SUPPORT TO PROMOTING RECIPROCAL UNDERSTANDING AND DIALOGUE BETWEEN EU AND WESTERN BALKAN COUNTRIES

The Progress of Republic of Macedonia in the Area of Competition and State Aid

Pavlina Petrova
Yordanka Gancheva

Summary

Republic of Macedonia was the first country from the Western Balkans region, which signed the Stabilization and Association Agreement (SAA) with the European Communities and their Member States on 9 April 2001 in Luxemburg. By signing the Agreement the Republic of Macedonia has formally acknowledged its willingness to continue in a course of respecting democracy, human rights and market economy values.
During the last 15 years the Macedonian society was preoccupied mainly by interethnic issues while the economic problems and reforms were put aside. Abusing their decision making power, the ruling political parties started to give privileges to certain economic groups. Then concepts as the rule of law, market economy values and fair competition suddenly became just fancy, but empty of meaning expressions.
The Stabilisation and Association Agreement signing and the forthcoming EU integration gave rise to a movement in that area. The process of legislative approximation returned the public attention on the economic issues.
A lot of changes have happened during the long Macedonian transition period, but more other still await to happen. The ratified Stabilization and Association Agreement has framed the reforms’ long-term direction in a very clear and explicit way. The Republic of Macedonia has accepted to harmonise its legislative and institutional systems with those of the European Union meeting the relevant EU standards.
Since the obligations of EU membership have to be taken seriously the Republic of Macedonia is now being encouraged to develop a new ‘competition culture’. The three elements of the ‘competition culture’ development that should be reached by the Macedonian society are: appropriate legal framework for both antitrust and state aid control; efficient administrative capacity applying the competition rules; effective state aid and antitrust enforcement record.
These three conditions and the enforcement record in particular will be carefully assessed before any European Commission recommendation regarding the conclusion of the EU accession negotiations with Republic of Macedonia.
By SAA signing Republic of Macedonia pledged to bring its competition and state aids legislation in line of the European Community ones. Republic of Macedonia has been obliged to meet the EU competition acquis in two main directions: (a) on business’ level - harmonisation of the national antitrust regulations and (b) on state level - harmonisation of the national legislation on state aid control.
The analyses show that the current laws on competition and state aid in Republic of Macedonia follow the guiding principle that building a free competition and reasonable state aid should be based on the consumers’ overall interest. The Republic of Macedonia has made a significant progress in respect of Competition and State Aid legislation development.
The draft for new Law against Limiting Competition (DNLALC), approved by the Macedonian Government, is harmonized with the EU competition policy and legislation and is close to Bulgarian, Croatian and Estonian competition acts. It is based on the EU standards and presumably could build a solid legal foundation for efficient competition policy.
The new Macedonian Law on State Aid puts foreword the EU state aid acquis. It settles the main principles of the Macedonian state aid policy.
The liberalization of utilities and undertakings conducting activities of general interest, which is a very important part of the European competition policy, has been already initiated on paper but it should be transferred into the real life as well. While the provisions, allowing competition in the sectors in question, already exist, the legislative procedures for their implementation are not adopted yet. The Government should foster the finalisation of the legislative framework and thus to enable opening the monopolistic sectors for real competition.
Having a good competition regulation does not automatically mean having an effective competition. In fact the law itself could not have value if there would not be appropriate and efficient enforcement mechanisms.
The current state of the Macedonian court system represents a great obstacle to the competition rules enforcement. According to the constitutional provisions, only courts are entitled to impose sanctions. The court’s mandatory involvement in the penalty procedures makes them slow and prolonged. It hampers the law enforcement and results in lack of respect to the antitrust rules. The fact that there is no yet undertaking in Republic of Macedonia fined for violation of the Law against Limiting Competition, speaks in itself. The reform of the Macedonian court system is crucial for the effective competition policy implementation.
Although the laws provide for transparency in the work of enforcing agencies, it is not on a satisfactory level yet. The lack of Law on Access to Information makes receiving information dependent on the authority’s good will. The Internet access to the cases and relevant decisions is missing. Searching through the Official Gazette database is difficult and costly (in terms of time and even money). The competition policy enforcing agencies must provide easier access to their decisions. A regular update of their Internet websites will be of great use here.
While the legislation adoption and its harmonization with the EU rules is already a huge step forward, the main work, namely enforcement, transparency and control, is expecting to be done.
A lot of work has to be done also in the area of promoting competition advocacy and market economy values in Republic of Macedonia.
The lack of transparency in the Government actions, the noisy scandals accompanying the privatisation process and the weakness of the Macedonian institutions, especially of the court system, created a very disagreeable face of the market economy and gave the impression that there are no such things as market rules, fair competition and rule of law. These are some of the reasons why the Macedonian business society did not succeeded in developing a modern competition culture. Most of the businesses continue not respecting the law and striving for privileges, political protection or state aids.
Introducing a new competition culture in Republic of Macedonia will obviously take some time. It is a long process that has just began and will get forward along with the progress of the economic and structural reforms in the country.