Commercial Legal And Institutional Reform (CLIR) - Economic Growth

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COMMERCIAL LEGAL AND INSTITUTIONAL REFORM Diagnostic Assessment Report for the Republic of Bulgaria March 2002 After completing an investigation, the case-handling team transmits the file and a report to the commission. The parties to the case are summoned to a hearing before the full CPC. The parties may examine the evidence (with the exception of protected industrial or trade data). The CPC hears the arguments of the parties and questions them. It then conducts a deliberation in camera and reaches a decision. Immediately after the CPC makes its decision, an order is issued to the parties. At no point in these hearings, neither when the parties are present nor when the CPC deliberates as a body, is the staff that worked on the investigation present. Only the commissioner in charge of the staff is present acting as rapporteur. The staff that worked on a case should be present. An opinion explaining the basis for the order, i.e., the CPC’s “motivation,” is issued within 14 days of the hearing. The parties have 14 days after receiving official notice of the decision to file an appeal to the SAC. The motivations the CPC writes are essential to building a competitive culture in Bulgaria. Currently, CPC opinions are short and inadequate explanations of the bases for decisions. This is, in part, because of the legal and regulatory culture of Bulgaria. These insufficient explanations derive from the staff’s inadequate analyses and internal memoranda. Bulgaria does not have a history or legal culture in which powerful governmental agencies were compelled to explain their decisions publicly and justify their actions. Creating such a culture will take time and would benefit from assistance from credible and experienced U.S. and European institutions. Before such public explanations can be expected, young and inexperienced staff members need help as they progress through investigations and in preparing coherent memoranda that address all pertinent issues. Better-analyzed and justified published CPC opinions will emerge when the staff better understands the goals and purposes of the law. Likewise, better-written analyses will promote better public understanding of the purposes of the law and enhance confidence in CPC integrity. The CPC already enjoys some degree of respect. The private bar appreciates the CPC because it processes complaints and makes decisions quickly and inexpensively. They can obtain decisions on the merits from the CPC and then take the judgment for liability to court where they can obtain large money judgments. 4. Remedies. The CPC can prohibit a merger, recommend the revocation of a state aid, issue a cease and desist order, and issue fines. It can fine a company from 5,000 to 300,000 leva for a first-time violation and up to 500,000 leva for repeat violations. It can fine natural persons from 500 to 20,000 leva. Fines are payable to the state, not to the injured parties or disgorged to the public through an indirect compensation mechanism. The CPC is not empowered to determine and award damages. It has the power only to determine if a violation has occurred and to impose fines. Interested parties who seek damages up to 10,000 levs must go to the District Court and for greater sums to the Regional Court. 5. Commission for Trade and Consumer Protection. It appears that this agency is in the earliest stages of development. It has a large staff around the country. The focus of its Booz Allen Hamilton Page 54
COMMERCIAL LEGAL AND INSTITUTIONAL REFORM Diagnostic Assessment Report for the Republic of Bulgaria March 2002 enforcement actions appears to be on small individual disputes. The agency should be using its limited resources in a proactive way, seeking out large frauds, pyramids schemes, and health and safety hazards that have a broad impact on large numbers of consumers. SUPPORTING INSTITUTIONS 1. Supreme Administrative Court (SAC). The SAC is the ultimate body for judicial review of the decisions of the CPC. The SAC is composed of approximately 50 of the most experienced and qualified magistrates in the republic and is organized into chambers. No special chamber hears exclusively competition cases. Usually, the court sits in panels composed of three or five judges and, rarely, in plenary session. The two forms for judicial review before the court are appeal and cassation. On appeal, the case is heard by a panel of three judges who examine both points of law and fact. The panel can, for example, decide that the CPC incorrectly defined the relevant market and may reach a different determination. During the next stage of judicial review, cassation, cases are heard by a panel of five judges. In this phase, the court can only assess whether the decision conforms to the law. It may not remake factual determinations already established by the CPC or the appellate panel. The SAC has recently decided to limit the number of judges who review CPC matters to a few panels in Sofia. This is a positive development, as over time a small body of judges will become experienced and specialized in competition and unfair competition law. This should advance an atmosphere of predictability in the law, which is important to induce investment. 2. Law Faculties. Basics of Competition Law is an optional course for second- or thirdyear students in the University of Sofia Law Faculty. The lecturer is Mr. Metody Markov, who specialized in the subject in Germany. Few of those who practice competition law either in the private bar or at the CPC have taken this or any other university courses in competition law. Some recent university graduates have studied microeconomics and industrial organization, basic courses for competition concepts. Professors of these courses need encouragement, and the presence of visiting professors with years of life experience in applying the theory to actual situations would also be beneficial. 3. Nongovernmental Organizations (NGOs). NGOs have emerged in the consumer protection field, but not in the competition field. MARKET FOR REFORM IN COMPETITION LAW While many companies in Bulgaria are privately owned, more than half of the economy is still in public hands. Major industries such as tobacco, telecommunications, and energy are still government-owned. Booz Allen Hamilton Page 55
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Commercial Legal And Institutional Reform (CLIR) - Economic Growth

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