Sector analyzes

What is a sector inquiry?

The sector inquiry is an in-depth investigation of the competitive conditions in a given economic sector for a certain period of time. Using a number of specific mechanisms, the sector inquiry is of significant importance for maintaining an effective competitive environment.

Conducting sector inquiries of the competitive environment has been a competence of the CPC since 2003 when the provision of Article 7 (1) of the LPC (repealed) was supplemented. The Law on Protection of Competition provides the legal frame of the sector inquiries – as a material and legal order and as a procedure.

When and why shall a sector inquiry be conducted?

The CPC shall perform a sector inquiry in cases where the competition in a certain sector, branch, sub-branch or region may be prevented, restricted or distorted. In other words, a sector inquiry presupposes that there are indications for ineffective competition in a given sector and that there is a need for specifying the borders of the relevant market with a view to establishing in a systematic way the limitations that the participating undertakings face with regard to competition.

A sector inquiry can be conducted for the purpose of outlining the current situation of the competitive environment, the relevant characteristics and structure of the market, customer demand and the level of competitiveness in the respective sector.

Proceedings on conducting a sector inquiry

The proceedings on conducting a sector inquiry is constituted with a CPC decision as the reasons for the decision might be of different nature:

- a topical issue of social importance, related to competition and raised by state bodies and institutions, trade unions or economic organizations, the mass media;

- proceedings initiated by the CPC in the course of which it has been established that in a given sector, branch, sub-branch or region, there is a problem related to preventing, restricting or damaging competition;

- a signal to the CPC with regard to the competitive conduct and environment of a relevant market which raises well-grounded doubts about the presence of significant problems related to competition.

State and regulatory bodies, branch organizations, participants in the relevant market, etc. can be used as sources of information for conducting the inquiry. If possible, analogical analyses and/or decisions from the practice of the EC or of other national anti-monopoly institutions can be used.

Content of the inquiry

In the inquiry the condition of the competitive environment shall be determined and the specific problems for the period in question shall be outlined. The main factors and trends in the demand and supply of goods and services in the analysed sector shall be studied; the structure and competitive environment of the relevant market shall be analysed; the participants in that market shall be identified; the presence of restrictive barriers to entry shall be established; the degree of market concentration, sector dynamics, the regulatory framework and the self-regulation shall be determined.

Wherever it is expedient and possible, recommendations shall be given to state institutions and the economic operators for improving competition in the respective branches. In addition issues that need specific attention and monitoring on the part of the CPC shall be formulated with a view to counteracting anti-competitive practices and encouraging effective competition.

What is the sector inquiry used for?

The sector inquiry can be used:

- in other proceedings for unifying the practice of the CPC in defining the relevant market from a product and geographic point of view, as well as in determining the competitive environment, etc.;

- as a reason for initiating proceedings if data for infringements has been established in the course of the inquiry;

- in exercising the controlling competence on the part of the sector regulatory bodies in the relevant market;

- in cases of amending the legislation in the sector by the state bodies and institutions with a lawgiving initiative.

If the inquiry establishes that certain factors exert a negative effect on the competitive environment, such as the presence of anti-competitive practices, imperfections in the legislation or lack of a regulatory regime, the CPC shall formulate specific recommendations directed to improving the competitive conditions in the relevant market.