Competition Agency of Georgia Annual Report 2017 Tbilisi, 2018 Fair Competitive Environment for Business Development 2017 turned out to be a very significant year in terms of establishing competitive environment in Georgia. Although the Competition Agency started functioning just three years ago, during this period, especially in 2017, successful events led us to increase awareness of the Agency and trust towards it. Our small, however, highly professional team works daily to achieve our core goal – establishment of one of the main factors for development of business and economy in the country, free, fair, and healthy business environment, where the success can be achieved only through hard work and fair competition. During last year, our activities encompassed all directions of competition policy, confirmed by the following report. We proceeded 2017 with working on improvements in our organizational structure and procedures, capacity building of the staff, increasing awareness of the Agency, and deepening international cooperation. The European Union support to the Agency is vital to improve our future activities. Project “Support to the Georgian Competition Agency,” launched in 2017, contemplates increase of our capacity that includes improving legislative framework, refining procedures, capacity building of the Agency and its partner organizations, and increasing public awareness of competition related issues. It must be noted that in 2017 we held first international scholarly and practical conference, dedicated to the 25th anniversary of establishing the Georgian competition policy. In process of organizing the conference, priceless contribution was dedicated from Ivane Javakhishvili Tbilisi State University, European Bank for Reconstruction and Development (EBRD), IOS Partners, and N(N)LP Competition Institute of Georgia. The importance and scope of the event is shown by the fact that the representatives of competition authorities of Austria, Belarus, Estonia, Turkey, Lithuania, Latvia, Moldova, Poland, Romania, Armenia, Ukraine, Czech Republic, and the heads of Georgian executive, legislative, and judicial authorities participated in it. We hope that organizing similar events will become a tradition. 1 Obviously, lots of wishes were unfulfilled in a very interesting and tense year of 2017; however, our desire, support of the partners, cooperation with the European Union and leading international organizations in the sphere of competition, increased confidence of business guarantee the future success. Nodar Khaduri Chairman of the Competition Agency 2 Introduction Role and importance of competition is acknowledged by the supreme law of the country, the Constitution, obliging the state to support the development of free trade and competition. Notably, in 2017, 25th anniversary of establishment and practical realization of competition policy was celebrated in Georgia. 25 years has passed since the country established the first bylaw regulating competition in Georgia. However, Competition Agency of Georgia, as first independent Legal Entity of Public Law was established less than 4 years ago. The Competition Agency is accountable to the Prime-Minister and the Society of Georgia. The principal objective of the Agency is to implement competition policy, establish and preserve competitive environment in Georgia, and therefore, detect and eliminate all types of anti-competitive conduct. Our Main goals and messages: . To guarantee open, efficient and result-oriented activities; . To raise public awareness of the Agency and issues related to competition; . Capacity building of the Agency staff to ensure high quality and result-oriented work; . To implement new projects oriented to the development; . To increase trust in society and business. According to the statute approved by the Government of Georgia, the Agency consists of 4 structural units: Economic Competition Protection Department; Market Monitoring and Analysis Department; Legal Department; Administrative Department; As of 31 December of 2017, there were 42 employees in the agency. 3 Parallel to the daily work and activities to ensure fair competition in the country, we devote our efforts to become a worthy member of worldwide competition family. Active participation in international activities and close cooperation with competition authorities of various countries as effective tool to obtain information and exchange experience, are among the priorities of the Agency’s performance. The below report presents the key activities of Competition Agency of Georgia conducted in 2017: investigations and market monitoring, concentrations and state aid, recommendations issued to improve competitive environment, ongoing international projects in the Agency, raising public awareness on competition issues, signed Memorandums of Understanding, implementation of international obligations and other directions. We want to thank any person, authority or donor organization for their contribution in the activities conducted by Competition Agency of Georgia in 2017. Hopefully in 2018 we will be more enthusiastic in enforcing efficient competition policy and establishing healthy competitive environment. 