COMPETITION AGENCY OF GEORGIA
Implementation Report of the Capacity Building Training Plan
I. Training Plan for the Competition Agency – Goals and Justification
The EU-Georgia Association Agreement1 is based on mutual belief that it “will create a new
climate for economic relations between the Parties and above all for the development of trade and
investment and will stimulate competition, which are factors crucial to economic restructuring and
modernisation”2. The Competition Chapter of the Association Agreement (Articles 203-209) further
emphasizes the importance of “free and undistorted competition in their trade relations. The Parties
acknowledge that anti-competitive business practices and state interventions (including subsidies)
have the potential to distort the proper functioning of markets and undermine the benefits of trade
liberalisation.”3 The Competition Chapter also concretizes the obligation of the Parties to maintain
“comprehensive competition laws”4. This can be broken down into four main parts:

Legislation addressing anticompetitive agreements / concerted practices;

Sanctioning anti-competitive unilateral conduct of enterprises with dominant market power;

Effective control of concentrations to avoid significant impediment to effective competition
and abuse of dominant position;

Transparency in the area of subsidies.
These tasks must be undertaken by the authority which is “appropriately equipped for the
effective enforcement of the competition laws referred”5.
In order to meet the obligations mentioned above, Georgia introduced significant
amendments to the Law on Free Trade and Competition in March 2014, based on which the
1
Association Agreement between the European Union and the European Atomic Energy Community and
their Member States, of the one part, and Georgia, of the other part (“Association Agreement”).
2 Preamble of the EU-Georgia Association Agreement.
3 Article 203 of the EU-Georgia Association Agreement.
4 Article 204 of the EU-Georgia Association Agreement.
5 Article 204 of the EU-Georgia Association Agreement.
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Competition and State procurement agency was divided into two legal entities and the new
Competition Agency (“Agency”, “GCA”) was established. This decision marked a turning point, as
a formally independent antitrust authority was created for the first time in the country. The
legislation (Law on Competition and relevant by-laws6) is broadly in line with the EU best practice
and the commitments of Georgia under the DCFTA (Deep and Comprehensive Free Trade Area).
However, Georgia, according to the assessment published in the Transition Report, retained
a rating of 2+ in relation to the quality of its competition policy regime, indicating significant scope
for improvement.7 Significant limitations existed, notably, in the area of law enforcement. The
Agency lacked adequate administrative capacity to enforce competition legislation. Therefore, it
was decided to strengthen the skills and competences of its officials and case handlers through
formal classroom-based training and exposure to the best practices of other jurisdictions. The
Agency staff, composed of 40 people, required significant training in the areas of competition
economics, quantitative techniques for the enforcement of competition law, and material and
procedural aspects of competition law enforcement. The training was all the more pressing, as 90%
of staff were not experienced in competition law issues. The expectations, however, were high from
both consumers and market participants as it was the first time when the EU-type competition
watchdog was created in Georgia.
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Two regulations of the Government of Georgia: Regulation N526 of 01 September, 2014 "On Exemptions
from Prohibition on Competition Restricting Agreements"; Regulation N529 of 01 September, 2014 "On
Approving Small Amounts of Individual State Aid and General Procedure for Granting State Aid"; Five Orders
of the Chairman of the Competition Agency: Order N30/09-1 of 30 September, 2014 "On approval of the
forms of applications and complaints, rules for their submission and procedures and deadlines related to the
admissibility of the application and complaint"; Order N30/09-2 of 30 September 2014 "On approving the
Procedure for Applying the Leniency Program and Benefiting from Exemption from Liability"; Order
N30/09-3 of 30 September, 2014 "On approval methodological guidelines of market analysis"; Order N30/094 of 30 September 2014 "On approval the procedure on submission and consideration of notification on
concentration"; Order N30/09-5 of 30 September, 2014 "On approval of the rule and procedure of
investigation".
