Decision of Competition Agency of Georgia on Outdoor Advertising Case
On the basis of complaint of LTD “Libo,” by the order (N04/182; July 12, 2017) of the Chairman of Competition Agency of Georgia, the agency started investigation on alleged violation of article 10 of Georgian Law on Competition by the City hall of Batumi. The complaint was on outdoor advertising in Batumi.
During the investigation, the agency requested information from the parties, state authorities, and undertakings. The agency made decision on the basis of analysis.
Competition Agency of Georgia Approved the Merger Notification
On August 22, 2017, Competition Agency of Georgian received the notification of merger between “Cement Invest BV” and “Heidelberg Cement Central East Holding.”
On the basis of obtained information, international practice, and consultations with the experts, the agency defined the number of undertakings presented on the relevant market and their market shares. The agency also defined the concentration level of the market.
On the basis of analysis, the competition agency concluded that the competition would not be negatively affected by this merger.
The competition agency finished the investigation of case on Unison complaint
On the basis of complaint of JSC “Insurance Company Unison,” the competition agency proceeded the investigation on possible infringement of Article 10 of Georgian law on competition.
According to the decision, competition agency considered that in the public tenders the only term of the contracts to present the bank guarantee is the infringement of competition.
According to the agency, the established term give the banks more preferences compared to the insurance companies.
Within the frames of the investigation, by the discussed tenders the competition agency confirmed the infringement of Article 10 of Georgian law on competition by The Municipal Development Fund of Georgia, Roads Department of Georgia, Batumi City Hall, Khashuri City Hall, and Tbilisi City Hall.
The recommendations will be presented to the buyer organizations, government of Georgia, and LEPL Insurance State Supervision Service of Georgia.
The investigation process was finished by the order 04/248, on September 5, 2017.
The Decision of Competition Agency regarding transportation service of public school students market case
By the order N139 of August 23, 2016, on the basis of Transportation Service of Public School Students audit statement of State Audit Office of Georgia, on own initiative, the competition agency started researching the transportation service of public school students market, regarding the alleged violation of Georgian law on competition, article 7, by Ltd “V-com” (Ltd B&B), Ltd “Nishi,” Ltd “Time Service,” and Ltd “Mygps,” and violation of same law, article 10, by Ministry of Education and Science of Georgia.
In the frames of administrative procedure, during the investigation, the Agency requested the information from the economic agents and state authorities. The agency received explanations from the involved parties. The consultation meetings were held with the potential economic agents of the market and various state authorities.
On the bases of received information analysis, by the order N04/167 of June 23, 2017, the agency concluded that the fact of violation of article 7 of competition law by economic agents is not detected. Also, it was found out that Ltd “Mygps” was limited from participating in tenders that is the violation of article 10 of competition law.
Accordingly, in order to improve the competition on transportation service of public school students market, in public procurement procedure, for farther discussion, the recommendations were sent to Ministry of Education and Science of Georgia.
Competition Agency of georgia Approved Validity of State Aid, Provided by Ozurgeti Municipality
On the basis of obtained information analysis, the agency concluded that the state aid (90 000 GEL), Ozurgeti Municipality provided to N(N)LE “Farming Developing Center,” is in accordance with Georgian law on competition and Ordinance of the Government of Georgia (#529, September 1, 2014).
On December 26, 2016, in order to validate the state aid provided to N(N)LE “Farming Developing Center,” Ozurgeti Municipality submitted the application to Competition Agency of Georgia. According to the application, the state aid will be used for: 1) winery – seeking and popularizing Guria endemic species of grapes, 2) developing land for fruit demonstration, 3) setting up a warehouse 4) modelling new species of evergreens 5) popularizing/re-establishing tea culture, and providing consulting and seminar type meetings for the interested people.
Decision of Competition Agency of Georgia on Poti Port case
On the basis of the joint complaint submitted by 14 terminal companies and the order (#81 June 21, 2016) of the chairman of Competition Agency of Georgia, the agency started investigation on the presumable infringement of Article 6 of Georgian Law on Competition by J.S.C “Poti Sea Port” (Poti Port).
Six economic agents submitted the additional information.
The complaint was about the order of Poti Port (activation on July 1, 2016), according to which the integral tariff was established on unloading the container, transportation on the territory belonging to the Poti Port, and storing on the same territory.
On the basis of solicitation of the competition agency, Tbilisi public court, with the temporary order, stopped the activation of Poti order until the end of the investigation.
During the investigation process, the agency requested all the necessary information from the government entities and economic agents; Agency held the meetings and got explanations from the representatives of complainant terminal companies, Poti port, sea-lines, and transportation companies.
The agency received the relevant consultations from the government authorities; also, in order to get more detailed information members of the investigation group were sent to Poti port and terminal companies.
On the basis of the analysis, the Agency concluded that the new scheme of the Poti Port could limit the container transportation and terminal markets that will be dangerous for the consumers.
The agency also discussed to let Poti Port to use the new scheme, as it could increase the security and market efficiency, by concluded that limiting the competition cannot be justified by the mentioned.
According to the conclusion approved by the order (N04/91, April 21, 2017) of the chairman, it has been concluded that activation of a new scheme will cause the infringement of the Article 6, paragraph 2 - ,,b and ,,d” - of Georgian law on competition.
However, abuse of dominant position cannot be seen in this case because the new scheme of container transportation has never been activated before.
