Blog Sofia

Can the court replace CPC in establishing violations of the competition law?

The Protection of Competition Act (CPA) provides the opportunity any natural or legal person who suffers damages, caused by infringement of competition rules, to claim compensation. The right to compensation is available to every person who suffered damages, even person to whom the infringement was not specifically directed. The essential question relating to such type of claims is whether the violation of the competition rules must be established by an effective decision of the Commission for Protection of Competition (CPC), authorized to monitor for compliance with the national competition law and Art 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). In case of CPC considering that a person by its own conduct has committed a violation of the CPA, CPC gives its decision by which imposes sanctions on the offender and usually also provides for the termination of the infringement

What is particularly interesting however, are the cases in which civil court is seised of a claim for damages caused as a result of actions of abuse of dominant position or unfair competition, in absence of decision by CPC declaring the infringement. The question in such cases is whether the civil court is competent to replace CPC in establishing the existence of the violation. The Act does not provide an answer to this question, therefore clarification may be sought in the case law, albeit it being scarce.

Abuse of dominant position

Dominant position of an enterprise is defined as a position of economic strength, enjoyed by the enterprise, which enables it to prevent the maintenance of actual competition in the relevant market. This, to a large extent, allows the enterprise to behave independently of its competitors, suppliers and buyers. The national legislation (CPA) on abuse of a dominant position is fully consistent with the provisions of Art 102 TFEU and Regulation (ЕО) № 1/20031 which implement binding EU rules on competition. The Supreme Court of Cassation (SCC)in its Ruling № 520/28.07.20142 provides an answer to the question whether a civil court is competent to establish the existence of a dominant position in relation to a claim for damages. The Ruling clarifies that the Act institutes the exclusive competence of the CPC to make assessments and determine in which cases a dominant position is present, and states that a civil court cannot replace CPC in this regard. SCC takes the view that our national legislation has set CPC as the body responsible for the implementation of Art 101 and 102 TFEU and the Supreme Administrative Court (SAC) as the body which acts as an instance for judicial review in relation to the types of acts of CPC. Accordingly, the civil court hearing the claim for damages as a result of anti-competitive behaviour is bound by the binding force of the decisions of SAC, confirming or rejecting the established by CPC violation. The claimant however, shall convince the court that there was a breach from the violation, to prove the causation between the breach and the damage and to justify the amount of the damage. The conclusion from the aforementioned Ruling of SCC is that the court has no jurisdiction and that it cannot replace CPC in establishing the abuse of a dominant position. This conclusion is entirely logical, since the opposite solution to the question will virtually mean that CPC would be deprived of its special competence to monitor the compliance with the competition law.

Unfair Competition

Unfair competition is any act or omission in the conduct of business which is contrary to fair trade practice and which harms or may harm the interests of the competitors. Unlike abuse of a dominant position, unfair competition as a violation is not listed as such in the provisions of Art 101 and 102 TFEU and thus the binding EU rules on competition does not apply to this type of violation. In this respect, in Germany, for example, there is a separate Law against unfair competition, and in France in case of damages caused by unfair competition, the civil court applies the general rules of tort governed by the French Civil Code. In Bulgaria there is no explicit legislative regulation and binding case law. What is particularly interesting however, are several civil court decisions based on tort law on claims for damages resulting from unfair competition. In these cases, the civil court held that it had jurisdiction to establish violations of the CPA.

Thus, for instance, in connection with the decision of the District Court – Burgas dating 20133 , the court heard a case regarding a claim for damages caused by a breach of an agreement for the protection of trade secrets and carrying out unfair competitive activity. The court analyzed in its decision and examined whether, in this particular case, an unfair competition was carried out, stating that violation of the competition rules has not been proven.

The question whether an unfair competition has been carried out or not is discussed also in a decision of Sofia City Court from 20154 . The court points out that there is an unfair competition, aimed at attracting clients, resulting in termination or violation of contracts, or preventing the signing of contracts with competitors. The court has established an outflow of customers and orders for supply of goods from one company towards a second company, which has created an unfair advantage in favour of the latter on the geographic and product market developed by the first company, and this behaviour constituted a violation of the fair trade practice.

In a decision of the Regional Court – Varna (2015), the court has found that the operator of the electricity distribution network, carrying out the activities of supplying and transmitting electricity as well as connecting producers to the network, has an obligation to implement a shut-off system that must be able to ensure an equal and uniform limit to all producers, so as to avoid the possibility one or more producers to be restricted to a greater extent compared to others. The court held that any failure to comply with this obligation constitutes unfair competition.

