Antitrust Compliance: What the Law Requires of Your Business
Antitrust compliance means keeping your business inside the boundaries set by the Georgian Law on Competition: not abusing a dominant position, refusing competition-restricting agreements, and observing the rules governing concentrations. This page is built on the individual articles of that law and shows you where the risk is highest and how to avoid it.
The article on the authorized organ identifies the enforcer: the organ empowered to enforce the requirements of the law is the independent public-law legal entity established on its basis — the Georgian Competition and Consumer Protection Agency. In addition, in cases provided for by the law, this competence is exercised by the regulator of a regulated sphere of the economy. The practical implication for you: if you operate in a regulated sector, you will also deal with the sector regulator on competition matters.
Dominance and the Ban on Its Abuse
The law provides that dominance is determined on the relevant market taking into account the market share of the economic agent, the market shares of its competitors, barriers to entry into the market, barriers 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 determining market power. The agency determines the market share and market power of an economic agent using methodological guidelines for market analysis, which it adopts by an appropriate legal act.
The practical conclusion follows: dominance is not measured by share alone. Even with a modest share, high entry barriers or vertical integration may prove decisive in the assessment; conversely, a company with a large share may not be regarded as dominant because of active competitors. A compliance programme should therefore rest on a real analysis of the market, not merely on sales statistics.
Under the corresponding article, abuse of a dominant position by one economic agent or several agents (in the case of collective dominance) is inadmissible. The law names the acts that may be considered abusive:
- imposing, directly or indirectly, an unfair purchase or sale price or other unfair trading conditions;
- limiting production, markets or technological development to the detriment of consumers;
- applying dissimilar conditions to equivalent transactions with certain trading partners, thereby placing them at a competitive disadvantage;
- making the conclusion of a contract subject to acceptance by the other party of supplementary conditions which, by their nature or according to commercial usage, have no connection with the subject of the contract.
Note what is prohibited: not dominance itself but its abuse. A company holding a strong market position may compete legitimately, but its freedom to set prices and conditions is constrained — particularly regarding discrimination between partners and conditions unrelated to the subject matter of deals.
Restrictive Agreements and the Efficiency Exemptions
Another article prohibits agreements between economic agents, decisions of associations, and concerted practices whose purpose or effect is the restriction of competition on the relevant market. The prohibited forms named by the law include direct or indirect fixing of purchase or selling prices or other trading conditions; limiting production, markets, technological development or investments; sharing markets or sources of supply; applying dissimilar conditions to equivalent transactions; and imposing unrelated supplementary conditions. Such agreements are void unless the exemptions established by the law apply to them.
The exemptions are regulated separately: the prohibition may not be applied to agreements that contribute to improving production or supply and to technical-economic progress and ensure growth of consumer welfare — provided the agreement does not impose restrictions unrelated to the attainment of those objectives and does not allow the participants to eliminate competition on a substantial part of the relevant market. Justifying those circumstances is the burden of the economic agents themselves, while block exemptions tied to specific types of agreement are established for a defined period by a normative act of the Government of Georgia.
Concentration and the Notification Obligation
The law defines concentration broadly: a merger of two or more independent economic agents resulting in one agent being created; the acquisition, by securities, shares, contracts or other means, of direct or indirect, full or partial control over one or more economic agents by another agent or by persons already controlling at least one agent; and the creation of a joint venture performing on a lasting basis all the functions of an autonomous economic agent.
A concentration that does not substantially restrict effective competition on the goods or services market of Georgia or a part of it is compatible with the competitive environment; one that does substantially restrict it is inadmissible. Where a concentration creates or strengthens a dominant position, it is presumed to substantially restrict effective competition unless the economic agent rebuts this. For the registration of concentrations by persons subject to the notification obligation, a decision of the agency on the competitive effect of the contemplated concentration is required. Where a substantial restriction is expected, the parties may propose a modification of the operation in the form of structural or behavioural measures. If those measures are not implemented in time, the agency imposes a fine and applies to the court for annulment of the concentration and restoration of the original situation — including obligations to divest an enterprise, share or assets.
The Agency's Powers and How You Should Behave
A dedicated article regulates the agency's broad powers: investigating a case on the basis of a complaint or on its own initiative; demanding from an economic agent any information and documentation concerning its activity — including confidential information; summoning a party for explanations; inspecting the agent on site on the basis of a court decision; imposing a fine where requested information is not supplied within the deadline; issuing mandatory recommendations; and imposing the fines provided by the law in case of violation.
Particularly strict instruments also exist: where a dominant agent repeatedly violates the law, the agency may raise before the court the question of its forced division, if division is possible; it may also apply to the court for interim suspension of certain conduct. At the same time, upon a substantiated request of the economic agent, the agency is empowered to allow payment of the fine in instalments for a period not exceeding 1 year — the one softening mechanism you can influence.
Fines: How Severe Is the Liability
In cases of abuse of dominance or restrictive agreements, a fine is imposed on the party which must not exceed 5 % of its aggregate turnover of the previous financial year. Where the legal basis of that violation is not eliminated, or the violation is repeated, the fine may reach 10 % of aggregate turnover.
Violation of the obligation to notify a concentration likewise attracts a fine of up to 5 % of aggregate turnover, and a natural person is fined 10 000 GEL. Where structural or behavioural measures connected with a concentration are not implemented, the fine for each day of delay must not exceed 5 % of the average daily turnover of the previous financial year. In setting the amount, the damage caused, the duration and the severity of the violation must be considered, and the imposed fine must be paid within 1 month.
Building a Compliance System
In practice the risk points are well known: price coordination with competitors or „information exchange“, discriminatory differentiation of distribution terms, unrelated demands in procurement, and unplanned execution of concentrations. A compliance programme captures these points early: antitrust review of standard contract templates, staff instructions on communication with competitors, a procedure for responding to agency information requests, and pre-assessment of contemplated concentrations.
Our team will assist both with preventive work — drafting the compliance programme and training personnel — and in crisis situations: preparing responses to agency demands, filing concentration notifications, and proposing conditional undertakings and modifications of the operation. Contact us through Legal.ge for an antitrust compliance plan tailored to your market.