Сompetition in Moldova: Legislative Analysis

The first law in Moldova that governed the issues of monopolistic and anti-competitive behavior was the Law no. 906-XII of 29 January 1992 "On the limitation of monopoly behavior and the development of competition". It first introduced the meaning of a dominant position in the market, provided for some rules designed to avoid the abuses of dominant position, etc. Though not formally annulled this law does not play a special important role in the market regulation any more since the Law on the Protection of Competition no. 1103-XIV of 30 June 2000 came into force in the end of 2000. 

Basic principles of the Law on the Protection of Competition:

The Law on the Protection of Competition is a basic legal act in the Republic of Moldova laying down the rules of competition between market participants in the Republic of Moldova. Competition as such is defined by this Law as a contest between undertakings in which their independent activities efficiently limit each other's possibility to manipulate unilaterally the general conditions of goods turnover in the particular market.
Inequitable competition is defined as any actions performed by undertakings to gain unfair benefits what causes or can cause damages to other undertakings or harm their business status. 

Articles 2 and 4 of the Law stipulate the principles of competition regulation in Moldova. They provide for the state to recognize fair competition as a crucial factor in developing the economy. The state implements the policy designed to ensure free entrepreneurship and protection of correct competition.

It is forbidden to use one's rights for the goal of limiting competition, abuse dominant position and break legitimate consumers' interests. The state should contribute to developing and protecting fair competition and protect undertakings and consumers from monopolistic activities and unjust competition.

The Law stipulates several types of anti-competitive activities:
  • Monopolistic activity composed of abuse of the dominant position in the market and anti-competitive agreements.
  • Unfair competition.
  • Public authorities' activities limiting competition.

These types of anti-competitive activities will be explained and considered in other posts. However, it is worth mentioning here the definition of dominant position which plays a pivotal role in competition regulations in all countries. The dominant position in the market is considered (by virtue of art. 2 of the Law) as an exclusive position of an undertaking in the goods market that enables it to influence decisively  the general conditions of goods turnover in the respective market or to obstruct the access to the market for other undertakings. For a company to be declared as holding the dominant position it should have a market share of not less than 35 %. At the same time the term goods should be interpreted largely as the same art. 2 of the Law include the terms works and services into its definitions.

The main public authority created to implement the state's competition policy is the Agency for the Protection of Competition. And though the Law providing for the establishment of the Agency was adopted in 2000 it was only in 2007 when the Agency's board was approved and it started it activity.The Agency is entitled to control the functioning of the markets, their structural modifications and the creation of transnational corporations and financial and industrial groups. It carries out regulation of certain types of mergers and acquisitions and also may, under certain circumstances, lodge applications with the court for undertakings division. And it is the Agency that should intervene in cases of violations of competition regulations committed by undertakings.

Coming back to the definition of the dominant position it is necessary to mention that beside the existence of the definition in the Law on the Protection of Competition, there has not been yet approved a clear methodology for determining it. The Agency worked out the methodology and uses it, however, this methodology was not officially published as a legal act in the Official Monitor of the Republic of Moldova, and many lawyers claim it cannot have any enforceable legal power. In any case the methodology has been actively used by the Agency in order the dominant position of many companies in various markets. 
There are two causes for that:  insufficiency and lack of clarity of existing acts governing the rules of competition, and lack of necessary experience of the Agency, which only recently started to actively implement any competition regulations in Moldova.

Nevertheless, the situation is likely to change in the future, especially under the influence of the EC competition policy and regulations that would be implemented in the Republic of Moldova.
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