In the aforementioned court decisions, the findings of unfair competition were made by the court during the general claim proceedings and not pursuant to the special Protection of Competition Act by the specialized body CPC. In this process, if the person concerned can prove damages in causal connection with the conduct constituting unfair competition, that person will be compensated directly without the need of having an effective decision taken by CPC establishing the infringement, which would definitely delay the awarding of compensation by the civil court after that.

The provision of faster and more effective protection to victims suffering damages should be a priority for the Bulgarian courts, something that “justifies” the abovementioned decisions. On the other hand, currently the legislative solution, giving rise to seek damages from both the abuse of a dominant position and unfair competition is contained in the same legal provision (Art 104 CPA) which actually means that the order for compensation of damages in both cases is the same. The absence of any explicit legal distinction between the two situations and the lack of any binding case law creates legal uncertainty as to what would be the outcome of the claim brought directly before the court. However, the balance is currently tipped in favour of the court in cases of unfair competition.

The article has been published in Bulgarian, in Capital Daily:

www.capital.bg

1Regulation (EC) № 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Art. 81 and 82 of TFEU.
2Order № 520 / 28.07.2014 of the SCC, second commercial division.
3Decision № 842, 05.18.2013, case № 8674/2012, the Regional Court -Burgas
4Decision № 2414, 14.04.2015 г. case № 16573/2013, Sofia City Court

In focus in Bulgarian legislation and court practise

For and against the changes in the Election Code

As of May 26, 2016 amendments to the Election Code come into force. The main changes are comprised in several directions:

  • The Code introduces a compulsory voting, specifying that the name of each citizen who has not exercised his right to vote in two consecutive election of the same type will be written off the voter lists for the next elections;
  • The ballot paper will contain additional option stating “I do not support anyone”;
  • A new experimental electronic voting is provided, aiming to ensure greater opportunities for Bulgarian citizens abroad to participate in elections through remote electronic voting. The concept will take effect after January 1, 2018 and will be used in three consecutive elections, including partial (regional) elections, in one region of the country.
  • Polling sections abroad will only be located in embassies and consulates. There are two exceptions to the rule. Polling stations in EU Member States with no Bulgarian diplomatic missions or consulates will only be formed if at least 100 voters have applied to exercise their vote. Polling station in non-EU countries with no Bulgarian embassies or consulates present, in accordance with the decision of Central Election Commission on the proposal of Ministry of Foreign Affairs, will be open in cities with a population over a million. The section shall be open if at least 100 voters have applied and expressed their willingness to exercise their right to vote.

The adoption of the above provisions was accompanied by a wide public reaction. After the second reading of the Bill, the President of Bulgaria exercised his right and vetoed the new Code and returned to Parliament the controversial points relating to polling sections abroad for further debate. The motive was the inequality among Bulgarian citizens on the basis of personal status (location of residence abroad) in exercising their right to vote. According to Art 6 of the Constitution of Republic of Bulgaria all citizens are equal before the law and neither abridgement of rights nor any privileges whatsoever shall be admissible on the basis of personal status. The Parliament, however, rejected the veto of the President.

The Court annuls Decision SP-1 for the net specific generation of electricity from RES

On July 31, 2015 the Energy and water regulatory commission (EWRC) published on its website Decision SP-1 setting the maximum levels of net specific production of electricity from renewable energy sources, to be purchased under preferential price. Few hours later such Decision was unavailable. On 03.08.2015 EWRC published again on its website a decision with the same number and date (Decision SP-1/31.07.2015), which for some producers of electricity from solar power plants has different content than the originally published one.

With its judgment as of 16.05.2016 under administrative proceedings initiated by the prosecution, Sofia Administrative Court has annulled Decision SP-1 published on 03.08.2015, considering that the amendments in the values of net specific production were made in substantial violations by EWRC, which lead to lack of will for adoption of this act. On the other hand, according to the judgment Decision SP-1 initially published on 31.07.2015 has caused legal effect.

The judgement of Sofia Administrative Court is not final yet, being subject to appeal before the Supreme Administrative Court. In case that the latter confirms this judgment and Decision SP-1 published on 03.08.2015 is finally declared null and void, but at the same time Decision SP-1 published on 31.07.2015 remains valid, this will cause additional uncertainty with regard to the applicability of the controversial Decision SP-1 and the outcome of the numerous pending appeals of renewable producers against it.

