"For a long time, the dispute over the Competition Act within the government has not been between the Reform Party and Eesti 200, but rather between Eesti 200 and the Social Democrats," said Eesti 200 chair and Minister of Education and Research Kristina Kallas at a government press conference on Thursday. She was responding to a question about a claim made by Eesti Ekspress suggesting that Eesti 200 had managed to break the Reform Party's opposition to the bill.

"We have said from the beginning that we want a concrete and swift solution to this bill because, let's be honest — the fine imposed by the European Union is accumulating, at around €3,000 per day, which is certainly not reasonable," said Reform Party member and Minister of Economic Affairs and Industry Erkki Keldo at the same press conference.

Keldo dismissed Eesti Ekspress' claim that the new coalition had already decided in government to withdraw the current draft bill and submit a new version. However, he hinted that such a move could still happen in the near future.

"As far as I know, there have been several discussions and the issue revolves around different legal procedures — I will leave that to the legal experts. However, my understanding is that the latest discussion concluded that the government will proceed with a misdemeanor procedure — one that is uniform, simple and clear — so that we can transpose the directive without creating an unstable business environment or uncertainty about how potential competition violations will be investigated," Keldo explained.

According to him, the minister of justice has already discussed the bill with business organizations and will present it to the government in the near future.

Kallas also stated that the bill could reach the government as early as next week: "We have now broken through the deadlock, so hopefully, next week, when the new government is in place, we can send the bill to the Riigikogu, pass it and finally stop paying €3,000 per day in fines simply because we were stuck in a deeply principled dispute."

Dispute over how to treat companies

According to Kallas, the fundamental disagreement between Eesti 200 and the Social Democrats (SDE) was about their stance toward businesses — specifically, whether companies should potentially have to prove their own innocence in competition violations or whether the burden of proof should remain the state's responsibility.

"I understand the Social Democrats' position — they feel that competition law in Estonia is not entirely in order, that the Competition Authority's ability to handle competition-related offenses may not be where we would like it to be. That is all understandable. But this cannot be resolved by creating a legal framework where businesses are assumed guilty by default and have to fight to prove their innocence," Kallas said.

She added that legal experts have consistently maintained that self-incrimination cannot be written into the law, as it would be unconstitutional.

Keldo also expressed the Reform Party's trust in businesses: "As I have said before, both I and the Reform Party as a whole trust the business environment. People conduct their activities with good intentions. [However], if someone tries to distort competition, there must be a means to investigate and, if necessary, expose fraudsters."

Discussions among legal professionals regarding the amendments to the Competition Act were also addressed by Norman Aas, a sworn attorney at the law firm Sorainen. Aas previously analyzed the earlier draft bill at the request of the Estonian Construction Companies Association. He explained that the debate revolved around whether competition violations should be handled as misdemeanors or administrative offenses.

"In my view, incorporating administrative penalties into Estonia's legal system, as was proposed in the initial bill, would have been the wrong approach," Aas said. He referred to the previous draft bill, which is now expected to be replaced by a newly agreed version.

The first argument against the old draft was that Estonia's legal system had never included such administrative penalties before. This would have meant introducing an entirely new penalty mechanism alongside existing criminal and misdemeanor proceedings, Aas explained.

The second issue, according to Aas, was that the government had itself stated during the directive's processing at the European Union level — and in subsequent discussions — that Estonia would generally implement EU-mandated fines through its misdemeanor procedures.

"Of course, looking at it from another perspective, the administrative penalty system proposed in the previous bill — before the government's changes today — would have reduced the state's burden of proof and made the Competition Authority's work easier. However, the fines set out in this law are extremely high — linked to company revenues, up to 10 percent, and so on. One wrong move by the state, one incorrectly imposed fine and a company could go bankrupt," Aas explained, outlining the associated risks.

"In summary, this was primarily a fundamental legal debate among Estonian legal experts. It wasn't just a matter of the Competition Authority and state capacity on one side and businesses opposing it on the other. The dividing line was clear within the Estonian legal community — this type of administrative fine simply does not fit within Estonia's legal system," Aas concluded.

Laanet: We can always adjust the law at a later time

Kalle Laanet (Reform), a member of the Riigikogu Constitutional Committee and the former minister of justice who initially submitted the previous version of the Competition Act amendment to the Riigikogu, told ERR on Thursday that he supports the swift adoption of the amendments, with adjustments made if necessary.

"As of today, we don't actually know which approach is better. I would say that the criterion for truth is practice. In my opinion, the most important thing is that we reach a decision as quickly as possible so that we can start testing and implementing it, because the fine imposed by the European Commission is draining our state budget," Laanet said.

He also emphasized that the amendments to the Competition Act would not affect a large number of businesses in Estonia.

"Secondly, this is essentially a legal debate over whether one approach is better than another. If we could reach a compromise, take the next steps and see how it works in practice — if it turns out that the current approach does not work, then we can certainly reconsider the initial version. But to try to assess, in theory, whether one option is better or worse than the other doesn't seem particularly productive to me," Laanet noted.

Last fall, it became clear that although members of the then-coalition had agreed that competition violations would be handled under a new administrative procedure, Minister of Justice Liisa Pakosta (Eesti 200) did not agree and instead advocated for handling them as misdemeanors.

Estonia is required to amend its Competition Act in line with a European Union directive. In January, when four years had passed since the implementation deadline, a court ruling took effect, requiring Estonia to pay a €400,000 fine. Additionally, an extra €3,000 is added for each day the directive remains unimplemented.

--

Follow ERR News on Facebook and Twitter and never miss an update!