In order to increase the competition, effectiveness, and security of Poti Port, within the permission from the legislation, the Competition Agency provided the relevant recommendations to Poti Port, sea-lines, and city hall of Poti.
Competition Agency of Georgia declined the application regarding the anti-competitive conduct on the taxi service market of Gori
Competition Agency of Georgia declined the application, jointly submitted from the eleven economic agents, presuming the anti-competitive conduct (abuse of a dominant position and anticompetitive conduct) by “Katena” on the taxi service market in Gori.
According to the Agency, the application does not include the sufficient information needed to show the anti-competitive conduct of the defendant party. The applicants also agree the Agency’s opinion and point out their goal to be preventing any anticompetitive conduct by the defendant party in the future. It has to be noted that the Competition Agency is authorized to start investigating on the past (not the potential) conduct.
Accordingly, the Agency concluded that the reasonable doubt standard, regarding the presumable conduct, is discontented; considering the Georgian law on competition, in absence of a reasonable standard, the Agency does not have a sufficient reason to start the investigation.
The Competition Agency declined the complaint regarding the anti-competitive conduct submitted by “iPlus”
According to the order of the chairman of Competition Agency of Georgia, the agency declined the complaint regarding the anti-competitive conduct submitted by “iPlus.”
During the pre-enquiry process, the agency requested the relevant information from the parties and state entities.
Administrative procedure were initiated on the basis of the complaint; the formal status of the applicant economic agent is established by the competition law indicating that as a result of the anticompetitive conduct, according to the competition legislation, the applicant must be trespassed and has to adduce the evidence(s); this was not confirmed in this case.
In case the applicant provides more information and relevant evidences, the agency is ready to review the application again.
The complaint submitted by "iPlus" was about the anticompetitive conduct of "iTechnic." According to the complainant, "iTechnic" used the Apple store name illegally and conducted the false campaign against "iPlus".
Competition Agency declined to open proceedings against Booking.com
According to the Order of the Chairman of the Competition Agency of Georgia the application of the NGO “Center of Competition Law and Consumer Protection” was refused. The application referred to the alleged violation of the Law on Competition by Booking.com by including the “Most Favored Nation” (MFN) clauses in the contracts with Georgian hotel accommodations.
During the 6-week-long preliminary administrative proceedings, the Agency inquired into the said practices, notably, by requesting the information from the respondent, as well as other economic agents active on the relevant market in Georgia. The Agency reviewed the contracts and analyzed the pertinent international practice. It should be noted that the application received by the Agency did not contain any specific reference to possible harm to competition on the Georgian market which would result from the contractual clauses of Booking.com. None of the economic agents inquired by the Agency expressed any discontent by the activities of Booking.com To the contrary, most of the Georgian hotel accommodations consider Booking.com as an effective means for public offering of their service. The platform is also cited as an important contributor to development of tourism in Georgia.
Besides, although Booking.com denied any wrongdoing, the company agreed to willingly undertake the commitments and alter the existing MFN clauses in line with the commitments accepted in several Member States of the European Union. This means that Booking.com will operate on the Georgian market with the contractual terms that are approved by the leading competition authorities throughout the European Union. Considering the above mentioned, the Agency concluded that for the time being the reasonable suspicion of illegality (legal basis for starting the formal investigation) has not been established. However, the Agency will conduct the monitoring of the relevant market in order to examine whether the practices of the economic agents active in this market are in conformity with the Georgian competition legislation.
ინფორმაცია კონკურენციის სააგენტოს თავმჯდომარის 2016 წლის 25 მარტის N39 ბრძანების საფუძველზე განხორციელებული მოკვლევის შედეგების შესახებ
ინფორმაცია – სსიპ - კონკურენციის სააგენტოს თავმჯდომარის 2016 წლის 14 ივნისის №78 ბრძანების შესაბამისად განხორციელებული საქმის მოკვლევის თაობაზე მიღებული გადაწყვეტილების შესახებ
ა(ა)იპ “კონკურენციის სამართლისა და მომხმარებელთა დაცვის ცენტრი“-ს განცხადება სს „საპარტნიორო ფონდი“-ს მიერ სს „ჰუმანითი ჯორჯია“-სათვის ერთი მილიონი ლარის გაცემით „კონკურენციის შესახებ“ საქართველოს კანონის შესაძლო დარღვევასთან დაკავშირებით
ინფორმაცია სს „საქართველოს ჯანდაცვის ჯგუფი“-ს მიერ სს „ჯიპისი“-ს აქციათა 100%-ის შეძენის გზით განსახორციელებელი კონცენტრაციის კონკურენტულ გარემოსთან თავსებადობის შესახებ
სსიპ - კონკურენციის სააგენტოს გადაწყვეტილება ნავთობკომპანიების საქმეზე ძალაში დარჩა
ინფორმაცია კონკურენციის სააგენტოს თავმჯდომარის 2015 წლის 13 ნოემბრის N178 ბრძანების შესაბამისად წარმოებული მოკვლევის შედეგების შესახებ
ინფორმაცია შპს „ალტა“-სა და შპს „ევროტექნიკს ჯორჯია“-ს მიერ ერთობლივი საწარმოს - შეზღუდული პასუხისმგებლობის საზოგადოების დაფუძნების გზით განსახორციელებელი კონცენტრაციის კონკურენტულ გარემოსთან თავსებადობის შესახებ
ინფორმაცია სსიპ - კონკურენციის სააგენტოს თავმჯდომარის 2015 წლის 23 მარტის №39 ბრძანების შესაბამისად განხორციელებული საქმის მოკვლევის თაობაზე
Information on the investigation conducted according to the order №34 of March 6, 2015 of the Chairman of the LEPL Competition Agency (Oil Terminals)
On February 12, 2015 LEPL - Competition Agency (hereinafter Agency) received the letters of Ltd "MG", a foreign enterprise branch - "vibro diagnostics FZE" and Ltd "Lukoil Georgia" by the Ministry of Economy and Sustainable Development (hereinafter - the Ministry of Economy), according to which, the companies were informing the Ministry of Economy about the alleged violation of Article 6 of the Georgian Law on Competition by "Batumi Oil Terminal" Ltd. The companies appealed the following factual circumstances:
According to the sales contract signed between Ltd "MG" and "Lukoil Georgia", Ltd "MG" had to buy the fuel in the Batumi Oil Terminal. In order to fulfill the contract requirements, Ltd "MG" had to order railway tank trucks on the railway approaching the territory of "Batumi Oil Terminal" and consequently occurred as a counterparty at the mentioned territory. To ensure the aforesaid, Ltd "Lukoil Georgia" and a foreign enterprise branch - "vibro diagnostics" demanded the "Batumi Oil Terminal" to become the counterparty of Ltd "MG to become", which has not been fulfilled. Consequently, the applicant mentions that there was a selective approach by "Batumi Oil Terminal” when granting permission of the use of approaching railway, which represents the violation of the requirements of Article 6 of the Georgian Law on Competition, in particular – Abuse of Dominant Position.