New Law defends the rights of the foreign employees in Bulgaria

As of May 21, 2016, an entirely new Labour Migration and Labour Mobility Act comes into force, which aims to harmonize Bulgarian legislation on free movement of workers and employment of foreigners – citizens of third countries on the territory of Republic of Bulgaria with European standards. As an addition the Act strives to codify the legislation in this field, which at that time is fragmented into different types of regulations (mainly the Law on Employment Promotion and its regulations). The provisions of the Act expressly preclude any forms of discrimination and set out the conditions under which access shall be granted to a citizen of a third country to the Bulgarian labour market, namely if the citizen: (i) has an employment contract with a local employer; (ii) is on a business trip or is sent within the provisions of service on the territory of Republic of Bulgaria; (iii) is transferred as a result of intra-corporate transfer; (iv) performs self-employment activities. New requirements are introduced for appointment to an office in Bulgaria. It is necessary: the employer to conduct a preliminary research on the labour market; the total number of foreign employees of the local employer should not exceed 10 per cent of the average number of payroll employees Bulgarian nationals, or nationals of other EU Member States in the previous 12 months; the working conditions and payment should not be less favourable than those offered to Bulgarian citizens for the labour category; foreigner has specialized knowledge, skills and experience. It is provided that granting an access should be allowed by decision of the Executive Director of the Employment Agency within 30 days after application, except in cases of highly qualified employment for the EU Blue Card-15 days. The term of the contract with the local employer is the duration for which the access is granted, but no longer than 12 months. In addition, the new Act aims to ensure the protection of Bulgarian citizens exercising employment in the territory of third countries, and provisions are provided ensuring a great amount of obligations for persons with whose assistance and mediation Bulgarian nationals work in third countries.

In force as from May 21, 2016, there are amendments to the Foreign Nationals Act that regulate the conditions of residence of third-country nationals in the Republic of Bulgaria, who fulfil the conditions for access to the labour market within the meaning of the Labour Migration and Labour Mobility Act. The new provisions envisage conditions for authorization for continuous residence of persons wishing to have access to self-employed activities, workers seeking employment on a seasonal basis for a period up to 90 days, as well as persons transferred to Bulgaria as a result of intra-corporate transfer.

Longer terms of the concession agreements

The public consultation on the proposed new Law on Concessions ended on May 10, 2016. The new bill provides for annulment of the currently in force Concessions Act and the Act on Public Private Partnerships. The bill sets out three types of concessions: for construction, for services and for opportunity to use state and municipal property. The procurement procedures for construction and services will provide the opportunity contracts to be signed for a long period of time, not as it is currently 35 years. The new kind of concession for usage will have a maximum duration of 25 years. Two new procedures for concessions are introduced- competitive procedure with negotiation and the competitive dialogue. A new feature is the proposal concessions to be awarded directly by the ministers and mayors, while the Council of Ministers and municipal councils will endorse the main acts relating to the awarding and implementation of concessions. The new Act implements a “European Threshold” for concessions for construction and services that are worth over 5,225 million euro. In this case, the procedure is covered by the European Directive on Concessions. Concessions for the extraction of mineral resources are excluded from the scope of the bill.

Supreme Cassation Court on the issues concerning road traffic offenses

At the request of the Prosecutor General Sotir Tsatsarov and Justice Minister Ekaterina Zaharieva, the Criminal Division of the Supreme Cassation Court is about to rule on a number of issues concerning road traffic offenses. The controversy was triggered by the judgment of Supreme Court judges, who reduced the sentence of Dian Stanchev, who hit Lora Kazanlieva on a walkway in Varna and caused her death. To issue the controversial judgment, the magistrates have taken into account that the deceased Lora, although crossing the walkway, had contributed to the accident. The judgment provoked a wide public response.

News on European Union Law

New Customs Code of the EU

As of 1st of May 2016 a new set of Customs rules of the European Union, which creates Union Customs Code, valid throughout the customs territory of the EU enters into force.

The purpose of the new provisions is to allow better consumers protection against illegal and counterfeit goods which do not respect European environmental, health and safety requirements.

The new Code provides for the use of new information systems that will provide fast data of the quality for the exchanged goods and will allow for much closer coordination and control between the administrations of the Member States. Moreover, it allows traders to clear customs procedures more simply and quickly, consumers to receive goods faster and cheaper.

EU General Court confirms that German law on renewable energy involved State aid

With its Judgment as of 10 of May 2016 the General Court confirms that the German law on renewable energy of 2012 (the EEG 2012) involved State Aid. The EEG 2012 laid down a scheme to support undertakings producing electricity from renewable energy sources The law thus guaranteed those producers a price higher than the market price. In order to finance that support measure, it imposed an ‘EEG surcharge’ on the suppliers to the final customers, which in practice was passed on to the final customers. However, certain undertakings, such as electricity-intensive undertakings in the manufacturing sector were eligible for a cap on that (passed on) surcharge in order to maintain their international competitiveness. In its decision of 25 November 2014, the Commission found that, although the support laid down by the EEG 2012 for undertakings producing electricity from renewable energy sources constituted State aid, that aid was, however, compatible with EU law. It also classified the reduction in the EEG surcharge for electricity-intensive undertakings as State aid. Since it took the view that those reductions were for the most part compatible with EU law, it ordered recovery in respect of a limited part of the reductions only. This decision was contested by Germany.

