About This Service
The conduct of an economic agent in a dominant position falls under special control of the Law of Georgia on Competition. This page explains how dominance is determined (Article 5), which acts count as its abuse (Article 6), how the investigation of a case proceeds at the agency (Article 25) and what fines are provided for the violation (Article 33). Together these four norms build the legal mechanism that constrains the behavior of a powerful market player and gives injured parties a path of defense. Note that the law does not prohibit dominance itself — only the abuse of that power is punishable; the whole analysis turns on precisely this boundary.
Dominance and Its Criteria
Under Article 5, dominance is determined taking into account the market share of the economic agent on the relevant market, the market shares of its competitors, barriers to market entry and to expansion of production, the buyer's market power, the availability of sources of raw materials, the degree of vertical integration, network effects and other factors defining market power. The agency determines market share and power using methodological guidelines for market analysis adopted by an appropriate legal act — which means that establishing dominance is a methodologically calculated process, not an intuitive one.
Forms of Abuse
Article 6 provides that abuse of a dominant position by one or several economic agents — including the case of group dominance — is inadmissible. Acts that may be considered abuse include: imposing, directly or indirectly, an unfair purchase or sale price or other unfair trading conditions; limiting production, the market or technological development to the detriment of consumers' interests; applying dissimilar conditions to equivalent transactions with particular trading partners, thereby placing them at a competitive disadvantage; and imposing on a party supplementary conditions for concluding a transaction that are connected neither in subject matter nor commercially with its subject. The list is not closed — the law covers „other" forms as well, so each practice must be assessed separately. Most disputed conduct in fact fits around this list: a price that does not correspond to competitive conditions on the market; discrimination between partners on identical transactions; or conditions unrelated to the subject of the deal that are nonetheless demanded for its conclusion.
The Investigation and the Fines
Article 25 governs the investigation: after the decision to open it, the agency adopts the corresponding decision no შემდგომ than 6 months; taking into account the significance and complexity of the case, the investigation may be extended up to 18 months, with the parties notified no შემდგომ than 10 working days before the expiry of the period. The agency may demand information and documentation, summons a party for explanations, and — on the basis of a court decision — inspects the economic agent on site; the inspection covers familiarization with documents, copying, explanations and access to the places of activity, while obstruction entails a fine. Before the final decision the party may also assume commitments aimed at eliminating the alleged violation. Before the final decision a concluding hearing is held, and the parties are given no less than 25 working days to present their positions. The fines are established by Article 33 and arranged in tiers: for abuse of dominance the fine must not exceed 5% of the aggregate turnover of the previous financial year; where the legal basis of the violation is irremediable or the violation is repeated — 10%; and non-compliance with a defined demand triggers a daily fine not exceeding 5% of average daily turnover per each overdue day, and for persons not regarded as economic agents — 500 GEL per day. A separate rule concerns violation of the concentration notification duty: the fine there reaches up to 5% of aggregate turnover, and a physical person is fined 10 000 GEL.
Frequently Asked Questions
How is dominance established?
Through a complex assessment of market share and other factors — from barriers to network effects — using the methodological guidelines adopted by the agency (Article 5).
May several agents dominate jointly?
Yes — abuse is inadmissible also in the case of group dominance (Article 6).
How long does the investigation last?
A decision is adopted no შემდგომ than 6 months; by significance and complexity the investigation may extend up to 18 months, with advance notice to the parties (Article 25).
What is the scale of the fine?
In tiers: up to 5% of aggregate turnover for abuse, up to 10% for irremediable or repeated violations; the daily fine is up to 5% of turnover, and up to 500 GEL per day for non-agents (Article 33).
How We Help on Legal.ge
We will assess whether a market player's conduct is a form of abuse and prepare the application to the agency with a system of evidence; as a party, we will represent your position at the investigation and the concluding hearing and assess the possibility of offering commitments. Contact us — the market is protected by law, and using that protection begins with the right timing and the right form.