4 1. General Statistics of the Agency's activities In 2017, in the frames of the legislation, Competition Agency of Georgia received 1107 and sent 1712 letters, administered 504 internal correspondences, and issued 364 orders. Volume of Business Corespondence in 2017 1800 1712 1600 1400 1200 1107 1000 800 600 504 364 400 200 0 Internal Orders შემოსულიReceived გასულიSent შიდა კორესპონდენცია ბრძანებები Corespondence კორესპონდენციაCorespondence კორესპონდენციაCorespondence During the same year, the Agency conducted investigations of 6 commodity/service markets, 5 of which were completed in 2017. The Agency issued 10 recommendations to the state authorities and undertakings in order to improve competitive environment of relevant markets. In 2017, the Agency was monitoring 5 commodity/service markets; During 2017, the Agency reviewed 2 concentration notifications and 1 state aid application; 3 of applications/complaints submitted to the Agency were dismissed due to failure to meet legal requirements of application form and/or to correct the application gaps. Also, following activities were held in 2017: . 23 advisory council meetings of the Chairman were held with over 50 issues discussed; . 12 seminars/conferences were held to raise awareness of competition related issues among state authorities, business representatives and public sector; . Up to 30 capacity building events (study tours, trainings, and etc.) were held for the staff of the Agency; . 2 of the applications regards possible violation of competition law submitted in the Agency were redirected to the sector regulators due to provisions of law; . The Agency is currently examining admissibility of 1 complaint submitted in 2017. 5 2. Investigations 2.1. Completed Investigations In 2017, Competition Agency of Georgia completed 5 commodity/service market investigations. Out of mentioned investigations 1 was conducted on the basis of the Agency’s initiative, 4 were conducted on the basis of the submitted Application/complaint. Base of Investigation 20% სააგენტოსBased on the ინიციატივაAgency's Initiative სააგენტოშიBased on the წარდგენილი Complaint საჩივარი 80% 2 investigations concerned the alleged violation of the Article 10 of Georgian Law on Competition, 1 case concerned alleged violation of the Article 6, 1 was on alleged violation of Articles 7 and 113, 1 investigation concerned alleged violation of the Articles 7 and 10. კანონისAlleged მეVaiolation-6 მუხლის of Article შესაძლო6 დარღვევა კანონისAlleged მეVaiolation-7 მუხლის of Article შესაძლო7 დარღვევა კანონის მე-10 მუხლის შესაძლო Alleged Vaiolation of Article 10 დარღვევა კანონის მე-11³ მუხლის შესაძლო Alleged Vaiolation of Article 11³ დარღვევა 6 Investigation of Poti Port Case Investigation on alleged violation of the Article 6 (abuse of a dominant position) of Georgian Law on Competition by JSC “Corporation Poti Sea Port” (hereafter Poti Port) was started on the basis of complaint jointly submitted by 14 terminal companies. During the investigation process, the number of complainants was increased and additional information was submitted by six maritime companies. The complaint referred to the order, considered to come in force from April 1st, 2016, issued by Poti Port, indicating an integrated tariff set by Poti Port on the services of unloading the cargos, transportation on the territory of Poti Port territory, and warehousing. On the basis of the Agency intercede, on June 24, 2016, Tbilisi Civil Court suspended the order of Poti Port temporarily, till the end of the investigation. During investigation process, the Agency requested all necessary information from the state authorities and relevant undertakings, held meetings with the representatives of complainant companies, Poti Port, maritime and cargo transportation companies; consultations were received from the relevant state authorities. For on sight examinations, the investigation group members visited Poti Port and the terminal companies. On the basis of analysis, the Agency concluded that a new tariff plan of Poti Port would have limited competition in cargo transportation and terminal service markets and harmfully affect the consumers’ interests. Although the Agency analyzed Poti Port opinion regards security and efficiency improvements, distortion of competition could not be justified with existing circumstances.