Recent developments in Estonia regarding competition policy and enforcement

15 March 2024

Recent developments in Estonia regarding competition policy and enforcement

This article provides a brief overview of recent key developments in Estonia regarding competition policy and enforcement. Namely, the status of the transposition of the ECN+ Directive into Estonian law, the Estonian Competition Authorities’ (“CA”) analysis of the 2020 pharmacy reform, investigation of a potential grain cartel and CA’s analysis of the food market.

Transposition of ECN+ Directive[1] into Estonian law

Although Member States had to transpose the ECN+ Directive in national law by 4 February 2021, Estonia has yet to do so. After several delays and contrasting views, the Estonian government finally initiated the amendment of the Estonian Competition Act and related laws to transpose the ECN+ Directive into Estonian law (“Draft Law”) at the Estonian Parliament (Riigikogu) this February, i.e., February 2024. According to the Draft Law, the amendments are set to take effect on 1 June 2024, however, the Draft Law is still pending at Riigikogu.

The current legal framework in Estonia provides that anti-competitive agreements are classified as crimes (punishable by pecuniary punishment and imprisonment), and abuses of dominance and other competition offenses, such as failure to obtain a merger clearance, are treated as misdemeanours (punishable by a fine). In addition, CA may issue precepts (in Estonia: ettekirjutus) ordering an undertaking to carry out a certain act or to cease violations of the law. If the undertaking fails to comply with the precept, CA may issue penalty payments (in Estonian: sunniraha).

The Draft Law introduces a new competition field-specific administrative procedure (in Estonian: konkurentsijärelevalvementlus) to be carried out by CA which will replace the current system in Estonia (including the criminal proceedings applicable to anti-competitive agreements). CA will oversee competition law compliance, but as a result of the recent political compromise, fines for any competition law violations will be determined and imposed by the administrative court, rather than by CA itself. For a competition violation, undertakings may be fined up to 10% of their overall global turnover generated in the preceding financial year. Whereas, procedural measures typically associated with criminal investigations, such as surveillance and detention, cannot be applied in the new special administrative procedure.

The Draft Law proposes considerable changes to the current competition law enforcement system and remains a topic of intense debate among practitioners, enforcers, and other interest groups. As of the date of this article, the Estonian Chancellor of Justice and the Estonian Supreme Court, among others, have submitted additional opinions to Riigikogu expressing their concerns about the Draft Law. These concerns include constitutionality of certain provisions in the Draft Law and the lack of proper procedural regulation for the proposed new special administrative procedure. Therefore, it remains uncertain when and in what form the Draft Law will be passed by Riigikogu.

2020 Pharmacy Reform

In January 2024, CA published its ex post analysis[2] of the outcomes of the Estonian pharmacy reform (ownership restrictions) that entered into force on 1 April 2020. CA analysed the ways the reform had affected the pharmaceutical sales market with focus on the competition situation and independence of pharmacies. For this, CA surveyed a sample of 42 general pharmacies. In short, CA found that the pharmacy reform had not achieved its goals.

The aim of the Estonian pharmacy reform was to separate the retail and wholesale trade of medicines (in Estonian: ravimid)[3] by setting forth that only pharmacies where the majority is owned by pharmacists have the right to operate. In addition, wholesalers were not allowed to have a stake in or dominant influence over a pharmacy after 1 April 2020.

The analysis showed, however, that the pharmacies continue to be linked to the wholesale traders that previously owned them, e.g. via supply, franchise, sub-lease, or other arrangements. It was concluded that the desired effect of having independently operating pharmacies has not realized. Even after the reform, pharmacies continue to operate within established conditions, relying on various legal and economic factors, particularly on wholesalers and franchise owners.

In the analysis, CA made the following conclusions and recommendations:

  • New regulation for medicine prices: the existing model for regulating medicine prices is ineffective. Although medicine prices are negotiated between the medicine manufacturer and the government, and wholesale and retail markups are regulated, CA’s spot analysis of manufacturers and wholesalers in 2020 revealed that manufacturers provide wholesalers significant discounts from the nationally agreed-upon prices. To ensure that these manufacturer discounts reach the retail level and ultimately benefit consumers, a better regulation needs to be developed and additional measures should be implemented to enhance price competition among wholesalers.
  • Additional measures to ensure pharmacies’ independence: the current ‘dominant influence’ system is not working as it was supposed to as the pharmacies are still heavily reliant on the wholesalers through various contractual and other measures (such as leasing business premises from franchise owners, loan obligations, IT-systems). Therefore, the law should establish more precise and separate rules with particular attention to the contractual relationships that have evolved within the pharmacy sector after the reform. For example, addressing situations where the rights of use of the pharmacy’s business premises remain under the control of the franchise owner. CA also advises to implement a rule which prevents an individual from simultaneously being a member of the governing body of the legal entity that owns the pharmacy and being part of the group of owners or governing bodies of (or being otherwise closely linked with) the franchise owner, pharmaceutical manufacturer, wholesale distributor, or healthcare service provider.
  • Additional requirements for pharmacy ordering systems: pharmacies use ordering systems to manage medicine supply. However, these systems seem to create a situation where ordering medicines from a single wholesaler is favoured, which gives such wholesaler an advantage over other potential wholesale channels. A possible solution would be to create an ordering system where all licensed wholesalers can interact on equal terms. Pharmacists should have an easy way to automatically compare offers from different wholesalers within the system.
  • Additional competition law enforcement measures to CA: at present, CA has the authority to issue recommendations based on the market analysis that was carried out by the authority but CA does not have the authority to impose binding structural and behavioural requirements. Given the current debate in other EU Member States regarding whether competition authorities should have the legal power to intervene even when no violation has been identified, granting such additional measures to CA should also be considered in Estonia. Such interventions by the CA would not be aimed at sanctioning undertakings but rather at reducing the behaviour or market power in order to enhance overall economic welfare and protect consumers.

