Regulation on Competition for Entities Supervised by the National Bank

Regulation on Competition for Entities Supervised by the National Bank

02 June, 2021
Amendments to the Law of Georgia on Competition and the Organic Law on the National Bank in 2020 gave the NBG a more explicit authority with regards to the implementation of competition policy. It is in line with the obligations set out in these amendments that the National Bank has developed statutory documents regulating the competition policy for supervised entities.

To ensure the effective implementation of the competition policy in the regulated industry, and to safeguard the assessment and maintenance of the competitive environment in the market, the NBG approved the Regulation on the Submission and Review of the Notice on Market Analysis and Concentration. The Regulation sets out methods for market analysis, and criteria and parameters for evaluating a competitive environment. Further, it describes how to notify the National Bank of a concentration (acquisition of control interest by one entity of another, or merger of two entities), and then how the National Bank assesses the compatibility of the proposed transaction with the competitive environment.

In order to investigate the cases related to the abuse of the dominant position by the National Bank and restriction of competition, to review complaints and applications on potential violations, the National Bank also developed and approved the Regulation on Investigation of Cases Related to Potential Violation of Competition, Filing and Review of Complaint/Application. The document sets out the guarantees for the protection of the rights of the parties, the actions to be taken in the course of the investigation and the decision-making procedures. The Regulation also regulates the assumption of contingent liabilities by the defendant economic agent, the principles of imposing fines, the details of inclusion in the cooperation program, and the issues of inter-agency cooperation.

The new competition rules will entail greater transparency of competition-related activities and decisions by the National Bank. Decisions on the compatibility of the concentration with the competitive environment, as well as on potential competition violations will be publicly available by being published on the official website of the National Bank, with observance of confidentiality of information.

 The approved Regulation is based on the Law of Georgia on Competition, the secondary legislation of the Competition Agency, and international best practices, including the standards of the European Union, the United Kingdom, Canada, and the Organization for Economic Co-operation and Development (OECD).

The drafting of the competition regulation was accompanied by expert assistance, and intensive involvement and consultation with the Competition Agency and the financial sector.