Considering the abovementioned, according to the Article 2 (1) and Article 7 (1) of the Order №30/09-5 of September 30, 2014 of the Chairman of the Agency and according to the Order №34 of March 6, 2015 of the Chairman of the Agency, the Agency on its own initiative started the investigation on alleged abuse of dominant position of the economic agents operating on the territory of "Batumi Oil Terminal” and also in order to assess the compliance the activities of Oil Terminals in Georgian Black Sea ports with the Competition Legislation.
In the process of investigation, the agency obtained the information on the existing cases between the companies in the court and the following court orders: of Tbilisi City Court dated on February 20, 2015 (Case №728699-15) on “Partial Granting of Preliminary Injunction” (Applicants - Libra Trading FZC and foreign enterprise branch vibro diagnostics - VIBRO DIAGNOSTIK); “Termination of proceedings upon reaching the agreement between the parties” – Order of Tbilisi City Court dated on July 13, 2015 and the Order of Batumi City Court on “Termination of proceedings upon reaching the agreement between the parties”. Within the above-mentioned dispute, the matter of dispute of plaintiff's claim represented the fulfillment contractual obligation and observance the requirements of Georgian Law on Competition.
According to the Article 332 of Georgian Law on Competition, economic agent, the other interested person shall be entitled to apply to the court, relevant authority or official directly, claiming for elimination of violation of Georgian legislation on competition and compensation of losses caused by such violation.
According to the Article 182 (1) (b) of General Administrative Code of Georgia, an administrative body shall refuse to accept the complaint if a case on the dispute between the same parties, over the same matters and with the same evidence is pending in court.
Despite the fact that, Competition Agency adopted the rule of investigation in compliance with the Georgian Law on Competition, which is approved with the Order of the Chairman of the Agency №30/09-5 of September 30, 2014 “On approval of the rule and procedures of investigation“, and at the same time, the investigation has been launched based on the initiative of the Agency and not based on the complaint, the Competition Agency, as an administrative body, has to follow the main principles of General Administrative Code of Georgia. Therefore, general basis of refusal to accept the complaint, which concerns the inadmissibility of the review the complaint by the administrative body, extends also to the Agency.
Despite the above mentioned, it is important to notice that mentioned circumstance has become known to the Agency only after the initiation of the investigation – on July 17, 2015, ie, after the "Batumi Oil Terminal" has presented the information on court cases. As the above - defined, the ground for the refusal to accept the complaint under the General Administrative Code of Georgia raised on March 4, 2015, ie before the Order of the Chairman of the Competition Agency dated on March 6, 2015 has been adopted, on initiation the investigation. However, the agency learned of the relevant facts in July 2015, which became the reason for termination the investigation of the agency in this part.
At the same time, it should be also taken into consideration that the Agency started the investigation on alleged abuse of dominant position of the economic agents operating on “Batumi Oil Terminal” as well as generally in order to assess the compliance the activities of Oil Terminals in Georgian Black Sea ports with the Competition Legislation.
Therefore, there was no ground for termination the whole investigation and following the Order of the Chairman of the Competition Agency №189 of November 27, 2015, the investigation continued in the part relating the determination of the compliance the activities of Oil Terminals in Georgian Black Sea ports with the Competition Legislation. During the investigation Agency received information as from various institutions as well as from relevant economic agents in writing and oral explanations.
The study of the activities of Oil Terminals in Georgian Black Sea ports by the Agency was carried out generally in order to determine the compliance with the Georgian Legislation.
The decision of the Agency on the initiation of the investigation was known to all economic agents operating on relevant market as well as to the society. However, nobody applied to the Agency who may have been affected by the economic agents as a result of an unhealthy competitive actions.
Consequently, the Agency carried out investigation based on the information required during the investigation process. However, it should be noted that mentioned information did not include a kind of evidence that could arise suspicion of anti-competitive concerted actions by Oil terminals.
