The Legal Framework of Competition-Law Advisory
Competition-law advisory in Georgia rests on four fundamental norms: the criteria for determining dominance (Article 5), the prohibition of its abuse (Article 6), the prohibition of restrictive agreements (Article 7), and the concentration-notification procedure (Article 11). These four build the map through which any business decision — pricing, partnership, acquisition — is assessed through the prism of antitrust risk.
Dominance — Article 5
Article 5 provides that dominance is determined on the relevant market by taking into account the market share of the economic agent, the market shares of its competitors, entry barriers, barriers to expanding production, the buyer's market power, the availability of raw-material sources, the degree of vertical integration, network effects and other factors determining market power. The Agency determines market share and power using its methodological guidelines for market analysis. This is a multi-factor test — a share alone does not suffice, and for that very reason defining the market and assessing the barriers is the first stage of every advisory engagement. Defining the market is an art in itself: one and the same product may yield different shares on different geographic and product markets, and for that reason the Agency's methodological guidelines and market-analysis practice are the consultant's daily instruments. At the same time, dominance as such is not prohibited — what is prohibited is its abuse, and this distinction is the bedrock principle of advisory conclusions. The Code defines dominance by an open list of criteria: the market shares of the agent and of its competitors, barriers to entry and to the expansion of production, the buyer’s market power, access to sources of raw materials, the degree of vertical integration and network effects are all weighed, while the market share and power are determined by the agency using methodological guidelines on market analysis.
Abuse and Restrictive Agreements — Articles 6 and 7
Under Article 6, the abuse of a dominant position by one or several economic agents (in the case of collective dominance) is impermissible, and the norm lists its typical forms: establishing unfair purchase or sale prices or other unfair trading conditions; limiting production, markets or technological development to the detriment of consumers; setting different conditions on identical transactions for particular partners, thereby placing them at a competitive disadvantage; and imposing supplementary obligations unconnected by subject matter or commerce with the subject of the transaction. Article 7 prohibits restrictive agreements: price fixing, limitation of production, markets, technological development or investments, allocation of markets or supply sources, discriminatory conditions, unconnected obligations, and also the coordination of tender bids in state procurement — all prohibited where the purpose or effect of the agreement is the restriction, prevention or prohibition of competition; such agreements are void unless the statutory exceptions apply. The distinction between horizontal and vertical agreements is of practical importance as well: price and market-sharing agreements between competitors are the highest-risk category, while distribution and purchasing relationships require a separate assessment of each condition.