When Freedom Of Contract Slips Into An Abuse Of A Stronger Bargaining Position. The Bulgarian Competition Authority Fines A1, The Bulgarian Subsidiary Of Telekom Austria.

December 2018 - Last week, the Bulgarian competition authority fined A1, the Bulgarian subsidiary of Telekom Austria, a total of BGN 804,340 (approximately EUR 411,252) for abusing its bargaining power by imposing high sales targets on a local distribution partner and by unilaterally terminating the distribution partnership with it.

The case was tried and the fine imposed under the Bulgarian rules on abuse of stronger bargaining position, which were introduced in 2015 and apply to all economic sectors (unlike similar regulations in other EU Member States, which are limited to the retail/retail food sectors only).

A1 is the largest mobile telecom operator in Bulgaria. Based on regulatory submissions, it appears to have held in 2017 a share of approximately 40 percent of the mobile telephony market. This strong market position let the Bulgarian competition authority to regard A1 as an undertaking also having a significant bargaining power in its relations with distribution partners. Another attenuating circumstance in this case was that the distribution partner - an established handset retailer - has built its distribution business around A1's products, has generated a substantive portion of its turnover over the last few years from offering A1's services and could not market other mobile telecoms' services via its network of outlets.

A1 has been held liable for abusing its stronger bargaining position on counts that:

A1 has unilaterally imposed higher sales targets while suspending marketing and promotional support for the...