Therefore, taking into account the available information, the Agency didn’t consider the compliance the activities of Oil Terminals in Georgian Black Sea port with the Article 7 of the Georgian Law on Competition and assessed the issue only relative to the Article 6 of the Georgian Law on Competition.
As regards the assessment of the abuse of dominant position, according to the Article 6 (1) of the Georgian Law on Competition, the assessment was made in two main directions:
Determination of dominant position;
In case of confirmation of the dominant position, the compliance of the activities with the requirements of Georgian Law.
1. Determination of dominant position
On the service market specified for the purposes of the Article 6 of the Georgian Law on Competition, where investigation on refusal of rending the services proceeded towards "Batumi Oil Terminal" Ltd, the Agency did not assess the percentage of market share of "Batumi Oil Terminal", considering the fact that both Tbilisi and Batumi City Courts adopted relevant orders on the dispute between the same parties, over the same matters, which became the basis for the termination of the Agency's proceedings.
As for the oil products loading/unloading commodity markets which were defined for the purposes of inspection of Black Sea Oil Terminals’ activities - the analysis showed that in 2012 – 2014 years "Batumi Oil Terminal" Ltd had the dominant position, as its market share during three years was 40% more than critical, formal threshold defined by the Competition Legislation on both commodity markets - on oil unloading and loading commodity markets.
Abuse of Dominant Position
After the confirmation of a dominant position, the agency assessed the compliance of the action with the requirements of the Georgian Law on Competition. As the Agency during the case proceedings appealed to the competitiveness between both parties, as well as the inquisitorial principles which is characterized by administrative procedures, first of all, has been assessed the circumstances and actions obtained by the Agency, and then was carried out the investigation - whether there was any other kind of violation.
Therefore Agency assessed the market behavior of "Batumi Oil Terminal" as a behavior of a dominant company on oil loading and unloading services markets based on the inter-comparison of the proposed service tariffs to economic agents by him.
During the study period, there were different types of tariff services in "Batumi Oil Terminal", depending on what kind of products, what volume were loaded from the trucks to the ship and vice versa. Consequently, the average annual change in magnitude per ton of the established service tariff depended and still depends on the volume and the types of loading cargo.
Thus, as a result of comparison of proposed tariffs to the various economic agents the Competition Agency has not identified any anti-competitive behavior, that could arise the abuse of dominant position by "Batumi Oil Terminal".
In addition, it should be noted that during the investigation process none of the economic agents, which could have been the victim of "Batumi Oil Terminal" as a result of its behavior, didn’t apply to the Agency.
Based on the above, the Agency concluded that in pricing policy of the "Batumi Oil Terminal" was not identified the signs and terms of violation of Article 6 of the Georgian Law on Competition.
As for the economic agents operating on oil products loading market in Poti – “Argotrans Georgia” Ltd and “Channel Energy (Poti) Limited – Georgia” Ltd – they are not dominant companies, considering their small market share. Accordingly, within the information available for the Agency, the Competition Agency did not even examine the fact of violation of the Article 6 of the Georgian Law on Competition by them.
Finally, based on the Order of the Chairman of the Agency №202 of December 20, 2015, was not confirmed the abuse of dominant position by "Batumi Oil Terminal" Ltd on oil products loading market.
Information on the monitoring of the coffee commodity market
From November 2014, the Competition Agency, according to the Article 172(b) of the Georgian Law on Competition, by its own initiative started coffee commodity market research (monitoring), for detection the competition restrictive and unfair competition facts and assessment the competitive environment on the relevant market. Given that the demand for coffee in Georgia, similarly to the foreign states, is high, and worldwide (nearly 450 billion cups of coffee blends every year, while the daily - 1.5 billion) the demand on it is so high that after the oil is considered as the most widely used product. In addition, in US on the food commodity market after water and soda drinks coffee occupies the 3rd position (the 4th is beer and the 5th milk).
In addition, some previous statements of the certain entities were taken into consideration concerning the reasons of leaving this market - the representative of business group “Lashkar Group” (Source: www.netgazeti.ge) “there is dumping price and unhealthy competition on coffee market, which is why they stopped for coffee business".
Therefore, the aim of the monitoring of the coffee commodity market was to conduct general market review, determine the market size, the current competitive environmental assessment and elaborate the measures to be implemented.
During the monitoring process Agency has processed data and information requested from the economic agents and relevant state authorities, namely from: National Statistics Office of Georgia; LEPL National Food Agency; LEPL Revenue Service; LEPL Georgian National Agency for Standards and Metrology.
Consultative assistance were received from above mentioned authorities. Consultations have been received by the NGOs which conducted specific researches of coffee commodity market and by those economic agents who spoke through various media sources about existing problems on the relevant market.
Furthermore, during the monitoring process, the Competition Agency, through direct and electronic questionnaire, carried out survey of various age groups of coffee consumers (up to 500) and economic agents operating on the coffee market.
In the framework of monitoring was carried out also a review of the situation of coffee on the world market, the characterization of competitive environment of the coffee market in Georgia, detection the main problems and trends on the market, in particular: Identification of product and geographic market; Processing of the information of economic agents operating on the market; Assessment of the level of concentration and other indicators on the market; Preparation of relevant decisions and recommendations in order to resolve the current problems on the market.