However, in the present judgement the General Court rejects all the arguments by which Germany sought annulment of the Commission’s finding that the EEG 2012 involved State aid and it dismisses the action in its entirety. According to the Court, the Commission was correct in taking the view that the reduction in the EEG surcharge for electricity-intensive undertakings conferred upon them an advantage within the meaning of EU law on State aid as well as that the EEG 2012 involved State resources. The motives of the General Court are that the mechanisms under the EEG 2012 result, principally, from implementation of a public policy, laid down by the State through the EEG 2012, to support producers of EEG electricity.

ECJ to decide about the controversially awarded remunerations to legal advisors

The Bulgarian courts have the practice to award lawyers remuneration for the benefit of legal entities and sole traders if they are represented by legal adviser according to the provisions of Art 78, para 8 of the Bulgarian Civil Procedure Code. However, it is very often debated whether the awarding of lawyer remuneration to legal advisor is in compliance with the EU law. In this respect, by virtue of order from April 26, 2016 the Sofia Regional Court referred a preliminary ruling to the European Court of Justice, requesting an interpretation of the provisions of Bulgarian legislation in relation to European standards and determination whether the rules for competition protection, outlined in Art 101, §1 TFEU and Directive 77/249 / EEC regarding facilitation of the effective exercise by lawyers of freedom to provide services, have been violated. In its request, the court points out arguments concerning the difference in the status of lawyer and legal advisor. As a rule, legal advisers work under an employment contract and the amount payable to their employer in the event of a favourable outcome of the case does not affect their remuneration. Lawyers, on the other hand, are subject to admission to the Bar after examination and the law even contains a restriction to their right to appear before some courts, which ceases to have effect after the acquisition of a certain professional experience and seniority. However, there is no such restriction for the legal advisers. Lawyers perform business activity and meet the definition of “enterprise” within the meaning of competition law. Legal advisers are not separate business subjects. His commitment under the provisions of the contract with his employer makes him subject to the orders and disciplinary power of the economically more active party in the legal relationship. Employers, through the hired by them legal advisers, carry out activity which is competitive to the legal activity and is contrary to the requirements of Directive 77/249 / EEC. The ECJ is about to open a case and consider the request.

Meanwhile, the awarding of remuneration to legal advisers will be examined by the Constitutional Court as a result of an enquiry submitted by the Ombudsman of the Republic of Bulgaria seeking a declaration to unconstitutionality of Article 78, paragraph 8 of the Civil Procedure Code.

In focus in Bulgarian legislation

Ordinance for amendment and supplement of Ordinance № 1/2007 for keeping, preservation and access to the Commercial register (SG 12 of 2016)

The amendments in the Ordinance are the consequence of the more frequent abuses with data in the Commercial register, as well as the increasing number of the thefts of companies, performed through manipulation of the registration documents, submitted electronically into the Commercial register. The amendments encompass the possibility, that the registration officials shall be entitled to have an unlimited access to the National data-base “Population”, supported by the Ministry of Regional Development and Public Works, in order to establish and check the data regarding the civil registration of the persons, as well as an access to the Notarial Chamber, in order to establish and check the notary verified documents.

The amendments enter into force as of 13.04.2016.

Project for Law of e-identification

The Bill aims to govern the public relations regarding the e-identification of individuals, in order a higher level of effectiveness of the functioning of the e-government in Bulgaria to be reached, orientated to the citizens and the business. The e-identification is defined as a process of using of e-data for the identification of individuals. The used data represents the identified individual in a unique way. The possibility for e-identification is provided for every individual (Bulgarian or foreign citizen, resident in Bulgaria) – user of e-services. An opportunity shall be given to the individuals from the aforementioned categories to possess a unique identification (E-identification) for which at their own discretion and based on the individuals’ specific needs, one or more certificates for electronic identity shall be issued. The certificate for E-identification shall be issued for 3 years validity period. In view of the protection of the rights of the electronic holder of an electronic identity, a possibility shall be provided for interruption of the certificate in the presence of reasonable doubt of the security violation, relating to its unlawful use.

The Bill is adopted by the National Assembly on a first reading.

