New competition regulations

Belarus: New Law on Suppressing anti-competitive activity and on developing competition enters into force from 1 July 2014

The Law sets new rules for defining market dominance of legal entities based on market share. For example, a company is considered dominant if its market share is 35%, or less than 35% if it is acknowledged as dominant by the competition authority (though no company can be recognised as dominant if its market share is less than 15%); two companies are considered dominant if they jointly hold 54 % or more of market share; three companies if they jointly hold 78% or more; four companies if they jointly hold 95% or more.
The Law extends the list of acts considered to be abuse of a dominant position:

  • unreasonably reducing or stopping production of goods in the face of demand or orders for delivery;

  • refusing to (or evading) entry into agreements with particular individual consumers;

  • unreasonably establishing different prices (tariffs) for the same goods.

The Law introduces a new notion of “vertical agreements” (i.e., agreements between non-competitive companies), and sets appropriate restrictions on those agreements.
In particular, vertical agreements are forbidden if they:
a) may lead to or set resale prices;
b) prohibit the buyer from selling the goods of companies regarded as the seller’s competitors.
However, these restrictions do not apply if a company’s market share does not exceed 15%.
Certain Merger & Acquisition transactions must first be approved by the competition authorities, e.g.:

  • if the balance sheet value of assets of one of the parties exceeds 100 000 basic units (approx. 970 150 EUR);

  • annual sale of goods revenue of one of the parties exceeds 200 000 basic units (approx. 1.9 mln EUR);

  • a company is considered dominant or a natural monopoly .

Approval of the competition authorities is required for corporate reorganisation of dominant companies into open joint-stock companies.
The above transactions are invalid without prior consent of the competition authority. Under the new Law a court may force a split and (or) allocate a new company at the suit of competition authority.
The new Law enters into force on 1 July 2014.
Source: NRLA No. 2/2092 of 19 December 2013, NRLA No. 2/2092 of 17 December 2013
Author: Alexander Liessem, bnt legal&tax Belarus

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