The legal basis for regulating competition in Albania is outlined mainly in Law 9121 of July 28 2003 (the Competition Law), which aims to protect free and effective competition. The law governs prohibited agreements, abuses of a dominant position and mergers. Separately, state aids will be regulated by Law 9374 of 21 April 2005, which takes effect on January 1 2006.
The negotiations concerning the Stabilization and Association Agreement with the EU emphasized the need for a new, complete and effective legislative regime for competition issues. Competition is one of the main areas where Albania has to approximate its domestic laws with EC law. The Competition Law is therefore oriented towards EC legislation on competition including Regulation 1/2003.
Agreements between enterprises that prevent, restrict, or distort competition are prohibited. These agreements include:
- the direct or indirect fixing of sale and purchase prices or other business terms;
- the division of markets or supply sources;
- the restriction or control of production, distribution, technological development, or investments;
- discriminating business terms;
- business relations conditioned on unrelated additional obligations.
Certain agreements may be permitted for reasons of economic efficiency. Horizontal agreements (at the same level) are permissible if they aim to improve rationalization, specialization or research and development of processes and products. Vertical agreements (at different levels) are allowed if they aim to limit sales to several potential categories.
Licensing agreements will also be allowed if the commercial autonomy of the purchaser, licensee and other undertakings is properly limited. At the same time, competition must not be overly restricted, and consumers' interests should prevail.
Abuse of dominant position
The abuse of a dominant position is prohibited. Dominant undertakings are those suppliers or customers exposed to no significant competition, or those that hold market positions superior to other competitors, suppliers or customers. Abuse of a dominant position constitutes, for example, direct or indirect application of unreasonable prices or other commercial terms or conditions. It can also constitute restriction on production, distribution or technical development to the detriment of consumers.
A merger is considered to be any of the following: a fusion of two or more independent companies or their parts; a direct or indirect takeover of companies or their parts; the formation of a new joint company (acting as an independent economic unit). The purchase of shares of a company by financial, credit and insurance institutions for the purpose of reselling them within one year from the date of the acquisition is not considered to be a merger, provided that the voting rights associated with these shares are not exercised during this one-year period.
The competent competition authority shall not allow mergers aimed at creating or reinforcing a dominant position in the market held by one or more companies.
The authority may, however, allow a merger when one of the participating companies faces bankruptcy and does not have any less anti-competitive option than a merger. The company must be likely to exit the market in the near future without the prospect of a merger, and there must be no possibility of reorganizing the activity of the company.
All undertakings being investigated by the authority, as well as those involved in a merger or that need to be exempted from the application of the law, must provide the authority with any relevant information, including commercial secrets. They must do this on their own initiative or upon receiving a request. The authority must protect confidential information obtained while conducting its activities. This obligation will also extend to its members after their duties are terminated, except when court proceedings are involved.
The merging undertakings, as well as those undertakings proceeding with a takeover, must notify the authority of the merger agreement if:
- the turnover of all the participating companies in the international market is more than LEK 70 billion (approximately $686.24 million); or
- the turnover of all the participating companies in the domestic market is more than LEK 800 million, and the turnover of at least one participating company in the domestic market is more than LEK 500 million.
The merger will not be effective if the authority is not notified of the merger, or the merger is not approved, or conditions relevant to the merger authorization are not fulfilled. The authority must also be notified of any horizontal, vertical or licensing agreements, or any amendments to them. The authority may allow them to continue by imposing obligations or conditions on the undertakings, or by limiting the duration of such agreements. Should the authority not contest such agreements within three months of notification the exclusion will be considered granted.
A decision permitting such agreements may be revoked if the facts that served as the basis for the issuance of the decision have changed.
Such decisions can be annulled retroactively on the following grounds:
- the parties to the agreement have not respected the obligations outlined in the decision;
- the decision is based on incorrect or improperly obtained information;
- the parties have abused the exclusion granted by the authority.
Denis Selimi and Manisha Shah