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Bulgarian Competition Protection Commission Launched E-commerce Sector Inquiry

Bulgarian Competition Protection Commission Launched E-commerce Sector Inquiry

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At the end of November 2021 Bulgarian Competition Protection Commission (CPC) launched inquiry of the consumer goods and services e-commerce sector (The Sector Inquiry). The Sector Inquiry is part of CPC's priority in the field of antitrust for 2021 to monitor constantly digital markets for prohibited agreements or practices as well as for abuse of dominant position. CPC also defines the e-commerce sector as one of its investigations top priorities in 2022.

CPC underlines that in the recent three years it has conducted several antitrust investigations concerning e-commerce sector. They have provided CPC with information about certain issues of the competition environment on the digital markets in Bulgaria. Thus, with launching the Sector Inquiry CPC follows the practice of the European Commission and of the national competition authorities in other Member States (the NCAs).

The Statistic

According to CPC, it focuses on digital markets now due to the blooming of the information technologies that has been further encouraged by the pandemic in the past two years. During 2021 CPC has monitored and analysed statistic related to e-commerce. CPC based its analyses on data collected from Bulgarian National Statistical Institute (NSI), Bulgarian E-Commerce Association and EuroCommerce.

As result, CPC finds that the growth of e-commerce in Bulgaria on annual basis within the last five years is between 21% and 35%. The expected growth in 2021 is 30% comparing to 2020. In addition, 30.9% of the customers between 16-74 years purchased online goods and services for personal use in 2020. Another reason for this growth is the increasing Internet penetration which in 2020 is 78.9% of the Bulgarian households.

NSI's data show that most of the people in 2020 purchased online clothes, shoes, and accessories (75.3%), followed by household goods (31%), sport goods (26.3%), hotel reservation and tourist packages (21.1%), cosmetics (20.8%), etc.

As per the CPC's initial findings Bulgarian consumers prefer to purchase goods and services via Internet from online merchants which are registered in Bulgaria (90% of the purchased goods in 2020). Further, 34.6% of the goods and services are purchased online from merchants in EU and 20.6% form merchants outside EU.

CPC expects e-commerce sector in Bulgaria to continue growing within the next few years because of the increasing Internet penetration, established habits for using online shops and trust in e-commerce.

The Aim of the Sector Inquiry

With the Sector Inquiry CPC aims to extent its knowledge about the functioning of digital markets in Bulgaria, especially in relation to the most popular consumer goods and services; how market powers affect the market participants' behaviour; and what are the impediments for the competition and growth of the e-commerce. CPC wishes to get a more detailed picture about the processes which are going on the digital markets. This will provide CPC with sufficient information whether any further measures are necessary to be undertaken for the proper development of the markets and the competition environment.

The CPC Powers

Within the Sector Inquiry CPC will determine the relevant markets and will investigate their structure and characteristic, entry barriers, market participants, level of competition, regulatory frame as well as existing self-regulations. On this basis CPC will make its conclusions about the competition environment of e-commerce sector.

For this purpose, CPC may request information and all kind of pieces of evidence, such as: written, tangible and digital, from all parties (e.g., suppliers, online shops, and customers) which are active on the relevant markets. Further, CPC may take oral or written explanations from the market participants and their contract partners. During the investigation CPC may use external experts as well as may request information and support from the other NCAs and European Commission. CPC is not allowed within sector inquiry to conduct on-site inspections.

What's next

If CPC finds serious indications for anticompetitive practices during the Sector Inquiry, CPC may open investigations for prohibited agreements/practices and/or for abuse of dominance under CPA and/or TFEU. CPC may also open investigations for early implementation of mergers without being notified to CPC or prior CPC's clearance under the CPA, if such evidence are found.

When CPC finds need certain legal or administrative measures for improvement of the competition environment to be undertaken, CPC will inform the respective competent state or local authorities, when the Sector Inquiry is adopted.

CPC will also send the Sector Inquiry to the National Assembly and/or Council of Ministers to be considered by preparation of strategies, programs or plans for development of the e-commerce sector, if any.

According to the CPC's practice so far, the final Sector Inquiry might be expected by the end of 2022. Considering the reasoning of the decision for launching of the Sector Inquiry, most probably CPC will follow the recent best practices of the European Commission and the NCAs concerning the e-commerce sector. Since e-commerce sector will be one of the CPC's investigations priorities in 2022, it might be expected CPC to focus on identifying hardcore anticompetitive practices concerning the most popular goods and services which to be further investigated.

By Mariya Papazova, Partner, PPG Lawyers

Bulgaria Knowledge Partner

Schoenherr is a leading full-service law firm providing local and international companies stellar advice that is straight to the point. With 15 offices and 4 country desks Schoenherr has a firm footprint in Central and Eastern Europe. Our lawyers are recognised leaders in their specialised areas and have a track record of getting deals done with a can-do, solution-oriented approach. Quality, flexibility, innovation and practical problem-solving in complex commercial mandates are at the core of our philosophy.

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