Commission on protection of competition addresses statement of objections to "Water supply and sewerage - Varna" Ltd for possible abuse of monopoly position
By Ruling № 1202/16.11.2023, handed down under case № KZK-445/2021, the CPC addresses statement of objections to "Water supply and sewerage - Varna" Ltd (ViK-Varna) for potential infringement of art. 21, item 1 of the LPC, consisting in transfer of the costs for building elements of the water supply network (WSN), in this account street plumbing pipes, water pipe diversions and fire hydrants, having the status of public property, to the owners of properties applying for connection to the WSN.
The outlined behavior may prevent, restrict or distort competition and affect consumer interests on the market for providing connection to the WSN operated by "Water supply and sewerage-Varna" Ltd by means of building the respective infrastructure needed for the purposes of providing a complex water supply and sewerage services in the territory of the municipality of Varna, Avren, Aksakovo, Beloslav, Byala, Vetrino, Wulchi dol, Devin, Dolni Chiflik, Dulgopol, Provadiya and Suvorovo and on the market for construction works, related to connection of new consumers to the WSN of the utility company, replacement and reconstruction of water and sewerage facilities of connected consumers.
As the CPC established, within its allocated territory, ViK-Varna is the only operator authorized to connect new consumers to the WSN for the purposes of the supply of drinking water and water for sanitary and industrial purposes, etc., wastewater and rainwater treatment.
The CPC reached the conclusion that the collected evidence substantiate the statement of objections and pertain to behavior which took place from 1.01.2018 to 11.10.2018 and which consists in incorporating, in breach of the sector regulation, in the agreements with consumers (current and future customers of ViK-Varna) obligations to pay for the construction of plumbing pipes and other facilities part of the network infrastructure, e.g. water pipe diversions and fire hydrants.
Following the assessment of the legal and factual context from which the relations between ViK-Varna and its’ clients emanate, the CPC expressed concerns that in addition to being a regulatory violation, the scrutinized behavior constitutes an abuse of monopoly position. The preliminary conclusions show that to achieve this result, ViK-Varna has abused its position of a single public provider of water and sewerage services in the allocated territory of Varna region, by making the connection to the WSN subject to the consumers’ agreement to bear the costs for construction of the necessary technical infrastructure forming part of the public network.
In the light of the antitrust provisions such behavior qualifies as an imposition of unfair trading conditions under Art. 21, item 1 of the LPC.
The addressee is entitled to file written objections within 50 (fifty) days as of receipt of the statement of objections.
On the grounds of Art. 76, para. 1 of the LPC, the addressee has the right to an oral hearing subject to explicit request to this end.