This issue is significant in that it highlights a critical delay in Estonia’s adoption of the EU competition directive, which was due in 2021. The delay has already resulted in a daily fine of €600 for the state, with the potential for this to be ten times as the European Court reviews the case.

Initially, the government proposed a new administrative process for handling competition violations, but Justice Minister Liisa-Ly Pakosta (Eesti 200) shifted her focus to simpler contravention procedures, citing efficiency and alignment with existing systems. The controversy highlights the challenges of legal reform, institutional coordination and the wider economic and political impacts of the EU’s unfulfilled obligations.

While the current Reforma-SDE-Eești 200 coalition partners initially agreed to introduce a new administrative procedure for handling violations, a cabinet reshuffle following the change of prime minister earlier this year and diverging views on legal issues have blocked progress.

At the same time, Estonia continues to pay a daily fine of EUR 600 for not adopting the EU competition law directive, the risk of this penalty increasing.

Riigikogu committee chairman: The delay was unavoidable

Earlier this year, the coalition partners developed an administrative procedure to handle violations of the Competition Act, with the aim of creating a new process under Estonian law. In February, after years of debate, the government submitted a bill to the Riigikogu that would allow administrative courts to impose fines. The bill passed first reading in April but has since stalled.

Jaak Aab (SDE), chairman of the Riigikogu’s Economic Affairs Committee and a former government minister, noted that this delay was predictable given the need for substantial changes to administrative court procedures.

The original proposal sought to empower the Competition Authority to impose administrative fines. However, the government has opted for a more complex solution, involving first-tier administrative courts and requiring procedural reforms. Justice Ministry officials confirmed in May that clarifications would be proposed by the fall.

The new minister of justice criticizes the duplication

The government reshuffle in July brought significant changes. While the coalition partners remained the same, the Ministry of Justice portfolio went to Liisa-Ly Pakosta from Eesti 200 (along with the digital business portfolio).

Pakosta was skeptical about the administrative fines and criticized the duplication of trials under the current bill, saying: “If we want to have another court in addition to the circuit court (second level), which until now has protected people of excessive condition. exceeding, but would now impose fines on behalf of that state, we should establish a separate court proceeding that fully duplicates the existing fines process in the circuit courts.”

In August, Minister Pakosta presented two alternative versions of the bill. One mirrored the current proposal but redirected fine decisions to district courts. The other suggested handling competition violations through tort proceedings, which she called “the most economical and efficient way to get justice for Estonian consumers.”

Businesses also prefer that competition violations are misdemeanors

Stakeholders are now divided on how to proceed. Jaak Aab stressed that substantial changes to a government-initiated bill require government approval, while MP Mario Kadastik (Reform) admitted that if a new bill appears as a result of Pakosta’s changes, “the entire due process, along with all coordination.”

Kadastik leads the debates on the bill through the committee for economic affairs.

Pakosta has defended the aforementioned contraventional approach, saying it aligns with EU practices on data protection and financial supervision. She argued: “Infringement proceedings are an appropriate method”, citing support from the European Commission due to its non-criminal nature, which complies with the competition law directive.

Business lobby groups and the Supreme Court have considered both tort and administrative procedures appropriate, although businesses favor tort procedures because of their purported simplicity and efficiency.

EU fines could increase tenfold

The Economic Affairs Committee of the Riigikogu continues to debate the future of the bill.

Kadastik noted that implementing acts could be introduced during the second reading of the bill, but adding consensus among coalition partners remains essential. Pakosta expressed confidence in his amendments, saying: “All necessary consultations can be handled by the Riigikogu Economic Affairs Committee.”

However, some officials warn that the procedural changes could require at least a year of preparation. Aab stressed the urgency, pointing to the potential for Estonia’s daily fines to increase tenfold if the European Court rules against the government.

Estonia’s competition law reform is facing delays due to political and procedural hurdles, with increasing penalties urging a swift resolution despite legal and political challenges.

In 2014, the European Parliament and the European Council issued a joint directive on “certain rules governing actions for damages under national law for infringements of competition law provisions of the Member States and of the European Union”. EU competition law aims to promote fair competition in the single market, for example by preventing cartels, excessive monopolies and illegal state aid.

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