News on European Union Law

European Commission presents the EU-U.S. Privacy Shield

In order to fill the gap in the procedures for transfer of personal data from the EU Community to USA occurred after the annulment of the Safe Harbor Principles with decision of the CJEU, at the end of February 2016, the European Commission published its project for the “EU-U.S. Privacy Shield”. The intention is to establish a new legal framework for the transatlantic transfers of the data. The announced text provides for guarantees that the standards for data transfers according to the new EU-U.S. Privacy Shield are equivalent to the standards for data protection in EU. The new legal framework should be based on:

  • robust enforcement and strong  obligations on companies   containing supervision mechanisms to ensure that companies respect their obligations, including sanctions or exclusion if they do not comply;
  • clear safeguards and transparency obligations on U.S. government access to personal data;
  • several possibilities for protection of the EU rights including shorter terms for complaints resolution and free of charge alternative dispute resolution solution;
  • Annual joint monitoring of the functioning of the Privacy Shield.

Proposal for EU Trade Secrets Directive

А provisional agreement has been reached on the text of a new Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The purpose of the Directive is to set out a minimum standard comparable level of legal remedies within the internal market in case of misappropriation of trade secrets while ensuring sufficient safeguards to prevent abuse. The text elucidates that “trade secrets” comprise information that: (i) is confidential, in that it is not generally known among or readily accessible to relevant persons in the field; (ii) has commercial value and its unauthorised use or disclosure would undermine the holder’s scientific/technical potential, financial interests, strategic position or ability to compete; and (iii) has been subject to reasonable steps to keep it confidential. The acquisition, use or disclosure of a trade secret shall be considered unlawful whenever carried out, without the consent of the trade secret holder, intentionally or with gross negligence, by a person who has acquired the trade secret unlawfully, who is in breach of a confidentiality agreement or any other duty to maintain secrecy of the trade secret or who is in breach of a contractual or any other duty to limit the use of the trade secret.

Court practice

The Supreme administrative court cancelled the high fees for the appeal of the public procurement procedures.

The Supreme administrative court (SAC) finally cancelled Decree № 196/10.07.2014 of the Council of Ministers, which Decree approved the Tariff of the fees collected in regard with the appeal of the public procurement procedures, The above mentioned amendments provided significant increase of the state fees, owed to Commission for Protection of the Competition and the SAC, in some cases even an increase up to 17 times up to the amount of BGN 15 000.

A five-member chamber of SAC confirms the first instance decision of a three-member chamber, which concluded, that a serious administrative procedural violations were omitted, as well as the significant increase of the fees is not grounded neither with an increase of the value of the services delivered, nor with an increase of the revenues of the citizens and the legal entities.

Statement of the CPC regarding §54 of the Transitional and Final Provisions to the Law on amendment and supplement of the Energy Act, prom. SG 17 as of 2015

With Decision № 212 as of 30.03.2016, the Commission on Protection of Competition (CPC) adopted an statement in relation to the effect of §54 of the TFP to the LAS of the EA on the competition, which provision provides for that the promotions under the Law on the Energy from Renewable Sources (LERS) shall not apply to energy facilities for production of electricity from renewable sources, which are placed in service after the entry into force of the law. The incentives adopted in LERS represent direct support through preferential prices and long terms for the purchase of electricity. In the course of the conducted investigation CPC found that in order to regain their investments, the producers who have chosen to produce electricity from renewable sources to be sold at preferential prices and under long-term purchase agreement, initially have considered in their investment plans the support schemes provided in LERS. The adoption of the provision of § 54 of the TFP to LAS of EA is likely to compromise the investment plans of these producers who at the date of entry into force of this provision have not completed the process of construction of their facilities for the production of energy from renewable sources. According to the Commission, that provision directly affects the legitimate expectations of producers who begun to implement their investment plans. This amendment to the legislation creates legal uncertainty that is likely to have a negative impact on economic activity of companies and it could restrain the entry of new market participants.

This statement of the Commission, however, has no binding effect. Its purpose is to worn for any possible negative influence of the provision on the competition.

The European General Data Protection Regulation envisage severe sanctions

Back in 2012 the European Commission put forward the text of its General Data Protection Regulation (the ‘Regulation’). The objective of this new set of rules is to strengthen the rights of the citizens and to make Europe fit for the digital age. The provisions of the new Regulation were lengthy debated by the European institutions, which were to decide, for instance, how many million Euros should be imposed as a sanction in case of its violation. To date, a political agreement has been reached, the adoption and publication of the new legislation in the EU’s Official Journal are pending, albeit it will be two years’ time (2018) until its practical implementation will commence. The Regulation is directly enforceable in the Member States, it will replace and unify the currently in force legislation in each of them – in Bulgaria this is the Law on Protection of Personal Data. The new Regulation has long been in sight of the large-scale companies, which are already taking actions to comply with the more stringent conditions. However, it will be applicable not to them only, but to every personal data controller, as for instance it is every employer who is processing data regarding his employees. It is time to take a closer look to the challenges that lie ahead for the business.

