About this service
Cartel agreements are the most strictly prohibited conduct under the competition law of Georgia: price fixing, market sharing and limitation of production are assessed as concerted practices among economic agents, and their detection by the Agency ends in a heavy fine. This page describes the legal framework of cartels — the content of the prohibition, the de-minimis thresholds, the exemptions, the procedure of investigating a case and the scale of fines, as well as the cooperation programme that gives a cartel participant the chance of immunity from the fine. In practice the dispute almost always rests on three questions: whether an agreement existed at all, whether the restriction of competition was its purpose or consequence, and whether the case falls within the exemptions or the de-minimis framework.
The content of prohibited agreements
The law prohibits the conclusion between economic agents, or within their association, of any agreement, the adoption of any decision or the carrying out of any concerted practice whose purpose or effect is the restriction, prevention or distortion of competition on the relevant market. The law names the typical forms separately: the direct or indirect fixing of purchase or sale prices or of other trading conditions; the limitation of production, markets, technological development or investments; the sharing of markets or sources of supply by customer, territorial or other criteria; the application of dissimilar conditions to equivalent transactions for particular trading partners; and the imposition of supplementary conditions unconnected with the subject matter of a deal. Such an agreement is void unless the exemptions established by law apply to it — a cartel contract is therefore invalid by its own force.
De-minimis thresholds and exemptions
The prohibition does not extend to insignificant agreements: the combined market share of the parties to a horizontal agreement must not exceed 10 per cent, that of each party to a vertical agreement — 15 per cent, and in the case of a mixed agreement the share of each party must not exceed 10 per cent. What matters is that this privilege is not applied to price fixing and market sharing — for the classical cartel forms there is no de-minimis. In parallel, the prohibition may not be applied to agreements that promote the improvement of production or supply and technical-economic progress and ensure an increase in consumer welfare, on two conditions: it must not impose on the participants restrictions unconnected with the attainment of those aims, and must not allow them to eliminate competition on a substantial part of the market. The substantiation of these circumstances lies on the economic agents themselves, and group exemptions are established by a normative act of the government.
State organs and the investigation of a case
A separate prohibition concerns organs of state power, of the autonomous republic and of municipalities: they are forbidden to create entrepreneurial structures that weaken or restrict competition, to establish privileges that give a particular agent an advantage over its competitors, to prohibit or hinder an agent's activity, to create state structures for monopolisation, and to adopt decisions that create a dominant position substantially restricting free price formation and competition. The procedure of investigating a case is likewise precisely determined: after the opening of an investigation the Agency adopts a decision within no more than 6 months, and given the significance and complexity of the case the investigation may be continued for up to 18 months; the parties are notified of an extension no later than 10 working days before its expiry. Before the final decision a concluding hearing is held, and the parties are given no fewer than 25 working days to present their positions. The Agency may demand information and documentation, summon explanations, while an on-site inspection is possible only on the basis of a court decision; refusal to admit or hindrance of an inspection brings a fine of 10,000 GEL and, on repetition, 20,000 GEL. The limitation period for studying a case is 3 years from the completion of the act, and the opening of an investigation suspends its running.
Fines and the cooperation programme
For a violation of the prohibition of agreements, a fine is imposed on the party whose amount must not exceed 5 per cent of its aggregate income in the preceding financial year, and in the case of failure to eliminate the legal basis of the violation or of its repetition — 10 per cent; in determining the amount, the damage caused, the duration and the gravity of the violation must be taken into account. An imposed fine must be paid into the state budget within 1 month. A special possibility is the cooperation programme: a person is fully or partially released from the fine if it recognises its participation in the agreement in writing, provides the Agency with case-relevant information and evidence before it becomes known from another source, cooperates continuously, terminates its participation and does not destroy evidence. The privilege does not extend to the initiator of the agreement or to the person that coerced another to participate — which is why the timing of entry into the programme and the person's role are decisive.
How we help on Legal.ge
Our team begins the defence in antitrust cases with an analysis of the qualification: we determine whether an agreement existed and whether restriction was its purpose or effect, verify the de-minimis thresholds and the exemptions, prepare positions for the concluding hearing and assess the realistic prospects of the cooperation programme. If the Agency has opened a case against you, contact us — at the first consultation we will assess the prospects of the dispute. Legal.ge — reliable legal support throughout Georgia.