CA’s analysis of food market

In the fall of 2023, CA carried out a brief market analysis of the food prices in Estonia[4]. The aim of the analysis was to identify whether there are any competition failures or significant unexplained changes in the food market, specifically whether there was any ‘greedflation’. CA sought to (i) better understand how the prices of food products sold in Estonia have changed in the past three years; (ii) determine the factors behind the price changes; (iii) asses whether the price fluctuations align with trends in the world market and regions close to Estonia; and (iv) determine whether Estonian agricultural producers, food manufacturers and retail stores have unjustifiably profited at the expense of consumers.

For this, CA analysed the changes in food prices and economic indicators of sector companies during the period of 2019 – 2023 with emphasis on agricultural producers, food industry and retail stores (vertical sector). In the analysis, CA used the publicly available information published by Statistics Estonia, Estonian Institute of Economic Research, Eurostat, and public financial reports from registered companies.

As a conclusion of the analysis, CA found that the food prices in Estonia have been influenced by international policies and market failures, and Estonian agricultural producers, food industry and retail stores have not excessively raised prices or earned unjustifiably large profits. Instead, factors such as the increase of global fuel and energy prices, the Ukrainian war, armed conflicts in Africa, climate change and associated extreme weather conditions have impacted the food prices.

Although, CA did not find that the Estonian agricultural producers, food manufacturers and retail stores had earned unjustifiably large profits from high price increases, CA stressed that it will continue to monitor the developments in the food market. CA stated that it will take measures to enhance its efforts against unfair trading practices to ensure that producers’ goods reach consumers on fair conditions and there exists fair competition between producers’ and retailers’ private level products.

Grain Cartel

The Prosecutor’s Office recently terminated criminal proceedings initiated in 2018 against several undertakings who were suspected of participating in a grain cartel. The proceedings were terminated under the opportunity principle (in Estonian: oportuniteedi põhimõte)[5] with the companies and individuals being required to pay a total of more than 300,000 euros as a pecuniary obligation. Criminal proceedings are still ongoing in respect to one individual. This case stands out as one of the largest cartel investigations of CA.

The investigation focused on six companies suspected of entering into anti-competitive agreements within the grain dryer market in relation to 2018 – 2019 subsidies from the Estonian Agricultural Registers and Information Board (PRIA). Undertakings had the opportunity to apply for investment support from PRIA, including funding for the purchase of grain dryers. As part of the application process, undertakings were required to submit at least three comparable price quotations to PRIA.

CA discovered that the price quotations submitted by these six companies were prepared within a short time frame of each other and looked visually very similar. This raised suspicions that the price quotations had been previously coordinated among the grain dryer sellers, indicating that they were not genuinely competitive.

Before the commencement of the next round of PRIA subsidy applications, CA, in collaboration with the police, carried out an extensive surveillance operation and searches at 12 locations – making it the largest competition-related search in Estonia to date. Based on the evidence gathered, the undertakings were filed with the suspicion of dividing the market for the sale of grain dryers and coordination of price quotations.

Since the undertakings under investigation constitute the majority of grain dryer sellers in Estonia, the alleged anti-competitive conduct had a significant impact on the market.

More information can be found from CA’s webpage here and CA’s 2022 annual report here.

Kaisa Üksik, Head of Competition Practice Group (Estonia) – Walles



[1] Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market,

[2] Full text of the analysis can be found here:

[3] As defined in § 2 of the Estonian Medicinal Products Act, English text available from here:

[4] Full text of the analysis can be found here:

[5] The decision not to prosecute based on the opportunity principle means that in the assessment of the prosecutor and the court the violations have taken place, but for various reasons, criminal punishment is not absolutely necessary.§ 202 of the Estonian Code of Criminal Procedure, English text available from here: