Anti-competitive practices are the categories of conduct prohibited under the Competition and Anti-Monopoly Law No. 14 of 2010 as restricting, preventing, or distorting competition in the Iraqi market. The framework distinguishes between horizontal restraints (conduct between actual or potential competitors) and vertical restraints (conduct between operators at different levels of the supply chain), with substantive considerations specific to each category. The framework engages substantive analytical considerations of the conduct’s effects on the competitive process, with both substantive prohibitions and procedural arrangements for the assessment of specific conduct.
Definition of Anti-Competitive Practices
The definition engages both express coordination and substantive coordination of conduct, supporting the comprehensive application of the framework. Anti-competitive practices under the Competition Law engage:
- Agreements between operators, whether formal or informal, written or oral
- Concerted practices supporting coordination between operators without formal agreement
- Decisions of associations of operators affecting competition
- Conduct with the object or effect of restricting, preventing, or distorting competition
- Conduct producing substantive effects on the Iraqi market
Horizontal Restraints
Horizontal restraints engaging the principal categories above are conventionally treated as substantively serious, with substantive prohibitions and substantial penalties. Horizontal restraint agreements and practices between actual or potential competitors engage the most substantive concerns under the competition framework. The principal categories include:
- Price fixing, engaging agreements to fix prices, price components, price-related conditions, or pricing practices
- Market sharing, engaging agreements to divide markets by reference to geography, customers, products, or other dimensions
- Output restriction, engaging agreements to restrict production, supply, or distribution
- Bid rigging, engaging coordination in competitive tenders, including agreement on which competitor will win, agreement on bid amounts, agreement on bid withdrawal, and agreement on subcontracting arrangements
- Boycott arrangements, engaging coordinated refusal to deal with specified counterparties
- Information exchange supporting substantive coordination
- Joint research and development arrangements where they engage substantive coordination of competitive activities
- Joint purchasing arrangements where they engage substantive competitive effects
Cartels
Operators should structure their internal arrangements with substantive attention to cartel risk, supporting both the prevention of substantive breaches and the response to identified concerns. Cartels are the most substantive category of anti-competitive practice, engaging coordinated conduct between competitors with substantial competitive effects:
- Cartel arrangements typically engage multiple horizontal restraints simultaneously
- Cartels frequently engage substantive concealment supporting the maintenance of the arrangement
- Cartel enforcement engages substantive investigative powers including search, document collection, and witness examination
- Cartel penalties are substantial, engaging significant monetary penalties and potential criminal liability
- Cartel detection frequently engages leniency arrangements supporting cooperation by participants
- Cross-border cartels engage international coordination between competition authorities
Vertical Restraints
Vertical restraints engage substantive analytical considerations of their substantive effects, with the framework distinguishing between pro-competitive arrangements supporting efficient distribution and arrangements producing substantive anti-competitive effects. Vertical restraints, agreements between operators at different levels of the supply chain engage substantive considerations distinct from horizontal restraints. The principal categories include:
- Resale price maintenance, engaging restrictions on the prices at which distributors may resell products
- Exclusive distribution arrangements, engaging restrictions on the distributors to whom a supplier may supply or the geographic areas they may serve
- Exclusive purchasing arrangements, engaging restrictions on the distributor’s purchasing from competitors
- Selective distribution systems, engaging restrictions on the distributors authorised for specific products
- Tying arrangements, engaging the conditioning of the supply of one product on the purchase of another
- Bundling arrangements
- Territorial restrictions on distributors
- Customer restrictions
Analytical Framework
The analytical framework supports the substantive application of the framework to specific conduct, with the assessment engaging both legal and economic considerations. The analytical framework for the assessment of anti-competitive practices engages:
- Identification of the substantive conduct including the parties, the substantive content, and the operational implementation
- Characterisation of the conduct as agreement, concerted practice, or unilateral conduct
- Identification of the relevant market affected by the conduct
- Assessment of the substantive market position of the parties
- Assessment of the object and effect of the conduct on competition
- Identification of any countervailing efficiency benefits
- Assessment of the substantive balance between anti-competitive effects and efficiency benefits
Object and Effect
The distinction is substantive, with object-based prohibitions typically engaging the most serious categories of conduct including hardcore cartels, and effect-based assessment engaging the broader range of potentially anti-competitive conduct. The Competition Law prohibits conduct with the object or effect of restricting competition:
- Object-based prohibition engaging conduct that, by its nature, restricts competition, with the substantive prohibition applying without specific evidence of effects
- Effect-based prohibition engaging conduct that, while not restrictive by object, produces substantive anti-competitive effects in the specific circumstances
Efficiency Defences
The efficiency defence engages substantive analytical considerations, with the substantive availability depending on the specific conduct and circumstances. Efficiency defences support the substantive justification of conduct that might otherwise engage the framework:
- Substantive efficiency benefits produced by the conduct, including improvements in production, distribution, or innovation
- Sharing of efficiency benefits with consumers
- Indispensability of the substantive restrictions to the realisation of the efficiencies
- Absence of substantial elimination of competition
- Substantive documentary support for the efficiency claims
Consequences of Breach
The substantive cumulative consequences support the operator’s substantive investment in compliance arrangements that prevent breaches at the source. Consequences of breach of the anti-competitive practices framework include:
- Administrative penalties imposed by the Competition Council
- Substantive monetary penalties calibrated to the severity of the conduct
- Cease and desist orders requiring the termination of the conduct
- Orders for divestment or structural remedies in substantive cases
- Reputational consequences affecting the broader market position
- Civil liability to parties harmed by the conduct
- Criminal liability for substantial offences
- Adverse consequences for the operator’s broader regulatory standing
Compliance Programmes
Effective compliance programmes substantially reduce the operator’s competition law risk and support the substantive defence of any matters that arise. Anti-competitive practices compliance programmes engage:
- Clear anti-competitive practices policy with senior management commitment
- Risk assessment identifying the substantive competition risks engaging the operator’s activities
- Training of personnel engaged in commercial decisions
- Specific guidance on contact with competitors
- Specific guidance on participation in trade associations
- Information management arrangements addressing competitively sensitive information
- Internal reporting channels
- Periodic compliance audits
- Specific response procedures for identified concerns
How We Can Help
Etihad Law Firm advises on anti-competitive practices in Iraq, including compliance programme structuring, assessment of specific conduct against the Competition Law framework, response to Competition Council investigations, leniency considerations, defence of anti-competitive practices proceedings, and the conduct of disputes engaging anti-competitive matters.