Sides expecting different solutions to stepping up competition rules

Competition Authority signage.
Competition Authority signage. Source: Siim Lõvi /ERR

Estonia stands out in the EU with very few competition rules infringement proceedings. Prime Minister Kaja Kallas has said the incoming government plans to ramp up competition supervision, including by empowering the Competition Authority to ensure fair competition.

When Evelin Pärn-Lee took over running the Estonian Competition Board six months ago, she admitted that the agency has not looked into Estonia's fuel sellers whose prices are almost always identical. Estonia also stands out in the EU with having found no cartels, while Latvia, Lithuania and Finland all have.

"Compared to our neighbors, the impression one is left with is that Estonia either lacks activity harming competition or fails to uncover it," Pärn-Lee said. "When prices are too high, and they can be higher in Estonia than in Finland, it points to competition not functioning properly. Competition is not working for two possible reasons – we either have strong market participants who abuse their position or secret agreements keeping prices up."

The difference lies in jurisprudence. Cartel agreements are handled in criminal procedure in Estonia, meaning they fall to the prosecution, which is overworked as it is. That is what the country should change.

"Estonia is a back marker here in many ways. The country has not implemented the ECF+ directive or harmonized domestic legislation according to which cartel agreements needed to be taken out of criminal procedure two years ago," Pärn-Lee said.

The Ministry of Justice has been working on the relevant bill for two years. The main change would be taking punishments for competition offenses out of the Penal Code and introducing a new form of proceedings in the form of administrative fines.

The outgoing minister Lea Danilson-Järg (Isamaa) introduced the bill to the cabinet last December.

"It raised questions, in terms of whether some offenses should remain punishable pursuant to the Penal Code, as opposed to as administrative fines," Danilson-Järg said. "The bill exists today and can serve as a foundation for the new government."

Martin Mäesalu, competition law specialist at law firm Ellex Raidla, said that even though competition supervision needs to be ramped up, administrative fines are not the way to go.

"Estonian law has no administrative fine proceedings. /.../ It must be asked whether now is the time to hurriedly introduce it," he said. "We would likely spend the next two to five years arguing over administrative rights – whether a search was warranted, whether evidence is admissible etc. – instead of whether fines were justified," Mäesalu suggested.

The lawyer said that competition crimes could be punished in misdemeanor procedure the rules of which would need to be adjusted minimally.

But Evelin Pärn-Lee listed a number of shortcomings of misdemeanor procedure, including that it does not facilitate fining legal persons covered by public law or obligating companies to help discover offenses. "I find using misdemeanor proceedings instead of criminal ones a bit like jumping out of the frying pan and into the fire," he said.


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Editor: Marcus Turovski

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