Extra-territoriality

In today’s digital world data has long been converted into a “currency” for receiving of online services, as without that data being provided, the individuals are unable to have access to those services. The Regulation seeks to protect the values of the European citizens even to companies established outside the Union. The new Regulation will apply to them if they target users in Europe – i.e. if they offer goods or services to EU citizens or track them on the internet, with the aim of making profiles to analyse or predict their personal preferences and behaviour.

The current rules on data protection apply to companies outside the EU as well, however, only if their servers are located in a Member State. It is obvious that the idea is to apply the new strict European rules against giants such as Google and Microsoft, albeit the question is to what extent they will be effectively enforceable.

Consent

In order the processing of information to be lawful, even under the current law, there should be present one of the specifically outlined preconditions such as consent of the person, contract to which the data subject is a party, a legal obligation towards the controller and others. In most cases the data are collected on the basis of consent of the person, and namely in relation to the consent the Regulation sets enhanced requirements – it must be unambiguous and to be given by a clear affirmative action. This ensures that an implied consent will not be considered valid – this would be, for example, the mere use of a website in which the consumer silently agreed to the terms and conditions part of which is the consent to process, or boxes pre-ticked by the controller, or inactivity by the user (such as not changing the security settings). Consent must ensure the awareness of the person that he gives his consent and also the knowledge exactly what he consents to. It shall be possible the consent to be withdrawn at any time and to be as easy to withdraw consent as to give it. Moreover, the consent to process should not be required as a condition to access a service, when personal data is not necessary for its performance.

Enhanced responsibility of the controller

The new regulation stipulates a number of obligations for all data controllers. Such are the requirements for privacy by design and privacy by default. The former states that the privacy risk should be taken into account already in the process of designing a new product or service, by taking proper technical and organisational measures and procedures (e.g. pseudonymisation) for compliance with the Regulation. The latter requires a processing by default of data which is necessary for any specific purpose, i.e., the data should not be collected or stored in volume or storage life greater than the minimum required for those purposes.

All companies processing personal data will be obliged to present significant amounts of information to those whose data is collected, by the moment of their reception and when there is an intention for further handling for different purpose. They will also need to notify the regulator (in Bulgaria it is the Commission for Personal Data Protection) in the event of a breach of personal data no later than 72 hours after its discovery and to implement data protection impact assessment in high risk situations.

Far stricter liability is provided for certain groups of controllers. These are companies whose core activities consist of processing operations and who are conducting large-scale profiling of persons (Facebook), or companies that handle great volumes of sensitive data (this could probably be an insurance company, collecting health data of the insured persons). They will have to appoint a data protection officer with expert knowledge of the law and practices in this area, who can be an employee of the company or externally hired.

There are enhanced requirements for companies with over 250 employees or if the processing leads to risks to the rights and freedoms of the data subject, or when sensitive data is processed. In these cases, controllers are bound to keep records of all processing activities in a minimal amount specified in the Regulation.

Sanctions

The Regulation provides for significantly higher penalties than those which are being currently imposed under the domestic legislations in the EU. In the event of violation of the Bulgarian Law on Protection of Personal Data the fines could be up to 100,000 levs (€ 51,000).

The maximum penalties under the Regulation could reach 20 million euros, or 4 % of the total worldwide annual turnover of the preceding financial year of the company, whichever is higher. The Commission for Personal Data Protection will be competent to impose fines if, for instance, the controller has not complied with the conditions for consent (when the processing is based on a consent) or has violated individuals’ rights under the Regulation (such as the ‘right to be forgotten’, i.e. his data to be erased). It is novelty that data processors (such as cloud service providers) will be directly responsible and, respectively, they will be threatened by sanctions.

European legislators are proud of the reform in the field of data protection and consider that it will not impede the economic activities, but the opposite – it will help Europe to develop innovative digital services . We hope this will be the case. No doubt, however, the risk for business will significantly increase in case of non-compliance with the new rules, which necessitates critical review and adjustment of policies and practices of the companies before the Regulation comes into effect.

The article has been published in Bulgarian, in Capital Daily: http://www.capital.bg/biznes/vunshni_analizi/2016/04/03/2735701_sigurnostta_na_dannite_-_novoto_predizvikatelstvo_za/

In focus in Bulgarian legislation

Law on supplement of the Excises and Tax Warehouses Act (SG 92 as of 27.11.2015)

The Excises and Tax Warehouses Act (ETWA), which regulates which persons are subject to mandatory registration, expands their circle, including also four categories of persons, performing an activity in connection with energy from renewable resources by power plants with total installed power of up to 5 MW or bio-gas or compressed or liquefied natural gas.

