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Short Reads

Belgian prohibition on abuse of economic dependence comes into force and new fining guidelines

Belgian prohibition on abuse of economic dependence comes into force

Belgian prohibition on abuse of economic dependence comes into force and new fining guidelines

05.11.2020 NL law

In 2019, Belgium introduced legislation banning abuse in relationships between companies where there is no dominant position, but rather a position of economic dependence. The act entered into force on 22 August 2020. This category of restrictive practice applies alongside the existing prohibitions on cartels and abuse of a dominant position. It opens up new opportunities but also new threats for companies that are not in a dominant position.

Belgium has further modernized its competition law rules with new guidelines on fining policy, increasing the liability of companies, and clarifying the fines rules that will be applied to abuses of a position of economic dependence. At the same time, the leniency guidelines have been streamlined with the new competition Act of 2019.

Prohibition on abuse of economic dependence finally entered into force

The heat is on; in 2019, Belgium introduced legislation banning abuse in relationships between companies where there is no dominant position, but rather a position of economic dependence. The act now finally entered into force on 22 August 2020. This category of restrictive practice applies alongside the existing prohibitions on cartels and abuse of a dominant position. Non-dominant companies are well-advised to assess the position of economic dependency of their counter parts in order to ensure compliance with these rules. The other way around, companies in a position of economic dependence may have a new effective tool to combat abuse. The first procedures before ordinary courts have already started.

New guidelines on calculation of fines

The Belgian Competition Authority (BCA) has issued new guidelines on the calculation of fines for infringements of the rules on prohibited restrictive practices. The purpose of these new guidelines is to provide greater transparency and legal certainty for companies (and associations of companies) that are the subject of investigation regarding the possible level of a fine that may be imposed. It also includes guidelines for infringements of the new rules on abuse of economic dependence.

When calculating fines for undertakings for the infringement of Articles IV.1(1), IV.2 or IV.2/1 BCEL, or of Articles 101 or 102 TFEU, the BCA will in principle be guided by the Guidelines on the method of setting fines used by the European Commission. For the calculation, however, the starting point will be the Belgian turnover in relation to the infringement.

The new guidance also implies that for infringements of the prohibition on the abuse of economic dependence, similar rules will be followed. As a result, such infringements run the risk of being punished just as severely. However, where the maximum fine for infringement of cartel rules is 10% of the companies’ worldwide turnover (while until 2019 this was 10% of the Belgian turnover), the maximum fine for infringements of the rules on abuse of economic dependence is limited to 2% of the companies’ worldwide turnover.

New leniency guidelines

The BCA has also updated its guidelines on leniency, to bring them into line with the updated competition law rules in the new Book IV of the Code of Economic Law. The changes are only minor and have mainly been made to ensure uniformity. The guidelines list the conditions to be met in order to benefit from a total or partial exemption from fines in cartel cases, for both natural and legal persons. Abuses of a dominant position, abuses of a position of economic dependence, and vertical agreements that are not ‘cartels’ do not fall within the ambit of the notice.

 

This article was published in the Competition Newsletter of November 2020. Other articles in this newsletter:

 

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