7 According to the transition methodology employed by the EBRD, competition policy is ranked according
to a synthetic indicator ranging from 1 to 4+, where 1 corresponds to “No competition legislation and
institutions”, 2 corresponds to “competition policy legislation and institutions set up; some reduction of entry
restrictions or enforcement action on dominant firms”, 3 corresponds to “some enforcement actions to reduce
abuse of market power and to promote a competitive environment, including break-ups of dominant
conglomerates; substantial reduction of entry restrictions”, 4 indicates “significant enforcement actions to
reduce abuse of market power and to promote a competitive environment” and 4+ corresponds to “standards
and performance typical of advanced industrial economies: effective enforcement of competition policy;
unrestricted entry to most markets”.
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The Order of the Chairman of the Competition Agency N199 of December 22, 2015, “On
Approval of the 2016-2018 Training Plan for the Agency” was issued exactly for these purposes: to
increase efficiency of the newly formed Agency, to train the staff and enhance their qualification,
and finally, to raise public awareness with respect to competition policy issues.
II. Implementation of the Capacity Building Actions in 2016
The Order of the Chairman of the Competition Agency N199 of December 22, 2015, “On
Approval of the 2016-2018 Training Plan for the Agency” envisaged the following capacity building
trainings for its staff for the year 2016 (subsequently, all of them were successfully held):
Name of the Training
Target Group
Abuse of dominant position;
collective dominance.
Direct and indirect evidence in
cartel cases; European practice.
Number of
Participants
Competition Agency
10 -15
Competition Agency
10 – 15
Competition Agency, Sectoral
Regulators, Ministry of Economy and
Cooperation between
Sustainable Development, Ministry of
Competition Agency and
Justice, Economic Council, National
Sectoral Regulators
Bank, Ministry of Finance,
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Representatives of the Parliament of
Georgia and non-governmental sector
These topics were chosen as the priority due to their utmost relevance and high importance
for the institutional development of the GCA.
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1) Cooperation between Competition Agency and Sectoral Regulators
a) General Overview
It should be noted upfront that the legal situation regarding the delineation of competition
and sectoral regulation, as well as enforcement of respective laws, is particular in Georgia. The Law
on Competition defines “regulated sphere of economy” as the “spheres specified by Georgian
Organic Law on the National Bank of Georgia, Georgian laws on Activities of Commercial banks,
On Investment Funds, On Electronic Communication, On Broadcasting and On Electric Energy
and Natural Gas, as well as municipal service sphere where free pricing and competition is limited
and specified by the resolutions of the Government of Georgia as regulated economic spheres and
are subjected to tariffs regulation.” (Article 3 (q) of the Law on Competition). According to Article
1 (4) (c) of the Law on Competition, the Law shall not be applicable to the relations specified by
Georgian Law on Securities Market, with the exception of cases where such relations impact
competition at the goods market of the country and/or limits it or may cause its substantial
restriction. Besides, economic agents from the regulated spheres of economy are exempted from
the mandatory prior notification requirement to the GCA in cases of concentration. Their mergers
or other types of concentration are scrutinized by the sectoral regulators, according to their
respective laws.
Chapter VI of the Law on Competition is dedicated to the Cooperation of the Agency with
the authorities in the regulated spheres of economy. According to Article 31 (1) of the Law, if the
complaint on alleged violation of competition in the regulated sphere of economy is submitted to
the Agency, it shall forward such complaint to the relevant regulator. Thus, many large actors of
the Georgian economy (notably, banks and other financial institutions, telecommunications
companies, energy enterprises) are exempted from the GCA’s direct scrutiny.
However, the Law on Competition enlists certain forms of cooperation that the GCA and the
relevant authorities may establish in order to advance protection of competition on the Georgian
market. For example, the relevant regulating authority shall inform the GCA on commencement
of investigation of the case of competition violation in the regulated economic sphere. Upon their
request, the GCA shall provide expert proposals on cases of competition violation in the regulated
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economic sphere, to the regulating authorities. The latter are also entitled to receive consultations
of the Agency on the issues related to competition.
Besides, the Law allows the common investigations or joint working groups to be created
between the GCA and relevant sectoral regulator in cases of alleged violation of competition
legislation. There are even more specific rules regarding the delineation of competences between
the GCA and the Georgian National Communications Commission (“GNCC”). Finally, the GCA
cannot impose fines on the economic agents of the regulated sphere of economy.