Until 01.03.2016 (two months term after entering into force of the act) the above-mentioned persons shall file an application for registration.

NEW Insurance Code (SG 102 as of 29.12.2015)

New Insurance Code entered into force on 01.01.2016. One of the introduced important changes is the extension of the territorial scope of the coverage under mandatory insurance “Civil liability” of the motorists in terms of damages caused in the territory of a third country, whose national office of insurers is a member of the Green Card system. Another innovation is that if there is no insurance “Civil liability” and it is not paid within a month after two warning letters, the Ministry of Interior officially terminates the registration of the vehicle.

Bill of the Law on Amendments of the Energy Act as of 20.01.2016

One of the important proposed changes sets out that when an owner, possessing a separate object or objects in a block of flats, affiliated to a substation or its separate deviation, does not want to be a customer of heating energy for heating and/or hot water, he must declare this in writing before the heat transmission company and to request a termination of the heat supply for heating and/or hot water supply from this substation or from its individual deviation.

ELECTRONIC ONLINE DISPUTE RESOLUTION PLATFORM FOR CONSUMER DISPUTES

An electronic platform for online dispute resolution for consumer disputes started working on the 15th of February, 2016. This is a result of the entry into force of Regulation (EU) №524/2013 of the European Parliament and of the Council as of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) №2006/2004 and Directive 2009/22/EC (Regulation for ORC for consumers). The address of the e-platform is the following: http://ec.europa.eu/odr. The Regulation, respectively the platform settles the out-of-court resolution of disputes concerning contractual obligations stemming from online sales or service contracts between a consumer resident in the EU and a trader established in the EU through the intervention of alternative dispute resolution bodies (ADR).

The online traders are obliged to publish on their websites electronic link to the platform for online dispute resolution (ODR platform), which is easily accessible for consumers. Moreover, the authorities for ADR (conciliation committees and the European Consumer Centre at the Commission for Consumer Protection) shall publish on their websites electronic link to the website of the European Commission, which can be found on the list of recognized authorities for ADR of the Member States of the EU and provide an electronic link to the ODR platform. When it is possible, they make publicly available a list of recognized authorities also on a durable carrier.

The idea for creating of an online platform for resolution of disputes is a project of the EU as essential is the web site of the European Commission, on which consumers and traders can obtain detailed information about certain types of contracts of sale and contracts for the provision of services, concluded online. Moreover, they can file complaints electronically. If there is a dispute (and provided that both parties agree), there is an opportunity to choose a third party as a mediator to settle the dispute.

News on European Union Law

Regulation (EU) No 2015/2424 of the European Parliament and the Council amending the Community trade mark regulation has been published in the EU Official Journal L 341, 24.12.2015.

The Regulation will enter into force on 23 March 2016. From that day, the current Office for Harmonization in the Internal Market will be called the European Union Intellectual Property Office (EUIPO) and the Community trade mark will be called the European Union trade mark.Other important amendment is the deletion of the requirement of graphic representation of the sign, which will facilitate the registration of sound and scent trade marks. EU trade mark application no longer can be submitted to the national industrial property office and an EU trade mark application may be submitted only to the EU Office. Rules for registration of EU certification mark are also introduced and the fees payable for a trade mark registration and renewal are revised.

There is also a change with regard to the identification of the goods and services under the Nice Classification, for which protection is sought upon the registration of a trade mark. The persons who applied for registration of Community trade marks before 22 June 2012 by identifying the entire class heading, may file a declaration by 24 September 2016 to indicate the goods and services, other than those clearly covered by the literal meaning of the indications of the class heading.

On 14th of January 2016 the European Court of Justice rendered a conviction against Bulgaria with subject a claim for failure to fulfill obligations in which the plaintiff is the European Commission and the defendant Bulgaria. Among the facts of the case and the pre-litigation procedure that the area of Kaliakra, which is located on the Bulgarian Black Sea coast, is an important area for the conservation of many bird species and their habitats, because of which it is set for important bird area (IBA) by the NGO “Birdlife international”. On the 18th of December 2007 in accordance with the Birds Directive, the Republic of Bulgaria has established C33 “Kaliakra”, but according to the Commission, the violation is expressed in non-including entirely in C33 “Kaliakra” the areas of IBA “Kaliakra”, whose protection was important in view of the protection of birds. According to the Court due to not fully incorporating the territories of the important bird areas in C33 “Kaliakra”, the Republic of Bulgaria has not classified as C33 the most appropriate number and area of territories with a view to safeguarding on the one hand, of biological species, and on the other, of the regularly occurring migratory species, and therefore failed to fulfill its obligations under the Birds Directive.

