The Commission for Protection of Competition Must Evaluate the Potential Impact of Fines on Businesses: The Position of the RA Court of Cassation
- 2025-05-21
Acting on behalf of "Ritm Pharm" LLC, we had filed a lawsuit seeking the annulment of Decision No. 54-A of the RA Commission for the Protection of Competition (hereinafter referred to as "the Commission"), whereby the company was held administratively liable and fined AMD 1,000,000 for failing to provide information to the Commission.
The RA Administrative Court upheld the claim, finding that the administrative act lacked adequate justification for selecting the specific penalty amount of AMD 1,000,000, and also lacked proper analysis regarding the potential impact of the imposed fine on the company. The Court concluded that the absence of necessary justifications for imposing liability and determining the fine's amount must result in the invalidity of the administrative act.
The RA Administrative Court of Appeal rejected the Commission's appeal, upholding the Administrative Court's judgment. However, the Appellate Court additionally emphasized that, beyond the missing justifications, it was essential for the Commission to address all legally prescribed conditions, such as the presence of repeated violations, motives, and other relevant factors—something the Commission had failed to do.
The RA Court of Cassation reaffirmed the conclusions of the lower courts regarding the invalidity of the administrative act, while simultaneously providing a new interpretative stance, specifically highlighting the following points:
- The circumstances outlined in Article 31(2) of the RA Law on Protection of Economic Competition, which must be considered when imposing administrative sanctions, are not necessarily mandatory in every instance. Consideration should be given to the particular type and characteristics of the specific infringement. Thus, it may occur that in certain cases, not all specified circumstances are applicable or require analysis.
- When determining administrative sanctions, the Commission is obliged to evaluate only those circumstances objectively relevant to the specific case, rather than addressing all factors indiscriminately and unconditionally.
- Nevertheless, the Commission must, at a minimum, substantiate the chosen penalty amount and properly assess its potential impact on the economic entity, which was not done in the present case.
Given the above, the RA Court of Cassation decided to reject the Commission's cassation appeal, maintaining the lower courts' decisions unchanged, with its additional interpretative remarks.
Conclusions and Final Summary:
The position articulated by the RA Court of Cassation in this case is significant in two key respects:
- On one hand, it reaffirms the necessity of clear criteria for the discretionary exercise of administrative authority, particularly the thorough justification of the fine amount and its possible impact. The absence of such justifications will result in the annulment of the administrative act.
- On the other hand, the Court of Cassation clarified that not all circumstances prescribed by law are always applicable in each case. Rather, they must be evaluated within the context of the particular type and specifics of each violation. This approach enables the formation of a more flexible and pragmatic judicial practice in future cases.
Thus, while the RA Court of Cassation upheld the decisions of lower courts, it simultaneously clarified and refined legal approaches through its interpretations, which can significantly influence the consistency and uniformity of judicial practice in future similar administrative cases.
Notification:
The decision of the RA Administrative Court in Administrative Case No. VD/3753/05/21 has entered into legal force.