Estonian parlt passes law allowing EU block exemptions in competition

Estonian parlt passes law allowing EU block exemptions in competition. Photo: Eero Vabamägi

The Estonian parliament passed on Tuesday amendments to the Competition Act, introducing a framework that allows the application of European Union block exemptions within Estonia's domestic competition law.

Block exemptions are among the most widely used tools in EU competition law. They cover a wide range of contract types common in commerce, which, despite containing potentially anti-competitive clauses, have a positive impact on consumers and the economy. EU block exemptions apply to Estonian businesses when their agreements affect trade between member states.

The adopted solution is a hybrid model. On one hand, EU block exemptions become directly applicable within domestic competition law. On the other hand, Estonia retains the ability to review these exemptions and approve them through a national regulation, ensuring their compatibility and necessity within the Estonian legal framework. Specific adjustments for domestic law can also be made where needed. Additionally, the government has the authority to establish purely domestic block exemptions through regulation.

This solution aims to ensure legal certainty and effective competition oversight while reducing administrative and bureaucratic burdens. It also enhances legal clarity for businesses and helps reduce costs associated with legal consultation.

The updated regulation will not impact the current competitive environment. At present, Estonia has one government regulation covering block exemptions related to vertical agreements. As a result of the changes, six block exemptions will be incorporated into domestic competition law, including two that have not yet been transposed, relating to rail, road, and inland waterway transport as well as technology transfer agreements.

During second reading, amendments were made to clarify the wording of the provision delegating authority and maintain the existing procedure, whereby the government enacts national regulations based on the proposal of the minister responsible for the field. The rights of the Competition Authority regarding EU block exemption regulations were also clarified, and it was stipulated that changes related to block exemptions will take effect on Jan. 1 of the coming year.