Due to such a multi-faceted legal framework, cooperation between the Competition Agency
and sectoral regulators was urgent and indispensable. The latter have been in charge of their
respective sectors for over 20 years, while the Competition Agency was a new authority with far
less experience and exposure to Georgian enterprises. Therefore, establishing proper working
relationship and exchange of expertize with the relevant authorities, in order to ensure proper
horizontal enforcement of the competition legislation, was set as a priority for 2016.
Such a decision was also justified given how the legal framework worked in practice. On
several occasions the GCA has received applications from certain economic agents. These
applications fell outside the scope of the GCA’s powers, however, they did include the claims under
competition legislation. The GCA forwarded such applications to the relevant sectoral regulators.
For example, the GCA was seized during the merger between two TV stations and forwarded the
application to the GNCC (the merger was subsequently approved by the latter). The GCA has also
received applications in the banking sector and forwarded them to the National Bank of Georgia
(“NBG”). However, the GCA considered that these practices left significant scope for improvement.
Hence, the Agency sought closer cooperation with the sectoral regulators.
Considering the above mentioned, it was particularly important for the GCA staff to receive
the training on the best practices of both topics: partitioning the work between competition
agencies and sectoral regulators, as well as practical tips on joint investigations and other kinds of
cooperation. Participation of the sectoral regulators in such training was also considered as a
priority, as it would increase their awareness of particularities of (EU and Georgian) competition
legislation, as well as competences and powers of the GCA.
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b) The Training and its practical outcomes
The first training - TAIEX Workshop on Cooperation between the Competition Agencies
and Sector Regulators organised in co-operation with LEPL Competition Agency of Georgia - was
held in Tbilisi, on 25-26 February, 2016 and it was focused on sharing the European best practices
regarding cooperation between competition agencies and sector regulators to the representatives of
relevant Georgian authorities, NGOs and other organizations working in affected fields of economy
(60 participants in total). The key speakers included: Dr Johanna HARTOG, Head of the Unit
“Competition Law and Regulation, German Competition Authority”; Ms Ana SELCINSKIENE,
Executive director, Competition Council of the Republic of Lithuania; Mr. Gianluca SEPE, Head of
sector, Unit of EU Affairs, Italian Competition Authority; Ms Debby van der PLUIJM, Strategy
advisor, Dutch Authority for Consumers and Competition (ACM).
During the training sessions, the following topics were discussed in depth: Current situation
in Georgia in regard with the Cooperation between the Competition Agencies and Sector
Regulators; Cooperation between the Competition Agencies and Sector Regulators: legal
framework, best examples of (in)formal techniques (European/Lithuanian experience); Division of
competence between competition agencies and sectorial regulators (Italian and Dutch
perspectives); Cooperation and coordination of competition authority and regulator in practice –
the German example; Cooperation and coordination of competition authority and regulator in
practice – the Dutch example; Recommendations and steps forward.
The trainings demonstrated that different countries of the EU have different models of
competition law enforcement when it comes to regulated sectors. Some of them opt for horizontal
competition enforcement by competition authorities, with important input from the sectoral
regulators, and the others choose the other way around.
The GCA representatives presented the Georgian model, as well as the powers assigned by
Law to the Agency. The representatives of the sectoral regulators also actively participated in the
discussions. After the presentations by the relevant experts, the Georgian side was able to reflect
on the opportunities of strengthening mutual coordination within the existing legal framework, as
well as cooperation with their European counterpart.
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The training marked the beginning of ever-strengthening partnership between the
Competition Agency and Georgian sectoral regulators. Peer-to-peer contacts were established for
the first time and the discussions on how to proceed with the cases that include both regulated and
non-regulated markets were launched.
As mentioned above, one of the practical outcomes of the TAIEX workshop was to put the
competition and sectoral regulators in touch and make them aware of respective challenges and
opportunities, while also equipping them with the European experience. These initial contacts were
later developed and turned into tangible cooperation during administrative proceedings. For
example, one of the latest decisions of the GCA is a result of intensive and fruitful cooperation with
the National Bank of Georgia. The decision was issued on the application of the NGO “Center for
Competition Law and Consumer Protection” whereby the applicant alleged that the leading
Georgian credit reporting agency (JSC “Creditinfo Georgia”) and its contractual partners violated
Article 7 of Georgian Law on Competition (analogue of Article 101 TFEU). The GCA launched
preliminary administrative proceedings in order to decide on admissibility of the application (the
precondition of starting formal investigation process) during which it turned out that most of the
shareholders and clients of JSC “Creditinfo Georgia” belonged to the financial sector, regulated by
the National Bank of Georgia (“NBG”).
