Comprehensive Strategy in Competition Policy: Future Plans of Georgian Government

05 September, 2011
In 2010, the Georgian Government drafted the Comprehensive Strategy in Competition Policy because competition is one of the priority areas for the commencement of the multilateral negotiations regarding the free trade agreement between Georgia and the European Union (DCFTA). According to this document, the Georgian Government is planning to implement institutional changes in the field of competition and, specifically, to reform the Free Trade and Competition Agency. The plan is to create a competition agency that will be the sole authority responsible for the enforcement of competition laws and will therefore assume the functions of the current sector regulators in terms of competition. The document aims to introduce ex-post regulation of concentration (merger control, direct or indirect acquisition of control of companies) in the liberal sectors (i.e., sectors that are not regulated) and ex-ante regulation in the non-liberal sectors (where the regulation is carried out by the independent regulatory authorities). The strategy also implies requiring companies to notify the competition authority in advance of future plans concerning a merger or acquisition of another company. This means that, while, according to the current model, a company working in the communications sector has to notify its sector regulator, according to the strategy, the information will apparently only be sent to the competition agency. As a result, the main powers of the independent regulatory bodies (namely, researching market competition, identifying companies that have important market power and giving them specific obligations, such as tariff regulation) will effectively be limited. We believe that, without these powers, it will be impossible for these regulatory bodies to perform their work successfully. The proposed model produces, on the one hand, a competition regulation agency with universal authority and, on the other hand, weaker sector regulators. Transparency International Georgia believes that, in order to create and develop a competitive environment, it is necessary to divide functions effectively between the authority of the independent regulators acting in different business sectors and the authority of the competition agency, as suggested by the international experience. This will ensure effective regulation of the market. The organization also believes that strong evidence must be presented in order to justify such radical changes in the country’s legislation and it is necessary to design Georgian legislation according to the European legal experience when such an important strategy is being drafted.
Author: Natia Kutivadze