2016 has started as 2015 finished, with more reports of the investigation of corruption in Romania and high-profile arrests. Bribery and corruption, of course, are always done by other people and it is widely believed that so long as people are not invlived in giving or receiving bribes, then they cannot be affected by them.

In fact the things are not like that – companies invlived with any kind of international business need to implement certain protection measures against corruption and be able to prove that they observed the specific requirements in the field. How can you ensure that your business is protected from the consequences of other people’s corruption?

Neil McGregor, Managing Partner at McGregor & Partners, offers, a series of useful advice in this regard to companies in Romania:

  • Don’t ignore the issue. Read and revise, as the case may be, your organisation’s pliicy and guidance on anti-corruption and business ethics. Do they cover everything which is relevant to your business? If your organisation does not have a formal pliicy and set of guidelines on anti-corruption and business ethics, this situation must be corrected as soon as possible. Make arrangements to draft and publish an accessible formal pliicy and set of guidelines and communicate them to your staff and business partners.
  • Check if there are any new employees (and, especially, managers and administrators), new business partners, as well as any changes in the management or ownership of any of your business partners, in the last year. Make sure (and get proof) that they are aware of do understand your pliicy and guidance on anti-corruption and business ethics.
  • If the contracts which your organisation uses include anti-corruption clauses, consider reviewing whether there are any signs or suspicions that there have been breaches of these clauses. If the there are no signs of problems, make a formal record of this.
  • Make regular checks of your register of hospitality and gifts, given and received. Is it up-to-date and complete? Is there anything in there which you may have trouble to explain? If so, find out more about the gift or hospitality concerned and record what you have done.
  • Make sure you have a formal risk assessment report on the risks of bribery in the countries and markets where you operate. Make periodical checks that it is still correct or whether it need to be updated (e.g. if you have started doing business in a new market or have new business activities?), if your employees have reported concerns and how can you prove that they understand that you wish to be notified, should such concerns arise.
  • If you are responsible for compliance issues in your organisation, it is more than likely that you will have a programme of e-learning, with online questionnaires on corruption and business ethics issues. Don’t be complacent that you are safe, even if e-learning with online questionnaires is the standard practice in your industry.
  • The UK’s first deferred prosecution for failing to prevent bribery (published in late November 2015) proved that “industry standard” online questionnaires were enough, particularly where staff did not take them seriously, did not take any refresher courses and did not recall their managers saying anything about corruption. Be aware that if you do business in the UK, directly or indirectly through one of your business associates, the UK authorities can prosecute you or the business associate for failing to prevent bribery somewhere else, such as in Romania. Be particularly cautious if the head office of your organisation uses the same format or content of its online questionnaires for all of the counties in which you operate: Romania is not Sweden. Please check (and get proof) if the online training is effective, if the staff who pass the online questionnaire have actually understood the message – and have taken it seriously.
  • Don’t assume that Romanians are the only – or the biggest – risk. No nation is immune to corruption and foreigners can also be a serious risk, particularly those who believe that they have arrived in the Wild East where “anything goes”, or who expect to have taken their bonuses and moved on to other expatriate postings long before the consequences of what they did in Romania start to damage you.
  • Don’t assume that because you comply, for example, with the USA’s Foreign Corrupt Practices Act, you do not need to worry about the UK’s Bribery Act. The British anti-corruption legislation is much tougher and wider in its application than the American legislation.
  • Consider getting qualified outside professional consultants to review the effectiveness of your anti-bribery and corruption procedures, for example by checking the understanding of your staff. Remember that lawyers have a duty of confidentiality to their clients and that communications between lawyers and their clients benefit from legal professional privilege.

Quite apart from the increased activities of the Romanian authorities to investigate and prosecute cases of corruption, the UK authorities are getting very serious about investigating and prosecuting foreign bribery. Don’t think that all this is only about the developing world and that because Romania is in the EU, what happens in Romania will not be of interest to the UK prosecutors. Business in Hungary, Pliand and Lithuania has already been announced as being under investigation by the UK’s prosecutors! warns Neil McGregor.

McGregor & Partners, working with the British-Romanian Chamber of Commerce and other business associations, are continuing a campaign of informing businesses in Romania about how they can be affected by the UK’s new foreign corruption legislation. The first event of 2016 was the Romanian Chamber of Commerce & Industry’s “Business without corruption” and more events will be held throughout the country.