As a result of the analysis conducted of the received consultations and survey, was determined that instant and sedimentary coffee species are not interchangeable products. Consequently, Competition Agency established two main coffee markets - sedimentary and instant coffee markets. At the same time, the geographical boundaries of the established markets were considered the whole territory of Georgia.
For the assessment of current competitive environmental in Georgia and identification the main trends, based on the data held by the Agency (information received by the National Statistics Office of Georgia and Revenue Service) has been studied the current situation on Georgian commodity market from 2008 including June 2015. Obtained and processed information analysis showed that from 2008 to June 2015, on the country's coffee (Instant/Sedimentary) commodity markets were satisfactory competitive environment and the market was low (Sedimentary), or normal (Instant) concentrated.
However, considering the assessment of the competitive environment on the market and its determining factors, according to the powers granted by the Article 18 (2) (c) of the Georgian Law on Competition, the Agency presented mandatory recommendations for consideration to the National Food Agency. The recommendations concerns of coffee production phytosanitary control, monitoring of its concentrates content and labeling rules protection issues.
Information on the investigation conducted according to the order №19 of February 6, 2015 of the Chairman of the Agency (Motor Gas)
On December 26, 2014 NGO “Consumer protection organization” has submitted its application to the Competition Agency of Georgia (hereinafter Agency) on the alleged violation of the Article 7 of Georgian Law on Competition by Motor Gas distributor companies having an agreement with each other on fixing (increasing) the retail prices of Motor Gas.
Based on the materials and information submitted to the Agency, according to the Order of the Chairman of the Agency №19, February 6, 2015, the eligibility of the application of NGO “Consumer protection organization” was considered and the Agency started an investigation.
Considering the requirements of Article 18 (1) (b), Article 25 (5) and the Order of the Chairman of Competition Agency of Georgia, № 30/09-5 of 30 September 2014 - “The rule and procedures of investigation”, during the investigation, investigation group conducted sizable amount of work in close cooperation with public entities and economic agents operating on the market.
Agency has processed data provided by the state authorities, as well as information requested from the economic agents. For the determination of the important circumstances for the process of the investigation, according to the legislation, has been received explanations and consultations from the economic agents operating on the container transportation market. Agency has processed data provided by the state authorities, as well as information requested from the economic agents. In addition, meetings were held with the relevant economic agents, in order to receive necessary explanations. At the same time, Agency has processed data provided by the economic agents. Under established procedure by legislation, at the stage of presentation documents, as well as at preparatory and final meetings organized in the Agency, to the interested parties were given an opportunity to participate in administrative proceeding and opportunity to present its position/argument.
Within the framework of the investigation based on the evidences provided in the Agency, the Agency examined the facts presented by the applicant, as well as the competitive environment on Motor Gas market. Has been determined the product, geographic borders of the relevant market, existing institutional, technical and financial barriers, market shares of the economic agents operating on the market and the level of market concentration.
In the investigation process, during the definition of the boundaries of the product market, has been considered that along with the natural gas, petrol and diesel are used as motor fuel. However, considering relatively low price, efficiency and therefore a large number of the consumers, these products were not considered substitutable to the Motor gas. While making a decision, attention was paid also to the fact that during the investigation of the Agency on car fuel commodity market, only petrol and diesel were considered as substitutable on car fuel market. Therefore, at the present case, product boundary of the market was defined as the Motor Natural Gas.
As for the geographic boundary, the investigation group defined the relevant market as the whole territory of Georgia, as the purchase of motor natural gas is possible almost everywhere throughout the territory of Georgia.
According to the information provided by “Gas Transportation Company” Ltd and economic agents, has been determined that up to 100 Motor Gas distributor companies are operating throughout the country with up to 160 gas stations. Some of Gas stations are connected to a high-pressure gas main pipeline, while others to the low-pressure local networks.
According to the context of the application submitted to the Agency, for determination of the shares and market concentration has been defined the second half of 2014, the period of July - December. Agency collected all the data and as a result of appropriate analysis has been determined that the market concentration index (HHI) units in the second half of 2014 consisted of 1665.6, which means that the market was normally concentrated.
As a result of investigation the Agency decided that despite of the facts provided in the application, there is not a solid economic and legal arguments to demonstrate that in August 2014 and especially in December the price increase of the Motor Gas by the companies was caused by the agreement of the economic agents operating on the market, namely:
Conducted analysis shows that in August and December of 2014 despite the fact of parallel increase of prices with uniform amount – of 5 tetri, cannot be explicitly described as an anti-competitive agreement. Moreover, the price increase days in some cases are different. Some companies have not increased prices at all and their selling prices were different. Moreover, certain companies in various places (also in the same city) were selling gas with different prices, which is one of the main factor of the existing competition on the market. It should be also considered that the competitor’s behavior, devaluation of national currency and others impacts on pricing.
Finally, according to the Order of the Chairman of the Agency №162 of October 30, 2015, was not confirmed the violation of the Article 7 of the Georgian Law on Competition by the economic agents selling the Motor Gas.
However, considering the assessment of the competitive environment on the market and its determining factors, according to the powers granted by the Article 18 (2) (c) of the Georgian Law on Competition, the Agency presented recommendations to the Government of Georgia, LEPL Technical and Constructions Supervision Agency and LEPL Emergency Management Agency; also to the company “Socar Energy Georgia” and NGO “Gas consumers’ union of Georgia”, in order to improve competitive environment on the market.