These administrative proceedings marked the beginning of intensive practical cooperation
between the GCA and the NBG which included exchange of information and a consultative meeting
with the representatives of the GCA and different departments of the NBG. Finally, the GCA
decided that the application did not substantiate the “reasonable suspicion of illegality” (the legal
basis for opening the proceedings). The relevant Order of the Chairman of the Competition Agency
(N246) contains the analysis and insights regarding Georgian financial market and the impact of
the credit bureaus on its proper functioning, partly resulting from the NBG’s contributions.
In addition, as a result of the training, the GCA staff became better aware of the legislative
framework (covering competition aspects) in the telecommunications sector in Georgia. The two
agencies also established first contacts which served as a basis for deepening their cooperation. The
GCA and the Georgian National Communications Commission (“GNCC”) have subsequently
concluded negotiations and the two agencies will sign the Memorandum of Cooperation in early
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2017. The document will serve as a basis to form joint investigation groups, as well as work hand in
hand to strengthen competition law enforcement in Georgian telecommunications sector. It should
be noted that the GNCC has over 20 years of experience in enforcing competition law in
telecommunications sector. Its competition department is one of the oldest antitrust enforcers in
Georgia. Therefore, the GCA will have a strong partner on board for joint enforcement in the sector.
Finally, as a result of the workshop, the GCA established, and later on, strengthened
cooperation with the Georgian National Energy and Water Supply Regulatory Commission
(“GNEWSRC”). The GCA representatives were invited on the 9th meeting of the Sofia Competition
Forum which took place on 11 November 2016 in Sofia, Bulgaria. The topic of the meeting was
“Pricing abuses of dominance in energy and telecommunications”. The competition authorities
present at the meeting were expected to present the overview of the relevant legal framework and
practice to their peers. In order to provide an accurate record of Georgian regulatory framework
and practice in energy and telecoms sector, the GCA representatives consulted both the GNEWSRC
and GNCC before presenting in Sofia. The GCA and the GNEWSRC are set to intensify their
cooperation in the future.
These are just some of the instances of ever-growing cooperation between the GCA and the
sectoral regulators, the foundations of which were laid during the training. Having got to know
European best practices and obtained more information on each other’s work, the agencies remain
keen on establishing the best possible horizontal enforcement of competition legislation in Georgia.
2) Abuse of dominant position; collective dominance
a) General Overview
Abuse of dominance was selected as a priority topic for training in 2016 for several reasons.
First of all, Georgian legal framework in case of dominance is very similar to that of the European
Union. Article 2 of the Law on Competition of Georgia lists “inadmissibility of the abuse of
dominant position” as one of the goals of the law. The Law defines the criteria for determination of
dominant position: “Dominant position of the economic agent is determined on the basis of its share
at the relevant market, financial condition of the competitor economic agents, market entry or
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production expansion barriers, buyers’ market power, availability of raw material sources, vertical
integration degree, network effects and other factors determining market power.” However,
assessment of each of these factors requires specific knowledge and experience, as well as the high
degree of coordination between lawyers and economists. The GCA lacked such skills.
Secondly, the challenge of enforcement of Article 6 of the Law on Competition (analogue of
Article 102 TFEU) also lies in the history of competition regime in Georgia. Previously (for many
years) Georgian legal framework turned around the concept of “monopoly” and the enforcer was
called “Anti-Monopoly Service”. This significant shift of focus from monopolies to the instances of
abuse of dominant position required thorough retraining of the GCA’s staff, as well as the awareness
raising activities for the business sector. Hence, training about evaluation of market dominance and
its abuse was considered to be crucial and was put in the first-year of the GCA’s Training Plan.
b) The Training and its practical outcomes
The second training (September 21-29, 2016) was held in the framework of the EBRD project
Capacity Building and Advocacy Support for the Georgian Competition Agency. 7 days intensive
law and economics training, co-sponsored by the GCA, was delivered by professors Yannis
Katsoulacos8 and Ioannis Kokkoris9. It was attended by 15 participants from the Competition
Agency, 2 participants from GNCC and 2 participants from the GNEWSRC, covered the issues of
abuse of dominant position / collective dominance and European enforcement practice against the
violations of Article 102 TFEU.
