USAID | GOVERNING FOR GROWTH (G4G) IN GEORGIA INSPECTION POWERS OF COMPETITION AGENCY UNDER DCFTA

At the same time, it requires approximation of norms and regulations in various sectors, including competition policy and enforcement. The AA and DCFTA do not obligate Georgia to copy laws from the EU, but rather approximated laws should not be more restrictive than necessary to fulfill a legitimate objective. Reforming competition policy is a key requirement of DCFTA. According to the AA, Georgia should have effective anti-monopoly legislation and a competent competition regulatory authority. Georgia's commitments in this field are envisaged by Title IV on Trade and Trade-Related Matters, Chapter 10, of the Association Agenda between the EU and Georgia 2014 – 2017. Under the framework of legislative approximation, Georgia already has substantial progress in this regard, including the introduction of the Competition Agency, adoption of a Competition Framework Law, and a number of sub-normative acts to specify them. However, much remains to be done before Georgia is in full compliance with EU requirements in terms of effective enforcement. There are six interrelated issues concerning the inspection powers of the Competition Agency, each of which is elaborated in the body of this policy paper. These issues include the importance of anti-trust regulation, the disputable nature of the inspection powers of the Competition Agency, the consideration of requesting increased inspection powers, the risk of negative perceptions associated with increased inspection powers, the need to give the Competition Agency increased inspection powers, and the question of when such a change would be timely and reasonable. Not surprisingly, there are significant differences of opinion on how to proceed in this area. The views of the Competition Agency, practices common in the EU, and opinions of opponents of increased inspection powers are discussed later in this policy paper. Georgia has time to improve matters before it becomes a full member of the EU, and therefore, for policy-making purposes, the following steps should be followed: define the end-state inspection powers for the Competition Agency and their application, set a concrete deadline for meeting all preconditions for the end-state of inspection powers, and ensure that inspection powers of the Competition Agency are not increased until several key preconditions are in place. The preconditions for effective implementation of competition policy include increasing the public legitimacy of the Competition Agency, strengthening the court system to improve oversight and control of the Competition Agency and its decisions, setting a proper procedural balance between the Competition Agency and economic agents, increasing the capacity and experience of the Competition Agency staff in anti-trust areas, and increasing public awareness of competition issues.