On 11 January 2024, the Bulgarian Competition Protection Commission (the ‘Commission’) officially adopted a new Block Exemption Decision (the ‘Decision’) of certain categories of agreements, decisions and concerted practices.
1. Prohibited Agreements and Block Exemption
Article 15 of the Bulgarian Competition Protection Act (the ‘Act’) prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices of two or more undertakings, which have as their object or effect the prevention, restriction or distortion of competition on the relevant market.
The purpose of the Decision is to exempt from this prohibition certain agreements, decisions and concerted practices for which it can be assumed with sufficient certainty that the benefits generated by them outweigh their anti-competitive effects on the market, because they:
(i) contribute to improving the production or distribution of goods or to promoting technical or economic progress; and
(ii) allow the consumers a fair share of the resulting benefit; and
(iii) do not impose on the undertakings concerned restrictions which are not indispensable to the attainment of the objectives under it. (i) and it. (ii) above; and
(iv) do not afford the undertakings concerned the possibility to prevent competition in respect of a substantial part of the relevant market.
The Decision is adopted due to the expiry of the previous Block Exemption Decision of the Commission, dating back to 2011 and the subsequent adoption of new EU Block Exemption Regulations.
The new Decision follows the approach of the previous 2011 Block Exemption Decision of the Commission of explicitly referencing to the scope and conditions for block exemption envisaged in the respective EU Regulations, including with respect to the market share thresholds affording the exemption, the hardcore restrictions which remove the benefit of the block exemption and the excluded restrictions (i.e., obligations, which are not caught by the block exemption). In this way, the national rules on block exemption are aligned to and compatible with those of the EU Block Exemption Regulations.
2. Applicability of the Decision
The Decision applies to agreements between undertakings, decisions by associations of undertakings and concerted practices of two or more undertakings, as far as they do not affect the trade between Member States. Agreements, decisions and concerted practices which affect the trade between Member States are subject to the respective EU Block Exemption Regulations, which are directly applicable on the territory of Bulgaria. The Decision and the EU Block Exemption Regulations apply in parallel where both EU and national rules on prohibited agreements are applicable.
The Decision does not apply with respect to agreements having inappreciable effect on competition. Such agreements, caught by the so-called de minimis rule, are subject to another decision of the Commissions, adopted in 2009, which remains in effect.
3. Categories of Agreements Covered by the Decision
The Decision covers certain categories of:
(i) vertical agreements and concerted practices;
(ii) vertical agreements and concerted practices in the motor vehicle sector;
(iii) specialization agreements;
(iv) research and development agreements;
(v) technology transfer agreements.
As it was the case until now, the categories of agreements, which meet the block exemption conditions, will be deemed exempted from the prohibition of Article 15 of the Act by virtue of the law (ex lege). Therefore, no explicit Commission decision is necessary in each particular case. The respective undertakings should carry out the assessment of whether and to what extent the relevant agreements satisfy the conditions for exemption.
4. Entry into Force and Duration of the Decision
The Decision shall be valid for the period of validity of the respective EU Block Exemption Regulations, except where a different transitional period is envisaged in the Decision.
The Decision has retroactive effect and shall apply as of 1 June 2023 with respect to vertical agreements, agreements in the motor vehicle sector and technology transfer agreements. As of 1 July 2023, it shall apply with respect to specialization and research and development agreements.
There is a transitional period, during which the prohibition under Article 15 of the Act will not apply with respect to some previously entered into force agreements, which do not meet the conditions under the new Decision, but which have been compliant with the 2011 Block Exemption Decision.
Peter Boyukliev, IDI Country Expert for distribution in Bulgaria
