The prohibition of abuse of a dominant position constitutes a fundamental pillar of competition law enforcement in Georgia. While the mere possession of market power is not unlawful, the exercise of such power in a manner that distorts competition is strictly regulated. The Law of Georgia on Competition (the “Competition Law”) establishes the legal framework governing dominant undertakings and prohibits conduct that may harm competitive market structures, trading partners, or consumers.
Legal Framework and Institutional Authority
The Competition Law empowers the Georgian Competition and Consumer Protection Agency (the “Agency”) to identify dominant undertakings and assess whether their conduct amounts to an abuse of dominance. The Agency is authorized to investigate market behavior, request information, and impose sanctions where violations are established. The primary objective of these provisions is to ensure that undertakings holding significant market power do not engage in practices that restrict competition, exclude competitors, or exploit consumers.
Concept of Dominance
A dominant position refers to a situation in which an undertaking has the ability to act independently of its competitors, customers, or consumers to a significant extent. Such independence enables the undertaking to influence market conditions, including pricing, output, or other key parameters of competition. Dominance is assessed on a case-by-case basis, taking into account a range of economic and legal factors. While market share is an important indicator, it is not determinative in isolation.
Assessment of Dominant Position
In determining whether an undertaking holds a dominant position, the Agency typically considers the following factors:
- Market share of the undertaking and its competitors;
- Structure of the relevant market and level of concentration;
- Barriers to entry and expansion;
- Countervailing buyer power;
- Access to essential facilities or resources;
- Financial strength and vertical integration of the undertaking.
A high and sustained market share may give rise to a presumption of dominance, particularly where accompanied by structural barriers that limit effective competition.
Prohibited Conduct (Abuse of Dominance)
The Competition Law prohibits any abuse of a dominant position that may result in the restriction of competition. Abuse may take various forms, including both exclusionary and exploitative practices. Typical examples of abusive conduct include:
- Imposing unfair purchase or selling prices or other unfair trading conditions;
- Limiting production, markets, or technical development to the detriment of consumers;
- Applying dissimilar conditions to equivalent transactions with trading partners, thereby placing them at a competitive disadvantage;
- Making the conclusion of contracts subject to unrelated supplementary obligations;
- Refusal to supply or grant access to essential facilities without objective justification;
- Predatory pricing aimed at excluding competitors from the market.
Such practices are assessed in light of their actual or potential effects on competition and consumer welfare.
Objective Justification and Efficiencies
Not all conduct by a dominant undertaking constitutes an abuse. An undertaking may demonstrate that its behavior is objectively justified or results in efficiencies that outweigh any potential anti-competitive effects.
For instance, certain practices may be necessary for technical, economic, or safety reasons, or may lead to improvements in production or distribution that benefit consumers. The burden of demonstrating such justification typically rests with the undertaking concerned.
Investigation and Enforcement
The Agency may initiate investigations ex officio or based on complaints submitted by interested parties. During the investigation, the Agency may request information, conduct inspections, and analyze market data. If an abuse of dominance is established, the Agency may:
- Order the termination of the infringing conduct;
- Impose behavioral or structural remedies;
- Levy administrative fines in accordance with the Competition Law.
However, the Agency’s decisions are not final, and they can be appealed to the courts of Georgia.
The regulation of abuse of dominance under Georgian competition law plays a critical role in maintaining fair and effective competition. By preventing dominant undertakings from engaging in anti-competitive practices, the legal framework seeks to protect market dynamics, ensure equal opportunities for market participants, and safeguard consumer welfare.