Presented recommendations concerns of the wholesale supply prices of natural gas, systematic control established safety standards for construction on gas stations, technical equipment, ensuring strict adherence to safety regulations in their activities, and the availability of alternative sources of natural gas supply.
Information on the investigation conducted according to the order №29 of December 24, 2014 of the Chairman of the Agency
On November 25, 2014 “Georgian Trans Expedition” Ltd has submitted its complaint in the Georgian Competition Agency (hereinafter Agency) on the alleged violation of Article 6 of Georgian Law “on Competition” by the “Trans Caucasus Terminals” Ltd.
According to the complaint, a subsidiary company ofJSC "Georgian Railway" - "Trans Caucasus Terminals" owns the terminal, which is the only one in Tbilisi and its surroundings.In addition, the company carries out forwarding services as well, for which had announced a combined tariff (various services). The mentioned tariff includes the railway services (which in accordance with the JSC "Georgian Railway" tariff policy, must be the same for all economic agents) and the cost of terminal services as well.The complainant expresses doubt that the combined tariffs announced by the "Trans Caucasus Terminals" Ltd does not actually include a forwarding service tariffs. In addition, the complainant explains that "if economic agent does not want to use combined tariff and orders the transportation of the container to the JSC "Georgian Railway", containers should inevitably get to the terminal, therefore, has to get the terminal services from "Trans Caucasus Terminals" Ltd. The sum of the costs of Railway and terminal services is more than the cost of the combined tariff announced by the "Trans Caucasus Terminals" Ltd.
During the investigation group conducted work of sizable amount in close cooperation with public entities and economic agents operating on the market. Agency has processed data provided by the state authorities, as well as information requested from the economic agents. For the determination of the important circumstances for the process of the investigation,according to the legislation, has been received explanations and consultations from the economic agents operating on the container transportation market.
Within the investigation, the container transportation market has been defined as the relevant market. Mentioned activities are conducted by the railway and road transport. However, the Agency calculated shares of "Trans Caucasus Terminals" Ltd as on the container transportation market, as well as on the container rail transportation market.
As a result of investigation, according to the analysis of information provided by the state authorities and the economic agents, has been determined the volume of the imported, exported and transit containers in Georgia through the Poti and Batumi Ports in 2012 – 2015 years. At the same time, as it turns out, in Georgia, on container transportation market (rail and road transportation) the share of rail transportation in 2012, 2014-2015 respectively amounts to – 15, 67%, 11, 1% and 10, 36%.
Therefore, it it is revealed that on container transportation commodity market the rail transportation doesn’t occupy a dominant position. On the relevant container transportation market most of the share has the motor transportation, as in Georgia is not developed the waterway transportation. In addition, thedynamics of transportation shows that in recent years the share of container transportation through the “Georgian Railway” JSC in a total volume of the transportations, which, with other factors, can be related to the tariff policy of the “Georgian Railway” JSC, which is calculated in US Dollars (equivalent in GEL).
At the same time, according to the Agency’s available information, "Trans Caucasus Terminal" Ltd does not occupy a large share on the container rail transportation market (in 2012 year - 16.2%, in 2013 - 19.9%, in 2014 -16.8%, in 2015 - 20.1%).
Accordingly, the Agency decided that "Trans Caucasus Terminals" Ltd does not occupy dominant position, neither with the sense of the common market (container transportation commodity market) nor container rail transportation market.
Despite the fact that "Trans Caucasus Terminals" Ltd has not been determined to have a dominant position on the relevant market, the Agency had assessed and analyzed all the activities provided in the complaint.
In the complaint presented to the Agency, „Georgian Trans Expedition” Ltd considers that “Trans Caucasus Terminals” Ltd violates fair competition principles and acts in anti-competitive way, as to the "Trans Caucasus Terminals" JSC is given privileged position by the "Georgian Railway" JSC and the company itself produces the service with preferential tariffs compared with "Georgian Railway" JSC.
According to the complaint of "Georgian Trans Expedition" Ltd, in the combined fees offered by the “Trans Caucasus Terminals" Ltd is are not included the cost of expeditionary operations and aims to get the market advantage. This kind of activity by the complainant company is considered as abuse of dominant position.
Based on the investigation results, the Agency decided that “Trans Caucasus Terminals" Ltd and "Georgian Railway" JSCduring the provision of services haven’t created discriminatory conditions to other economic agents (Poti – Tbilisi and vice versa, Batumi – Tbilisi and vice versa so-called "Block-train" container transportation).
In particular, as a result of the decision made by the companies, according to the other principle of equal opportunities, any customer could use established preferential service tariffs for mentioned routes. This project was carried out for any person, including forwarding activity providers and was laid out in the combined tariff, without any exception, which in its essence and implementation form is rail transportation activity tariff and cannot be considered as the forwarding activitytariff.
Therefore, by the Agency, the tariff policy mentioned by the "Trans Caucasus Terminals" Ltd was not considered as a targeted action against competing economic agents and therefore was not qualified as abuse of dominant position.
Therefore, according to the Order of the Chairman of the Agency №155 of October 21 2015, was not confirmed the violation of Article 6 of the Georgian Law “on Competition” on the container transportation market by the "Trans Caucasus Terminals" Ltd.
Herewith, within the investigation, the Agency presented recommendations to the “Trans Caucasus Terminal" Ltd and the Government of Georgia in order to improve competitive environment on the market.
