In many cases SMEs operate as resellers of products purchased from larger companies or as distributors for products / services within a network, which has been created by a larger company, having specific characteristics, e.g., “exclusive distribution” network, “selective distribution” network, “franchise” network, etc.

In these cases, there are rules as to what is prohibited and what is permitted to be imposed on SMEs, as part of the agreement (under law 3959/2011 and the EU Regulation 330/2010)^[1]. For the entry into force of these rules the SMEs shall constitute independent companies, that is they must purchase and resell products or/and bear the entrepreneurial risks in relation to the contracts they conclude / negotiate even on behalf of another company (or bear the cost and the risks of the necessary investments in the specific market or other activities such as advertising costs).

• Which practices are prohibited? 
  When it comes to resale product prices, it is prohibited to the suppliers to determine (directly or indirectly through sanctions, threats and discrimination, detection measures and threats for terminating agreements):

• • the resale priceof the products or their advertising price - unless it is a new product and there is a short-term promotion campaign (generally only the suggested prices are allowed!),

• • the minimum selling or advertising price of the products – the supplier can only set the maximum resale prices,

• • the resale price of the products in relation to the prices of your (the SMEs’) competitors in the market,

• • your (the SMEs’) profit margin from the products sold,

• • the maximum level of discount you (the SME) can offer from a fixed price level,

With regard to the geographical regions where you operate and / or your customers, the supplier should not prohibityou (directly or indirectly) to: 

• • sell to someone coming from an area other than where you operate and the customer asks for the purchase on his/her own initiative (passive sales) - but it may prevent you from trying to actively sell to customers located in other exclusively allocated areas (active sales). In addition, in case you are a wholesaler, the supplier may prohibit you from selling directly to end consumers,

• • make reciprocal/mutual sales with other distributors if you all belong to the same selective distribution network (distribution system where the supplier sells the goods only to selected distributors based on specific qualitative or quantitative criteria),

• • make online sales (or force you to redirect customers to other distributors depending on their region / country of origin), but may impose certain conditions [e.g., to sell a percentage of the products from your physical store, to oblige you to meet specific quality criteria in the operation of your website, to limit your sales to online platforms (e.g., price comparison) if you belong to a selective distribution network, etc],

• • import or export products

In addition, your supplier is not permitted to:

• • charge/price you based on where you intend to resell (e.g., more expensive prices for products you intend to sell online) or impose discriminatory pricing of products for domestic customers, exports, etc.

Furthermore, your supplier is not permitted to:

• • impose to you directly or indirectly non-compete clauses/obligations (e.g., to oblige you not to engage in any other competitive activity related to those of the supplier), the duration of which is indefinite or exceeds 5 years (during the period of the agreement) or to require you to purchase only its own products (or other products only after the suppliers’ consent) at a ratio of more than 80% of your total purchases, if you have an agreement which is indefinite or exceeds 5 years, unless e.g. the store in which you operate is owned or rented by the supplier,

• • prohibit you to produce, purchase, sell or resell products/ services after the termination of your agreement, unless it concerns the protection of the know-how the supplier provided you with or/ and the duration of the non-compete clause/obligation is limited to 1 (one) year after the termination of the agreement,

• • oblige you directly or indirectly not to sell products of specific competing suppliers as long as you are a member of a selective distribution network (i.e., not to be supplied by another supplier).
    
    
• How can a SME react when it is faced with such imposed conditions?
  In case any of the above practices are imposed to you (explicitly in your contract agreement or as terms / guidelines by your supplier), you can contact the HCC using our digital services!

^[1] In accordance with par.11 of the Guidelines on Vertical Restraints (see EU Regulation 330/2010) in combination with par.50 of the Guidelines on Vertical Restraints with regard to the notion of affecting trade, vertical agreements between small and medium enterprises, as they are defined at the Annex of the Recommendation 2003/361/EC, in relation to the definition of very small, small and medium-sized enterprises, are rarely capable of affecting significantly the trade between Member-States or restricting markedly competition under article 101 par. 1 TFEU, and therefore, they do not fall, as a general rule, within the scope of article 101 par. 1 TFEU.

The SMEs usually have to confront large companies which have a dominant position in the market and they may become victims of anti-competitive practices aiming at exploiting them or excluding them from the market. Consequently, the SMEs have to comprehend the legislation related to abuse of a dominant position, in order to detect the practices being applied against them aiming at their exploitation or their exclusion!

Article 2 of law 3959/2011 prohibits the abuse of dominant position in the Greek market, especially:

1. the direct or indirect imposition ofunfair purchase or selling prices or other unfair trading conditions(g., excessive pricing of products / services or pricing below cost),
2. the limitation of production, distribution or technical developmentto the prejudice of consumers (e.g., the restriction of the ability to use new technological means),
3. the application of dissimilar conditions to equivalent trading transactionswith other trading parties, especially the unjustified refusal to sell, buy or otherwise trade, thereby placing certain undertakings at a competitive disadvantage (g., discrimination etc.), 
4. making the conclusion of contracts subject to acceptance, by the other parties, of supplementary obligationswhich, by their nature or according to commercial practice, have no connection with the subject of such contracts (e.g., tying 2 different products together for sale etc.)

The list of the above practices is not exhaustive, given that other practices may be abusive as well.

• When does the "dominant position" mentioned by law exists?

One company usually holds a dominant position when it has a high market share, e.g. a market share of more than 40% on the "relevant market" where it operates, taking into account other criteria (e.g. competitors' shares). The relevant market comprises of all the goods / services which are regarded by the consumer as interchangeable or substitutable by reason of their characteristics, their prices and the use for which they are intended. The analyses are carried out by the HCC on the basis of data collected from the market. 

