CPC sanctions “Water supply and sewerage – Varna” Ltd for abuse of a monopoly position
By Decision № 307/21.03.2024, ruled on case № KZK-445/2021, the CPC imposed a pecuniary sanction of BGN 336 146 to “Water supply and sewerage – Varna” Ltd (ViK-Varna) for violation of art. 21, item 1 of the LPC, consisting in transfer to the owners of properties, candidates for connection to the water supply network (WSN) of the costs for the construction works related to building elements of the WSN, in this account street plumbing pipes, water pipe diversions and fire hydrants, having the status of public property.
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 performance of 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 in the period from 1.01.2018 at least until 11.10.2018 ViK-Varna, in contradiction with the sectoral legislation, has incorporated in its 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 has established that in addition to being a regulatory violation, the scrutinized behavior constitutes an abuse of monopoly position. The 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.
By the decision in question, the Commission imposes on VIK Varna a behavioral measure, according to which the company should, within 60 days from the notification of the decision, amend the standard contracts for connection to the water supply and/or sewerage system by editing and/or incorporating in them the relevant clauses to ensure in a non-contradictory, clear and unequivocal manner that VIK Varna will bring the infringement to an end.
The decision of the Commission may be appealed before Administrative Court – Sofia Region by the parties to the proceedings or by any third party that has legal interest within 14 days.
The full text of the Decision is available in the public electronic register of the CPC: http://reg.cpc.bg/