Competition authority: tougher fines on monopolies

05.06.2012, 09:26

Estonian competition authority is proposing to introduce tougher sanctions on companies that abuse their monopolistic position on the market, saying that current sanctions are too soft and the statue of limitation of violations is too short.

Märt Ots, chairman of the competition board, say that he is convinced that tougher sanctions would force monopolies to start considering the implications of their actions.

Ots said that a case in point is Estonian postal company Eesti Post that was found to repeatedly have violated its monopolistic position on the market, but has done little to amend its ways.

Eesti Post was fined several times last year by the competition authority.

Ots did not say how big the fines should in his opinion be, but said that the current level of fines that can be awarded in such cases in Estonia were much smaller than in many other countries.

„The problem in Estonia is that there is a maximum limit imposed on the fine,” said Ots, explaining that while the fine could be proportional for a smaller water utility operating outside Tallinn, it is too small for large public corporations.

„If you have 30,000 euros as the maximum fine, it could well bankrupt some smaller company, but for large corporations it is not such a big deal,” explained Ots.

The competition authority believes that lawmakers should introduce a ratio of fine to the company’s revenue.

Ots added that another problem was the statue of limitations. At present all misdemeanors are handled under similar requirements which means that there is a similar procedure for those caught driving without a seatbelt and for public corporations that abuse their market position.

Ots said that he would propose to introduce an administrative fine that could be awarded by a court while the violation on which the fine is awarded would have no statue of limitations.

Minister of economic affairs Juhan Parts said in comment that Estonia had adopted anti-trust legislation and that several companies had already been fined based on the new law.

„The policy of sanctions must be proportional and efficient. If the competition authority has done some analysis, they should make a proposal to the government so that we could analyse what is the problem area,” said Parts.

Eliis Vennik, press spokesperson of Eesti Energia, the state-owned energy company, said that if the competition board sees problems in the valid legislation and regulation, it should turn to the lawmakers.

„We in Eesti Energia obey the law and it is not important how big the fines are,” said Vennik.

Also Ian Plenderleith, CEO of Tallinna Vesi, said that the anti-trust legislation was effective, although it implementing provisions of the law remained unclear.

Plenderleith said that it was still unclear which are the standards imposed on water companies and how the results are monitored and measured.

He added that the association of water companies had already formed a workgroup to clarify the requirements.