Kosovo - The Need for an Effective Competition Policy

The implementation of the Stabilisation and Association Agreement (SAA) between Kosovo and the European Union is expected to start in 2016. SAA Article 75 is about Competition and other Economic Provisions. Considering article 75, within a few years, Kosovo is expected to implement effectively competition policy, in line with the EU Acquis and experience.

The effectiveness of competition policy is first of all defined by the actual outcomes of investigation procedures and the decisions taken by competition agencies. In the case of Kosovo, market monitoring efforts are limited, and the number of investigations and related decisions is relatively small. For the more recent years, no real case is recorded – an odd situation indeed.

EU COMPETITION POLICY

The Importance of Competition

Competitive and contestable markets are important for the well-functioning of national economies. Such markets stimulate the mobilization and best allocation of resources and factors of production; they contribute to the lowering of prices, help improve the quality of products and contribute to the reduction of poverty. From a more dynamic perspective, competition also stimulates high levels of innovation and economic growth.

EU Competition Laws

Articles 101-109 of the Treaty on the Functioning of the European Union is the primary legislation for EU Competition Policy. In particular, TFEU Articles 101 and 102 prohibit concerted practices between so-called undertakings, or companies, which may affect trade between member countries and prevent, restrict or distort competition – the main focus is on cartels, mergers, takeovers and abuse of dominant positions. In addition to the TFEU, the EU competition framework refers to sectorial Regulations, Directives, Decisions, complex cases, block exemptions, notices, guidelines – decisions of the courts of EU members also matter. In all, the EU competition rules fill hundreds of pages, which does imply that a high level of legal and economic expertise is required when addressing competition issues.

An Evolving Policy with New Methods

At its very beginning, in the 1960s, EU Competition Policy was dominated by the civil law system, influenced by Roman law. Over the years, an Anglo-Saxon perspective – corresponding to the common law system – was added with the accumulation of so-called “landmark cases”. In addition, as in US courts, more importance is now given to articles in academic journals and the use of econometric tools, which may help detect interactions between key-variables, define relevant markets and assess dominance.

COMPETITION POLICY IN KOSOVO

Liberal Transition and Competition Policy

As indicated by various studies, developments toward a market economy, particularly the structural reforms that are needed for a successful transition, as well as the actual rules framing market agents’ behaviors, are reflected in the effectiveness of competition policy.

Legal Basis

The first Law on Competition in Kosovo was enacted in 2004, under UNMIK administration, and amended by the 2010 Law on Protection of Competition. The 2010 Law defines prohibited practices, exemptions, the status and the role of the Kosovo Competition Authority (KCA), the procedures to appoint and dismiss the Members of the Competition Commission (KCC), including its Chairperson. In that context, it is worth mentioning the importance of both the Parliament and the Government when deciding about the composition of KCA and the passing of by-laws.

The Kosovo Competition Agency

Established in 2008, KCA is composed of the five-Member Commission (KCC) – the decision-making body –, and the Secretariat or the administrative and investigative body, with a team of inspectors. KCA independence and power are guaranteed by the 2010 Law. Despite the adoption of laws, KCC Members were not reappointed or replaced after ending their first mandate – no one is actually in charge. KCA professional staff combines economic and legal knowledge – what is still lacking is a significant experience with practical cases, which implies that external support is strongly required to enhance skills.

The EU Assessment of Competition Policy in Kosovo

Five years ago, when referring to Kosovo, the Communication ‘Enlargement Strategy and Main Challenges 2010-2011’ from the Commission to the Council and the European Parliament underlined that “in the area of competition, there has been no progress on anti-trust policy or state aids rules. Administrative capacity has improved but the implementation of competition policy is overall at an early stage.”

More recently, in 2015, the Ministry of European Integration of Kosovo reports that the EU Commission “reiterated its concern about the functioning of the institutions in charge of competition and State Aid and urged Kosovo to appoint competent and independent Members of the Competition Authority and to provide adequate resources for its functioning and effectiveness”.

In other words, during the past five years, no progress at all is observed in the field of competition policy – a case of governance failure, impeding the path toward the EU.

Implementing the SAA

Despite a difficult situation, changes are expected to take place with the SAA, including the implications of Article 75. Thus, the effective implementation of the SAA will be supported by the adoption of a National Plan for the Adoption of the Acquis.

The NPAA draws a line between short term priorities and more medium term actions concerning: (i) the legal framework and (ii) related administrative measures; it will also be reviewed every year to assess progress, identify problems and propose solutions.

Final remarks: Enhancing Competition Policy in Kosovo

The Members of KCC must still be appointed; they should be competent and impartial. In other words, strong political supports will be required to enforce competition laws in a proper manner.

Considering the complexity of EU competition rules, there is also a need for assistance and sharing experience with EU members. In addition, given the small size of Kosovo’s economy, international trade could help intensify competition on domestic markets.

Last but not least, civil society – in particular consumers associations – should perhaps be supported and acts as whistleblower to protect the interests of the citizens.

 

Theme: 

Daniel Linotte

Daniel Linotte holds a PhD in economics from Oxford University. He worked as adviser with international organizations and governments, and held teaching positions at Boston University, the Catholic University Leuven and the European Institute of Public Administration (Maastricht). Since 2008, he is a Senior Member of St. Antony’s College (Oxford). He is presently leading an EU project in the Balkans. He is the author of “The Eurasian Economic Union – Implications for Governance, Democracy and Human Rights”, The Central Asia Caucasus Analyst, publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center... Read more about the author

Emrush Ujkani

Mr. Emrush Ujkani is a graduate of the Law School of Pristina University and holds an MA in EU studies from the Catholic University of Leuven (K.U.L). He specializes in EU law and is currently lecturer at the Pristina University for Business and Technology. He also served as head of the Department for Coordination of EU assistance/Agency for European integration in the Prime Minister’s office, and coordinated the Pre-Accession Assistance Instrument, TAIEX activities, Twinning, and community programs and agencies. He is the author of the book: “E Drejta e Bashkimit Evropian, Parimet, Institucionet dhe Praktika Gjyqesore” (“EU Law: Principles, Institutions and Case Law”... Read more about the author

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