• What should each SME pay attention to?

The SMEs should be careful and react to situations where some of the following pricing or other practices emerge on the market (although this does not necessarily mean that all these practices are prohibited, but that their effects on the foreclosure of competitors and / or anti-competitive effects on the market should be considered and assessed):

Pricing practices

• • Sale below the cost of products or excessive pricing (e.g. an increase of 200%).
  • Discriminatory pricing among customers or discriminatory discounts towards a specific customer. 
  • Loyalty and exclusivity discounts/rebates granted to customers in order not to buy from competitors.
  • Discounts/rebates for the avoidance of importing products from other EU member-countries.
  • Discounts/rebates for the purchase of the full range/portfolio of products of the supplier.
  • Product grouping discounts/rebates, with a lower overall price for the product package as opposed to the price of the products sold on an individual basis.
  • Retroactive quantity rebates, given for all purchases of one year at the end of the year.
  • Promotional allowances/benefits for exclusion or disadvantaged promοtion/exposition of competitors’ products on store shelves, etc.

Non-pricing practices

• • Imposition of exclusivity clauses on commercial relations (e.g. exclusive promotion, exclusive supply, non-competition and reporting of competing bids, exclusive use of equipment/supplies (refrigerators, etc.).
  • Reduction of production or distribution of products (e.g. artificial shortages in the market) or restriction and avoidance of use of new technologies for market development.
  • Unjustified refusal to supply or refusal of access to an essential facility(e.g. network access).
  • Certain unfair terms and unfair commercial practices (e.g. denigration, malicious actions against a SME).

• How a SME can react to such market practices?

In some cases the above practices may be justified (e.g. refusal to sell to those who do not pay). In other cases, however, practices are being implemented with a view to removing competitors from the market, thereby restricting competition and to the detriment of consumers.

If you have information on the application of such practices on the market by a dominant company, you can inform the HCC submitting your personal info or anonymously using our digital services!

Given that SMEs are an important part of the Greek economy, their views and knowledge for the market conditions, but also their ideas and proposals to create better conditions and avoid anti-competitive practices are a key source of information for the Hellenic Competition Commission.

Through the active participation of SMEs, utilizing the possibilities of intervention in the framework of the competences of the Authority and in the investigations already launched, the SMEs contribute to the renewal of the market operation!

Hand in hand with the Hellenic Competition Commission’s initiatives for the protection of SMEs (e.g. renewal of legislation and introduction of the concept of asymmetry in the bargaining power as well as the commercial ecosystems), the SMEs' contribution can serve to strengthen renewal and pluralism in the Greek market!

Possibilities of intervention for market development: 

• Regulatory intervention in sectors of the economy

An important possibility of the Hellenic Competition Commission is to pursue regulatory intervention in sectors of the economy in order to investigate the existing competitive conditions in it. Following the investigation, by reasoned decision, the HCC may take all necessary measures to create conditions of effective competition in the specific sector of the economy.

This procedure shall include the conduct of a public consultation in which each SME can participate and deliver its views. Following the conclusion of the public consultation and if the HCC finds that there are no conditions of effective competition in the sector of the economy under consideration, it shall communicate specific measures, which it considers to be necessary, appropriate and proportionate to create conditions of effective competition.

The involvement of SMEs in regulatory intervention procedures is an important factor in taking into account and protecting their interests! At present, the HCC carries out regulatory interventions in the press distribution sector and in the construction sector.

• Opinions

The functioning of the market may be governed by laws and regulations which do not lead to the competitiveness of the Greek economy and / or impose obstacles to the competitive process. Many of the laws and regulations are now outdated, especially as trade evolves through digital technology.

The Hellenic Competition Commission is the competent authority to deliver an opinion on draft laws and other regulations that may introduce obstacles to the functioning of free competition.

If you believe that there is a malfunction in the market in which you are active, then you can inform the HCC and send the relevant data so that the HCC may consider the possibility of issuing an opinion on the rules and regulations that cause problems at SMEs.

• Sector inquiries of the market

Where price formation or other circumstances give rise to suspicion of a possible restriction or distortion of competition, the Hellenic Competition Commission may conduct an inquiry in a particular sector of the economy or specific types of agreements in different sectors, provided that they fall within its competence. The HCC may request information from undertakings or associations of undertakings (e.g. to provide any agreement, decision or concerted practice known) and to carry out any necessary investigation.

Early in 2021, the first major sector inquiry in the field of production, distribution and marketing of basic consumer goods and in particular food products as well as cleaning and personal hygiene products was completed, while sector inquiries are currently carried out in the field of e-commerce, financial technologies (fintech), private health and insurance and recycling and waste management.

Through the participation of SMEs in the processes of the sector inquiries, they can make a decisive contribution to the development of competitive market conditions. 

Serious administrative and criminal sanctions may be imposed for breaches of L. 3959 / 2011 on free competition, in addition to the issue of HCC decisions on the termination and omission of practices.

For example, significant fines (up to 10% of the total turnover or the profit derived from the illegal practice) are imposed for infringement of the relevant legislation. Moreover, autonomous fines can be imposed to the directors of the companies responsible for infringement of the law (up to €150,000 for infringement of Article 1 or up to €1,000,000 in cartel cases between competitors and up to €300,000 for infringement of Article 2).

Other fines can be imposed for failure of compliance with an HCC decision (€10,000 per day), while a fine of up to 1% of the turnover can be imposed for refusal / delay of providing information requested by the HCC.

In addition to the fines, the law also provides for a prison sentence (2 to 5 years) for infringements of Article 1 of L. No 3959 / 2011, but also for the distraction of investigations (at least 6 months).

Finally, participation in cartel practices may lead to exclusion from future tenders.