Notably, the speakers covered both, legal and economic aspects regarding the topics
mentioned above: Basic principles of competition economics; Market definition, market shares and
MP; Assessment of market dominance; the requirement of significant market power (MP) in
competition law; Direct vs. indirect assessment of Market Power; Why market shares are an
imperfect proxy of Market Power; Other factors that affect Market Power, including barriers to
8
Professor of Economics at the Department of Economic Science of the Athens University of Economics
and Business, former Commissioner of the Hellenic Competition Commission.
9 Chair in Law and Economics at the Centre for Commercial Law Studies, Queen Mary University.
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entry and expansion; Innocent sources of market power; Collective market power and its
assessment; Unilateral Exclusionary Conduct by Dominant Firms: Competition law of unilateral
abusive conduct; Concept of abuse, types of abuses (pricing and non-pricing including predatory
behaviour, exclusive contracts, refusals to deal/supply/licence, tying/bundling, essential facilities
doctrine, margin squeeze, excessive pricing), objective justification; Seminal case law; substantive
standards and legal standards in the assessment of exclusionary conducts; Issues in competition
policy enforcement in multi-sided markets; in depth economic examination of some abusive
practices; predatory behaviour; Exclusive contracts; Refusals to deal and so on. The trainings (both
legal and economic parts) were accompanied with practical group works, case discussions and
finally, two written exams (in law and economics), evaluating the progress of the GCA’s staff.
It should be noted that the representatives of the sectoral regulators participated actively in
the training. The trainers shared the European experience and specifically pointed to the fact that
former (state-owned or operated as well as private but equipped with special rights) monopolies
tend to retain dominant position on the market and often, these undertakings are subject of
competition-related complaints and antitrust scrutiny. Therefore, it is crucial that GCA and
relevant regulators work hand in hand, wherever necessary, to ensure the healthy level of
competition, whenever those markets become more liberalized. In this context, analyzing the
European experience whereby such issues have already been dealt with was of utmost importance
for Georgia.
The knowledge and experience acquired during the training were helpful in GCA’s ongoing
cases as well. For the time being, the GCA has been investigating the alleged abuse of dominance
in the sea ports market. The major privately owned port operator was sued by the private customs
terminals for the abuse of dominance. The complainants alleged that the attempt of merging the
port and terminal operations by the dominant port operator would result in excluding all other
private terminals from the downstream clearance and storage market. The GCA staff has relied on
the European experience discussed during this training in order to get the interim measures
(injunction banning putting in place disputed arrangements) approved by Tbilisi City Court and
later, Tbilisi Court of Appeals (by Order of 6 January 2017, Tbilisi Court of Appeals left the interim
measures proposed by the GCA in place).
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The GCA staff also continues to rely on the training materials and experience in the ongoing
process of investigation. Other parts of the training, notably, legal and economic aspects of market
definition, are routinely used in all ongoing cases, from pharma mergers to administrative
proceedings involving the health insurance providers. As mentioned above, the GCA staff also
prepared the presentation about abuse of dominance in energy and telecoms sectors to present at
the 9th meeting of Sofia Competition Forum.
3) Direct and indirect evidence in cartel cases; European practice
a) General Overview
The third selected topic for capacity building activities was evidence (direct and indirect) in
cartel cases and relevant European practice. This topic was chosen due to its utmost importance for
the GCA’s ongoing work, as fighting cartels is one of the key objectives of competition watchdogs.
Besides, the GCA’s first major case involved cartel in petroleum market. In 2015, the GCA
revealed and sanctioned the anticompetitive concerted practice in Georgian petroleum market and
used substantial fines against the cartel participants. The decision has been appealed to the courts
in 9 separate proceedings. In two instances Tbilisi City Court ruled in favor of the GCA, and two
cases are pending in front of the Court of Appeals. Due to the lack of local practice in competition
law, both parties, as well as the Georgian courts, rely heavily on European experience. Therefore,
it was of utmost importance to equip the GCA staff with the relevant EU practice.
b) The Training and its practical outcomes
The third training (October 19-20, 2016), held under the same EBRD project and cosponsored by the GCA, was focused on anticompetitive agreements, including direct and indirect
evidence in cartel cases, with relevant European and international practice. The training was led
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by Professor Frederic Jenny10. Professor Jenny is one of the globally recognized maîtres of
competition law and economics. His training was of immense practical importance, as it comprised
not only by the Prof. Jenny’s presentations but also enabled the GCA representatives to ask practical
questions pertinent to their ongoing cases.