Information on the investigation conducted according to the order N 27 12th December 2014 of the Chairman of the Agency
On 6th of November 2014 Wheat and Bakery Producers’ Association Globalagro has submitted its statement on the alleged violation of competition rules by Azerbaijani company Carat Holding.
According to the applicant Azerbaijani company Carat Holding has obtained a privileged position on the market. Since company entered Georgian market it obtained the ownership on following companies:
1) Agrosystems Ltd. – Marneuli mill factory (capacity 600 ton per day; storage capacity – 80 000 ton per day); former Mzekabani (200 ton per day; storage capacity – 50 000 ton per day)
2) Karmen Ltd. – Gori mil factory Forte (capacity 350 ton per day; storage 42 000 ton)
3) Karmen-K Ltd. – Kachreti mill factory (capacity 200 ton per day; storage capacity 120 000 t)
Additionally, applicant submitted the information that holding was operating on the market with unfair prices in certain periods. Therefore the article 6 of the Georgian Law on Competition was violated. This situation created a threat that strategic storages could be obtained by one company which would influence on prices on the market (unfairly law prices on the market).
According to the order N 27 12th December 2014 of the chairman the agency has commenced investigation on the alleged violation of article 6 by Agrosystems Ltd., Karmen Ltd. and Karmen-k Ltd. Moreover respective economic agents were assumed to be interrelated entities for the purposes of this investigation. Agency has evaluated their share of market and level of market power as of one economic agent.
Agency has defined relevant market and conducted its investigation on the market of wheat flour in 2012-2015 years. Agency has taken into consideration position of the economic agents acting on the wheat market, while those markets are interrelated upper and bottom level markets, where one market (wheat) is a source delivering domain for another market (flour market) herewith ‘supplying’ market situation has an influence over another market (wheat flour) players’ activities. Agency has defined relevant geographical market as a territory of Georgia.
During the investigation agency team conducted work of sizable amount in close cooperation with public entities and economic agents which are acting on the market. Agency has processed official statistical data as well as data obtained from LEPL Revenue Service and relevant economic agents. For the purposes of investigation conducted consultations and received explanations from the economic agents acting on the flour/wheat market.
Agency assessed the following information:
1) Import of wheat and local production in Georgia;
2) Flour import in Georgia;
3) Indicators of flour realization share;
4) Comparative analyses of wheat flour producers’ selling prices;
5) Capacities of mill factories and elevators and comparative analyses of relevant economic agents’ mill factories and elevators.
Agency has clarified that in 2013-2014 years respondents’ market share on flour market was approximately 40%. However considering that it was not sufficient argument for proving the fact of having dominant position agency has decided that significant market share controlled by respondents (even less than 40%) together with other indicators such as production capacity and elevator capacity is sufficient economic indicator to create market power. Such market power enables economic agent to act independently from competing economic agents, suppliers, clients and end users, obtain significant influence on product flow conditions on the market and restrain competition. Therefore agency has concluded that respondent economic agents – Agrosystems Ltd., Karmen Ltd. and Karmen-K Ltd. enjoyed dominant position on the wheat flour market.
The next step after determining dominant position was to determine whether respondents violated competition rules and whether there were signs of abuse in their behavior. Agency has declared that the fact of abuse of dominant position was refuted by same facts which proved their dominant position on the market. Namely, where the production benefits, financial capital behind the economic agent, privileges on wheat market (elevator capacities) are the criteria which agency took into consideration while determining the dominant position of interrelated undertakings, same circumstances indicate that undertakings in question had the market power to produce flour with less expanses than other competitors on the market and therefore sell it in cheaper price. This is not against the principle of maximizing benefits. In different circumstances maximizing can be achieved by low margin and high turnover or high margin and low turnover. It is up to an undertaking to decide which model it will opt for.
As a result of analyses conducted by investigation team competitive advantage of undertaking was not confirmed neither according to wheat import price nor flour selling price. Other undertakings acting on the market have lower import and selling prices in certain cases.
Agency in its decision has emphasized that the main purpose of violating competition rules namely abusing dominant position is to eliminate other undertakings from the market and improve its own market position. Case materials reveal that respondent undertakings’ market share has not been increased in 2013-2014. On the contrary in 2015 (7 month) its market share is falling down significantly and amounts to 30 % of total market share. The latter fact weakens the assumption that low prices were targeted to strengthen undertakings’ market power.
As a result Agency had decided that pricing policy obtained by respondent undertakings did not violate competition rule set by Georgian Law on Competition. The signs of alleged violation of article 6 was not found. Therefore the fact of abusing dominant position by Agrosystems Ltd., Karmen Ltd. and Karmen-k Ltd. on the wheat flour market of Georgia cannot be approved.
Herewith Agency presented its recommendations to the government in order to improve competitive environment on the market.
ინფორმაცია საავიაციო ნავთის სასაქონლო ბაზრის მოკვლევის შედეგების შესახებ
შპს „ლიტექსი-სერვისი“-ს საჩივარზე დაწყებული მოკვლევის შეწყვეტის შესახებ
I n f o r m a t i o n on the investigation on the basis of the application of “Intertechnics” Ltd
“Intertechnics” Ltd. submitted its’ application (N 206211348) to the Competition Agency on March 4, 2015 alleging the violation of the Georgian Law on Competition by local self-government authorities in public tenders.
