P ROSECUTION OF CARTELS WITHOUT DIRECT EVIDENCE – SLOVENIAN EXPERIENCE DAVID VOGRINEC Department for Legal Affairs and Investigations Slovenian Competition Protection Agency The following presentation does not reflect views and opinions of Slovenian CPA

R EGULATORY FRAMEWORK Prevention of the Restriction of Competition Act (ZPOmK-1) Article 6: Agreements between undertakings, decisions by associations of undertakings and concerted practices of undertakings, which have as their object or effect the prevention, restriction or distortion of competition on the territory of the Republic of Slovenia shall be prohibited and shall be nulland void. Same context as in the article 101 TFEU

TOOLS FOR COLLECTING EVIDENCE Currently the CPA conducts 2 separate procedures: – administrative (the CPA establishes the infringement) – misdemeanour (usually conducted as a follow- on procedure, the CPA imposes fines on undertakings and individuals – responsible persons) ZPOmK-1 provides the CPA with large variety of investigation tools, including inspections Inspections (administrative procedure) conducted with an order, issued by the director of the CPA, no judicial review

D IRECT EVIDENCE proves the existence of an agreement between undertakings usually tries to identify contact, established between parties of an agreement almost impossible to obtain without conducting an investigation or leniency application Usually exists in a written form, official/unofficial document, , notice etc

C IRCUMSTANCIAL / INDIRECT EVIDENCE when there is no evidence of a contact between the parties of an agreement it must be carried out on case by case basis, depending on the burden of proof can be used as a sole proof to determine the effect of an cartel on the market, linking it to behavior of the parties included in an agreement and subsequently proving the existence of a cartel can be used as a supporting method to the document and other proof to achieve greater effect

TYPES OF CIRCUMSTANTIAL EVIDENCE proof of sole contact between parties of an agreement, no proof of actual price fixing etc Slovenian ski lift operators cartel: − association of ski lift operators – discussions about price fixing of ski cards − CPA obtained evidence for some of the years via inspection − for the missing years it concluded there was a cartel based on the effect on the market (paralell price increase etc) and the fact, the parties met regularly at the sessions of the association

SLOVENIAN SKI LIFT OPERATORS CARTEL for the missing seasons CPA took into account relevant factor, that the price increase in every season was almost synchronized in addition to that, CPA analyzed the margin range of an individual ski lift operator there was no objective reasoning for the similar increase CPA used a well established assumption that the cartel members continue to meet at the meetings of the association, with no public distancing themselves from a cartel

Slovenian Supreme Court concluded it was not sufficient evidence for the missing seasons that the parties engaged in contact within the association mere presence at the meetings with no direct proof of an actual price fixing agreement was not sufficient to prove a cartel agreement for an individual ski season ordered the CPA to conduct economic analysis of the relevant factors for the price of a ski card in the absence of direct proof paralell price increase could origin from objective factors such as higher ground costs (electricity etc), level of investments into necessary infrastructure etc, so the CPA must provide an analysis or proof that the paralell prices are a consequence of an agreement and cannot be justifyed with other objecitve factors

CIRCUMSTANCIAL EVIDENCE – „ ECONOMIC “ EVIDENCE almost every conduct or state on the markt can be used as circumstancial evidence most common circumstancial evidence are price paralelism, concerted rise of prices, unusually high profits or margins, stable market shares, high barierrs to entry, oligopolic market with low concentration etc slovenian case of a cartel in the wholesale pharmaceuticals sectors inspection + indirect evidence

PHARMACEUTICALS CARTEL CASE The CPA found that the four undertakings rigged their bids in public procurement proceedings conducted by public pharmacies, as they submitted mostly identical offers in terms of prices and rebates outcome of each procurement was division of the requested quantities between the parties of an agreement in accordance with their previous market shares Although wholesale prices of medicines for human use are set as legally binding maximum prices, this does not prevent suppliers from offering lower prices or discounts CPA looked into the bids submitted by an individual undertaking in the public procurement and concluded, that identical bids submitted in the public procurement procedure were a consequence of an agreement, enabling parties to retain fixed market shares in the procurements for public pharmacies

PHARMACEUTICALS CARTEL CASE II. lack of rebates and lower prices in the bids cannot be explained otherwise than as a consequence of an agreement, as lower bids and rebates by individual undertaking would lead to obtaining whole procurement and all of the quantities, which is the goal of every undertaking active on the market CPA obtained only one direct evidence indicating that the rebate policy of two of the parties of an agreement were synchronised with each other CPA investigated capability of an each individual undertaking to provide all of the quantities of the whole asortiment of medicines, required by pharmacies in each individual procurement

PHARMACEUTICALS CARTEL CASE III. the fact that the undertakings involved offered rebates in the latter phase of the procurement, after the division of the procurement between the parties of the agreement, showed, that it was possible for the parties involved to offer rebates and lower price in the phase of submitting the bids parties claimed the later offer of rebates occured due to the fact that the quantites awarded to each party were known only afterrwards, enabling them to offer rebates according to the awarded share

PHARMACEUTICALS CARTEL CASE IV. CPA refused such argument due to the fact that the main goal should have been obtaining all the quantities required in the procurement, enabling the parties to offer rebate already in the bid concerning the whole procurement nevertheless, CPA concluded that parties offered rebates in the stage of procedure where not all the awarded quantities were known to the parties also, the parties regulary met at the meetings of the section of pharmaceuticals wholesalers indicating that they were constantly in contact with each other

PHARMACEUTICALS CARTEL CASE V. additionally, the CPA took into account circumstantial evidence that all the parties founded a joint venture together, which led to a presumption on their medium for information exchange after consideration of all the direct and circumstantial evidence CPA concluded that the infringement was proven to the parties with the explanation the conduct of the parties was a consequence of an agreement between them

Thank you very much for your attention!