Commission Report 2002 (Slovakia)

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 6: Competition policy

Progress since the last Regular Report

Since last year's Regular Report, Slovakia has made further progress in this area.

In the anti-trust field, the Slovak Parliament adopted in June 2002 an Act on Group Exemptions from the Ban on Agreements Restricting Competition. The Act aims to harmonise Slovak national legislation with several sets of Community rules, including various block exemptions on vertical and horizontal restraints. It also includes a minor amendment to the Competition Act introducing a simplified procedure when dealing with certain mergers.

In terms of administrative capacity, in 2002 an increase in the number of staff of the anti-Monopoly Office to 75 (from 65) was approved by the Slovak Government. Of this increased number, 38 would be case-handlers directly involved in the implementation of anti-trust legislation. As far as enforcement is concerned, the Slovak anti-Monopoly Office in 2001 adopted 167 decisions of which 24 concerned agreements restricting competition, 25 abuse of dominant positions, and 118 mergers. Of these, 9 decisions (including 2 imposing fines) prohibited vertical or horizontal restrictive agreements. There have been no prohibition decisions on abuse of dominance,. However, in 2002, several resource-intensive investigations into international merger cases led to approval decisions subject to substantive conditions.

In the field of state aid, a revised Act on State Aid entered into force in November 2001 which broadly brings Slovak legislation in this field in line with Community acquis. In particular, the Act updates Slovakia's rules on regional aid and on aid to the sensitive sectors, and also incorporates the key provisions of the recent Community block exemptions on aid to small and medium-sized enterprises, on training aid and on de minimis aid. An Act on Investment Incentives which entered into force in January 2002 brought the conditions for granting certain investment incentives broadly into line with the acquis. Also, in June 2002 the Slovak Parliament adopted an act amending the existing fiscal aid schemes under Articles 35 and 35a of the Income Tax Law. This will enter into force on 1 September 2002. As a result, all new aid granted in accordance with these provisions from the tax year 2002 must comply with the relevant state aid rules. Both the Act on Investment Incentives and the revised Act on Income Tax provide for individual ex ante monitoring of all aid projects by the Slovak State Aid Office (SAO). In addition, during the reporting period, a new regional aid map was proposed by Slovakia with maximum aid intensities of 20% net for the Bratislava region and 50% net for the rest of the country, thereby taking into account the latest regional GDP figures. In January 2002, Slovakia presented to the Commission a state aid inventory covering cases approved in 2000 and 2001.

As regards administrative capacity, a Government proposal to merge the SAO with the anti-Monopoly Office was rejected by the Slovak Parliament in June 2002. The current status of the SAO was thus left unaltered. The State Aid Office foresees an increase in its staffing level from 35 in June 2002 to 45 by the end of the year. There are currently 22 case-handlers. During the period under review, the SAO undertook considerable efforts to strengthen its capacity, in particular by launching several training initiatives, including internships with relevant institutions within the EU. Substantial efforts to raise awareness of the state aid rules among aid grantors were undertaken.

In terms of enforcement, in 2001, its first full year of operation, the State Aid Office adopted 150 decisions, and during the following six months, a further 55 decisions. During this 18-month period, the SAO issued 10 negative decisions. One such decision was appealed against and upheld by the Supreme Court. The SAO played an important role in the conversion of incompatible existing aid measures into compatible benefits. In addition, the SAO also improved its internal procedures and has thereby made good progress towards a satisfactory level of enforcement.

Overall assessment

As regards antitrust, the Slovak Act on the Protection of Competition covers the main principles of Community anti-trust rules as regards restrictive agreements, abuse of dominant position and merger control. Since this Act has been complemented by the new Act on Block Exemptions as of June 2002, the Slovak legislative framework is to a large extent compatible with the acquis. As for administrative capacity, the anti-Monopoly Office functions well, with a good track record and a continued high level of staff training. It is understood that the Office will continue to actively develop its resources, in particular in view of the planned modernisation and decentralisation of the application of EU anti-trust rules. In order to further strengthen the enforcement record, efforts should continue to give priority to cases concerning the most serious distortions of competition, and more deterrent sanctions should be applied. In general terms, an increased awareness of the anti-trust rules, particularly among the business community should be fostered. Training of the judiciary is also required.

As regards state aid, the State Aid Act encompasses the main principles of state aid control, although Slovakia will have to continue to update its legislation in line with recent developments in the acquis, such as the Community Rescue and Restructuring Guidelines, and the Guidelines on environmental aid. On the question of steel, state aid granted in Slovakia is not compatible with Protocol 2 of the Europe Agreement. This issue needs to be addressed as a matter of urgency.

As regards transparency, state aid reports have been submitted for the years up until 2000. They now follow closely the methodology and presentation of the European Commission's survey on state aid in the EC and are of satisfactory quality. The State Aid Office has improved its functioning markedly, although further training efforts are necessary. It is now building up a track record of enforcement. Efforts should continue to further increase awareness of state aid rules among market participants, as well as aid grantors and the judiciary.

Conclusion

In its 1997 Opinion, the Commission concluded that Slovakia was progressing satisfactorily as regards alignment with the acquis in anti-trust legislation, though considerable efforts were necessary as regards state aid control.

Since the Opinion, Slovakia has made steady progress in adopting anti-trust legislation, developing the anti-Monopoly Office's administrative capacity and establishing an enforcement record. More recently, good progress has also been made in adopting state aid legislation and increasing transparency of the system, as well as in developing administrative capacity in the State Aid Office. An enforcement record is also emerging, although further strengthening will be necessary in this respect. Overall, on legislative alignment, administrative capacities and enforcement record Slovakia is reasonably advanced.

Negotiations on this chapter continue.

In order to complete preparations for membership, Slovakia's efforts now need to focus on ensuring that it continues to update its alignment as the acquis in this area evolves and, most importantly, on continuing to develop a track record of proper application and enforcement of both anti-trust and state aid legislation.

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