On 30 November 2023, the Bulgarian National Competition Authority (CPC) announced that it has adopted a draft decision on the block exemptions of certain categories of agreements, decisions, and concerted practices.
The CPC’s draft decision comes after the adoption by the European Commission of a revised Vertical Block Exemption Regulation, which entered into force on 1 June 2022. The new draft decision will replace the now expired previous decision of the CPC adopted in 2011 and update the Bulgarian national competition law rules in line with the recent EU law developments. The aim is to achieve reciprocity of national block exemption rules with EU rules governing block exemptions of certain categories of agreements, decisions, and concerted practices.
In general, block exemptions specify the conditions under which certain types of agreements (i.e. vertical agreements such as supply and distribution agreements and/or horizontal agreements between competitors such as agreements for research and development or specialisation agreements) are exempted from the prohibition of restrictive agreements laid down in Article 15 of the Bulgarian Protection of Competition Act (PCA), which is the equivalent of Article 101 TFEU. Block exemptions are designed to provide legal certainty to businesses on the application of competition law regarding certain categories of agreements where the benefits generated by the agreements outweigh their anti-competitive effects on the market.
In order to benefit from the block exemption, the agreements should meet certain criteria. In general terms, they should contribute to improving the production or distribution of goods or the provision of services, promoting technical or economic progress by providing consumers with a fair share of the benefits obtained. The CPC may, however, withdraw the benefit of the block exemption based on a case-by-case analysis.
The categories of agreements, which meet the block exemption conditions, will be deemed exempted from the prohibition of Article 15 of the PCA by virtue of the law (ex lege) and, therefore, no explicit decision by the CPC is necessary in each specific case. The undertakings involved should carry out the assessment of whether and to what extent the relevant agreements satisfy the conditions for exemption from the prohibition.
The draft decision also establishes a special rule regarding vertical agreements entered between an association of undertakings and an individual member or supplier. In the draft decision, the national block exemption will apply only if all members of the association are retailers and if no individual member of the association has a total annual turnover exceeding BGN 7 million.
The draft decision is currently only published for the purposes of public consultation and is not yet in force. When adopted, it will apply retroactively from 1 June 2023 to vertical agreements, agreements in the motor vehicle after-market and agreements for transfer of technologies. From 1 July 2023, it will also apply to specialisation and research and development agreements.
For further information on this draft decision, contact your CMS client partner or the following local CMS experts: Nevena Radlova, Anna-Maria Spasova, Gabriela Karaivanova or Dayana Zasheva.
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