The two-day training was attended by 17 participants from the Competition Agency, 2
participants from GNCC and 2 participants from the GNEWSRC. It covered vast amount of legal
and economic data and practical examples from the European Commission and EU courts:
Competition law of agreements; Concept of agreement, undertaking; Horizontal and vertical
agreements; Main types of anticompetitive agreements, including price fixing, bid rigging; Object
and effects infringements, facilitating practices, information exchange, tacit and explicit collusion;
cartel evidence; Detection tools, fines, leniency and settlements, damages. Seminal case law;
Economic theory of collusive behaviour: participation and sustainability constraints; Structural and
behavioural factors that influence cartel stability; Ex-ante and ex-post anti-cartel policies;
Sanctioning schemes, damage assessment and measuring the impact of anti-cartel interventions of
Competition Authorities, etc. The training also included practical element, i.e. classroom
discussions and solving a practical case in groups, under the supervision and final comments by
Prof. Jenny. The resulting knowledge and experience are now used by the Competition Agency
staff in their daily work.
Apart from the Petroleum cartel case, the GCA is currently investigating two cases of
(possibly) anticompetitive agreements. The GCA relies on the training materials and the EU
experience discussed thereby.
10
Professor at Economics Department and Director of International Relations at ESSEC Business school in
Paris, Co-Director of the European Center for Law and Economics, former judge of French Supreme Court
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III. Final Remarks
Considering the above mentioned, the trainings which were attended both by lawyers and
economists of the GCA, contributed massively to strengthening of the institutional capacity of the
GCA (as well as relevant sectoral regulators) and supported the increased approximation of the
Agency’s practice with its European counterparts. Apart from direct benefits of knowledge transfer,
the GCA staff also established valuable contacts with leading European professors and practitioners
of competition law and economics.
It should also be noted that the GCA has low staff turnover, therefore, the knowledge
obtained at the trainings are remaining at the Agency and are contributing to its establishment as
solid, trustworthy enforcer of competition legislation. In addition, the trainings with such reputed
competition professionals got the Agency positive publicity. Finally, the trainings were followed
by the joint presentations delivered by the trainers and the GCA staff to Georgian judges and
business community, which strengthened the GCA’s awareness raising efforts.
Considering the above mentioned, the capacity building activities held in 2016 can be seen
as one of the key building blocks in achieving the ambitions agenda set by the Competition Chapter
of the EU-Georgia Association Agreement, notably, the proper and procedurally fair enforcement
of “comprehensive competition laws” by the “appropriately equipped” authority. The trainings have
delivered theoretical knowledge and practical outcomes, enshrined in the GCA’s recent decisions,
and improved local and international cooperation, giving the Agency more ambitious future plans.
The GCA is going to continue its capacity building activities in 2017 as well, as foreseen in
the Training Plan. The following topics are envisaged to be covered by the trainings in 2017:
Name of the Training
Exemptions from the prohibition of
competition restricting agreements
Target Group
Competition Agency
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Number of
Participants
10 - 15
Leniency Program
Competition Agency,
Representatives of private sector
15-20
Definition of relevant market,
defining the product market (sectors:
pharmaceutical, agricultural, etc.
where it is problematic to define
relevant product market)
Competition Agency
10 - 15
Uncovering cartels in the process of
bidding (state procurement)
Competition Agency, State
Procurement Agency
15-20
Horizontal and Vertical Agreements
Competition Agency
10 - 15
The GCA welcomes any recommendations and/or best practices that our European partners
may be willing to provide in the process of strengthening the Agency’s institutional capacity, and
particularly, regarding the implementation of the GCA’s Training Plan. The GCA representatives
also remain available for the meeting in person for more detailed discussion of the said issues.
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