Namely, public tenders announced by Khashuri municipality city hall on February 3, 2015 (SPA 150003523), by Abasha municipality city hall on February 6, 2015 (SPA 150004029) and by Aspindza municipality city hall on February 11. 2015 (SPA 150004504) announced the procurement of earthmoving and excavating machinery. Tender terms included the condition that producer of the machinery should be producing motor and transmission engine by himself. The applicant argues that this condition is against competition rules.
Herewith, agency received a letter of citizen Teimuraz Shervashidze regarding existing problems in state procurement of specific equipment. Except the above-mentioned tenders, the tender announced by Non-Entrepreneur (non-commercial) Legal Person “Terjola Municipal Service of Cleaning and Amenities” (SPA 150004121) was mentioned in the letter.
Except the tender condition regarding motor and transmission engine, agency has determined several additional issues which we have faced in tender terms. Namely, the condition of applicants’ experience in the field (distribution from 10 to 20 units of similar equipment in other tenders), term related to the number of service centers and the amount of turnover -3 Million GEL which was required as an indicator of qualification.
In order to study the current market situation agency has processed following data during the investigation: Data received from LEPL Revenue Service regarding the undertakings which import specific equipment, the numbers of imported technique and prices. Accordingly agency has determined the number of undertakings which were asked to provide relevant information to the agency. Additionally they were asked to express their position with regard the tender conditions set by the municipalities. Agency held advisory meeting with the representatives of Georgian Technical University and the Ministry of Regional Development and Infrastructure, roads department.
Investigation team has checked the compliance of the case with the article 10, subsection “e” of the Georgian Law on Competition which defines that distortion of competition by the state authorities, authorities of the autonomous republic and local self-government authorities is inadmissible and prohibits to the state authorities, authorities of autonomous republics and local self-government authorities to adopt the decision resulting in providing monopolist position to the economic agent, thus substantially distorting free price-setting and competition, with the exception of cases specified by Georgian legislation.
According to the agency each tender held according to the Law of Georgia on State Procurement creates separate relevant market, which has its own entry barriers, its current and potential participants and volume (which is determined in accordance with the object to be purchased). Therefore agency is reviewing alleged tenders separately, one-by-one.
On the basis of processed information and consultations received during the investigation, agency has determined that the condition of motor and transmission engine production is not relevant for the goals and requirements (procurement of durable machinery of proper quality) of procuring authorities. Moreover, the requirement regarding the experience of distributing 20 units of equipment and 3 Million GEL turnover is not reasonable. Those requirements do not comply with competition protection principles.
Agency has stated that limitation of free pricing is obvious. This assumptions is confirmed by the fact that the winner of Abasha, as well as Khashuri and Aspindza municipality tenders is the same company with announced purchase price, respectively 156 000 GEL, 170 000 GEL and 180 000 GEL. During the three rounds of procurement other contenders had offered lower selling prices, whereas winning company maintained same price. It proves that this company did not bear risks of competition, while it was among the minority of undertakings which could comply with the requirements determined by the offer.
As for the tender announced by Non-Entrepreneur (non-commercial) Legal Person “Terjola Municipal Service of Cleaning and Amenities” to purchase road grader, the results were same – the only company which participated in the tender became the winner.
Agency has decided that procuring authorities Abasha, Aspindza and Khashuri municipalities have violated article 10, subsection “e” of the Georgian Law on Competition
Agency finds the action of Non-Entrepreneur (non-commercial) Legal Person “Terjola Municipal Service of Cleaning and Amenities” to be against the competition rules, however the actions of the entity does not fall into the coverage of Article 10 while it is not local self-government authority.
Abasha, Aspindza and Khashuri municipalities were ordered to obey competition rules during the procurement of earthmoving and excavating equipment. Terjola city council was asked to take legal measures which will enable its’ private entities to implement competition agency decision in their purchases which have to be arranged according to the Law on State Procurement.
Moreover, agency has presented its obligatory recommendations to the Government of Georgia, LEPL State Procurement Agency and procuring authorities in order to establish free competition on the market.
ი ნ ფ ო რ მ ა ც ი ა სს „სამედიცინო კორპორაცია ევექსი“-ს მიერ შპს „გნ კო“-ს წილთა 50%-ის შეძენის გზით განსახორციელებელი კონცენტრაციის კონკურენტულ გარემოსთან თავსებადობის შესახებ
Investigation results of car fuel (petrol, diesel) commodity market
Competition Agency started the investigation of Fuel Commodity Market (petrol, diesel, kerosene) by its own initiative on November 12, 2014. During the investigation from the fuel market have been allocated two relevant markets – Car Fuel and Jet Fuel markets. By the Order, №81 of July 14 2015, of the Chairman of the Georgian Competition Agency the decision was made on the investigation of Car Fuel relevant market (petrol, diesel).
As a result of investigation has been determined that violation of Article 7 (sections “a”, “b” and “c”) of the Georgian Law on Competition took place. Consequently, following to the Article 33 of the above mentioned Law, to the relevant economic agents - “Socar Georgia Petroleum” Ltd;“San Petroleum Georgia” Ltd; “Rompetrol Georgia” Ltd; “Wissol Petroleum Georgia” JSC;“Lukoil Georgia” Ltd; “L Oil” Ltd; “ITI” Ltd; „Binuli 1” - were imposed fines up to total of 55 000 000 GEL.
In addition, to the 23 economic agents, franchisees of “Lukoil Georgia” Ltd and “Rompetrol Georgia” Ltd, for the violations of Article 7 (section”a”) of the Georgian Law on Competition were determined fines of 200 GEL each.
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