods are delivered, despite of the invoice or the invitation for payment are earlier;
prohibit or restrict any of the parties to the contract to transfer its claims/receivables under the contract to third parties.
Such contract cannot be amended unilaterally, except for it is explicitly provided in the contract.
In the transitional provisions to the Food Act it is also provided that the existing contracts shall be bring in compliance with the enacted amendments within 6 months as from enactment.
Last, but not least, the amendments provide for election of CPC (Bulgarian competition regulator) members in a public procedure and prohibit them from serving more than one mandate without interruption.