Estonia aims to adopt EU competition directive come fall

Evelin Pärn-Lee.
Evelin Pärn-Lee. Source: ERR

The execution of a European directive to empower the Competition Authority has gotten stuck behind business interests and lack of political will, head of the watchdog Evelin Pärn-Lee said, adding that Estonia's small market needs effective competition supervision.

The ECN+ directive, passed by the European Commission in 2019, should have been harmonized with local legislation two years ago. The Ministry of Justice hopes to take a corresponding bill to parliament this fall.

The law, long in the making, has passed through several rounds of feedback where it has taken flak from businesses and legal experts. For example, Chancellor of Justice Ülle Madise found that the law would infringe both on confidentiality messages and privilege against self-incrimination. Madise said in May that she is willing to turn to the Supreme Court to check the constitutionality of the law should it be passed. The bill has also been criticized by entrepreneurs who fear, among other things, being ordered to pay colossal fines that the directive allows.

Evelin Pärn-Lee, director of the Estonian Competition Authority, could not say why Estonia has refrained from adopting the directive. "It is difficult to say as the bill has been ready for several years. I suppose we've lacked political will," Pärn-Lee told ERR.

Member States were supposed to enforce the directive by February 4, 2021 at the latest. Therefore, Estonia is two years too late here, the watchdog's director said. Estonia is the only EU country that has not adopted the directive in any way or sent it to the parliament.

Denmark was among the last Member States to adopt the directive. "Denmark, where competition rules violations used to constitute criminal offenses, also altered its recent system and switched to civil punishments upon adopting the directive. Changing procedural rules is also in order in Estonia if the directive is to be adopted properly," Pärn-Lee said.

The head of the Competition Authority added that she recently got the chance to ask the executives of the Danish competition watchdog whether the private sector fought the directive as fiercely there as it did in Estonia. "The Danes said no, because everyone understands in the end that an above-board entrepreneur has no reason to be afraid of being asked factual questions or to produce proof. I have publicly explained that entrepreneurs cannot be required to incriminate themselves, which protection starts at the Constitution, while they can be required to produce documents and answer factual questions. The constitutional right to not give testimony and agencies' right to demand to see a company's documentation is too often mixed up in Estonia," Pärn-Lee said.

Watchdog: Small market needs greater supervision

She said that she does not understand the pushback against amendments. "But it is possible business interests and one-sided lobbying have had a hand in it. Businesses are not really against honest competition. Yet, the voice of those entrepreneurs who want honest competition is not often heard, Pärn-Lee said, adding that Estonia has markets the participants of which are interested in keeping the watchdog from becoming strong are at least no stronger than its peers in the region.

There are several markets in Estonia where competition is insufficient or simply nonexistent, Pärn-Lee said. "And if we do not want to see insensibly high consumer prices, if we want open markets and competition, the Competition Authority needs to be given the necessary tools and procedural powers."

Pärn-Lee said that even if the Competition Authority suspects a cartel, the investigation still moves to the prosecution today. "They have good people who know competition law but they're not experts. I would once more give the example of Denmark where they perceived qualitative change after moving all proceedings to the competition watchdog. I hope to see the same efficiency in Estonia."

"And if the problem is that the Competition Authority will be given extensive powers to order fines, some countries require courts to sign off on fine proposals first. That is how it is in Finland, for example," she said.

Ministry to adjust the bill

Because the government has listed streamlining competition investigations as one of its priorities, it wants to adopt the EU competition directive post haste, said Heddi Lutterus, Ministry of Justice undersecretary for legal policy.

Lutterus suggested that the reason for the bill's slow progress is the fact that competition supervision proceedings constitute a novel solution in the Estonian legal system. "When working on the bill, we wanted to engage interest groups on a broad base, which we did early last year. Based on the thorough feedback we received, we have complemented the bill this year," she said.

The Justice Ministry sought another round of feedback last month.

"Ministries, business organizations, the justice chancellor, bar association and other interest groups have been sending us their feedback. We are currently processing recent feedback and staying in touch with the sides to try and solve concerns."

Lutterus said that businesses and lawyers are most concerned about the privilege against self-incrimination. "We will be revising this part of the bill, and it is possible further adjustments are needed there," the undersecretary said.


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Editor: Marcus Turovski

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