Execution of decisions of the council of competition of Bosnia and Herzegovina

Decisions of the Council of Competition of Bosnia and Herzegovina are final and binding.

The Council of Competition decides on the competition infringements in accordance with the provisions of the Competition Law and impose fines for violation of the same, as well as for failure to comply with the decisions, requirements and orders of the Council of Competition.

Bearing in mind that the Council of Competition is an independent body whose essential task is to control activities of business entities in the market of Bosnia and Herzegovina and to enable equitable application of the Competition Law then an interesting question is being raised and the same relates to the enforced execution of the Council’s decisions.

The current Competition Law does not contain detailed provisions regulating the above-mentioned issue, nor the Council of Competition passed bay-laws that would elaborate the issue of enforced execution of its decisions.

The decisions of the Council of Competition require certain actions, in particular certain behavior is forbidden, and fines are imposed for certain prohibited actions or due to the non-compliance with the decisions of the Council of Competition.

In case of a “serious violation of the Law”, the Council of Competition is authorized to punish any responsible legal entity or individual with a fine of 10% of the value of the total annual income of the legal entity generated in the previous year that preceded the year in which the violation occurred, and  fines range from 15.000,00 BAM to 50.000,00 BAM for the responsible person.

A special decision imposing a fine will be made by the Council of Competition in case the business entities do not act on the Council’s orders during the conduct of the procedure (eg. they do not submit information or submit incorrect or incomplete information or they do not submit a notification of the intention of the concentration) and this fine can be imposed in the amount that does not exceed 1% of the total revenue in the preceding business year. For the responsible persons in the business entity the fine ranges from 5.000,00 BAM to 15.000,00 BAM.

In accordance with the Law on Competition and the Decision on Closer Defining the Method of Periodic Payment of Fines, the Competition Council has been authorized to impose fines (periodic fines) as a special measure taken in order to force business entities to respect and enforce decisions and pay fines in the amount of up to 5% of the average daily income of the business entities realized in the preceding business year for each day of exceeding the deadline determined by the decision.

In the event that business entities (parties to the proceedings) or persons who are not parties to the proceedings, fail to implement or execute the aforementioned decisions of the Council, according to the applicable law, the same may seek legal assistance from the relevant authorities for their enforcement, while the relevant authorities are obliged to act at the request of the Council of Competition.

In the light of this provision, it can be concluded that if a party in the proceedings fails to execute the decision of the Council of Competition, then the Council is authorized to request “legal assistance” from another state authority that will initiate and enforce the same. Bearing in mind that the Council of Competition is a state body it implements its decisions mostly through the BiH Prosecutor’s Office and the competent court.

Prior to the enforcement procedure itself, the Council is empowered to impose new fines or penalties until the enforcement of the decision or payment of the imposed fine.

On the other hand, in its provisions, the law extends the effects of the imposed fines to the association of business entities, therefore in the event of insolvency of the association, the imposed fine can be collected from the contributions of members of the association paid for the purpose of paying a fine. If the said contributions are not paid within the deadline, the Council of Competition may demand payment of a fine from any member of the association.

However, the Council of Competition did not face too many problems related to the implementation of its decisions. The reason for this is the fact that the Council has the possibility, in case of non-compliance with its decision, or in the event of non-payment of the imposed fines, to impose a new fine for the failure and those fines are quite large.

The question of execution of the decisions of the Council of Competition is becoming more interesting if one takes into account that in addition to business entities that have their headquarters in the territory of Bosnia and Herzegovina, the Competition Law applies to companies with headquarters abroad, of course, if the same is a participant in the market of Bosnia and Herzegovina.

The question arises as to how to execute a decision of the Council of Competition or to collect a fine if the business entity does not have its headquarters in the territory of Bosnia and Herzegovina? The answer to the  question lies in the application of the relevant regulations of the European Union,  use of the case law of the European Court of Justice as well as use of the decisions of the European Commission in assessing each particular case, since the Council of Competition is authorised to use the same.

The practice of the European Court of Justice has established that under the term entrepreneur (in our country this should be a business entity) understands different legal entities, i.e. all related legal entities (parent company, daughter company, other affiliated companies) which are jointly and severally liable for any fines imposed against the entrepreneur. In accordance with the taken position for the imposed fines, not only will the economic entity be fined, but also the related companies, i.e. in case of insolvency of the business entity, the fine shall not be left unpaid.

This attitude is taken for the purpose of enforcing the entire “group” to align its business with the rules of market competition, while on the other hand the fine imposed should reflect the overall strength of the group (related companies) that makes the entrepreneur (business entity).

However, such a broadly defined term “entrepreneur” (business entity) was, among other things, one of the reasons for coming up with a proposal for a Directive of the European Parliament and the Council authorizing the bodies of the Member States in charge of competition to better enforce the rules and ensure the proper functioning of the internal marketwhich should be considered by the European Parliament and the Commission. One of the proposals of the Directive is to use the term “business entity”  for the purpose of imposing fines agiants the parent companies and the legal and economic successors of the company. In this way, it would prevent business entities to avoid the payment by simply merging with another company or by restructuring.  Any legal or economic successor of the entity or all related parties shall be jointly and severally liable for the imposed fine if the business entity agianst whom the fine is imposed is not able to pay the same.

The new Directive shall enable the mutual cooperation of state authorities in charge of market competition in a way that when a national competition authority (the applicant) carries out an inspection on behalf of the national competition authority of another Member State (the recipient of the request),  of the official person or persons accompanying them, the applicant countries have the right to attend and actively participate in the implementation of the inspection.

For the purpose of collecting the fines imposed, Member States shall ensure that the executing authority, at the request of the national authority of another Member State, executes decisions imposing fines or penalties imposed by the requesting authority.

In order  to enable the State recipient of the request to enforce the applicant’s decision, it is required that the entrepreneur, against whom the fine or penalties have been imposed, has no legal presence in the State of the applicant and that it is obvious that the  subject entrepreneur does not dispose sufficient funds in the Member  State of the applicant. Of course, the applicant shall be authorized to file a request for enforcement only if the decision whose enforcement is requested in the applicant’s country has become final and no appeal against it can be filed, and if the decision whose enforcement is requested is not in obvious contradiction with the public order of the Member State that received the request.

In this way, it will be possible to avoid the possibility that a business entity that does not have a legal presence in the territory of a state avoids payment of the imposed fines.

In accordance with all the above, the Council of Competition has all the powers to enforce its decisions, i.e. to impose fines and penalties for failing to do so, and in the end, to initiate a procedure of enforced execution through the relevant state authority. The ultimate goal of such powers is primarily to protect the market and settle the market participants behavior as well as to enable equal participation. Bearing in mind that the Council of Competition has wide powers to enforce its decisions, first of all, by imposing quite high fines, then business entities are quite careful when deciding whether to act on the Council’s decision or not.

It is indisputable that the aforementioned Directive, if adopted, will greatly assist and contribute to the prevention of market abuse due to the fact that the behavior of business entities will also be checked by the competition authorities of other Member States.

Author: Natasa Skrbic, e-mail: [email protected]

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