As an EU member state, Estonia’s laws are harmonized with the relevant EU legislation. The Competition Act is the most important law, regulating among other things merger control, abuse of dominant position and state aid. Another relevant law is the Restriction of Unfair Competition and Protection of Business Secrets Act. State supervision is exercised by the Competition Authority.
Undertakings operating in markets regulated by specific Acts (such as the Electricity Market Act, District Heating Act, the Aviation Act, the Natural Gas Act, the Postal Act, the Ports Act, and the Public Water Supply and Sewerage Act) shall pay a supervision fee to the Competition Authority.
Unlike other EU states, competition infringements are currently prosecuted and sanctioned in criminal or misdemeanor proceedings instead of administrative proceedings, though as of 2023 there are plans in progress to change this legislation.
The Penal Code states that agreements, decisions, or concerted practices between undertakings with the objective or effect of restricting competition are punishable by a pecuniary penalty or up to one year's imprisonment. Agreements, decisions, or concerted practices among competitors, including participation in public procurements, which directly or indirectly fix prices or other trading terms with respect to third parties, limit production, service, goods markets, technical development, or investment, or share markets or sources of supply, restrict access to goods markets for third parties, or attempt to exclude third parties from these markets, are punishable by a pecuniary penalty or by one to three years' imprisonment. The pecuniary penalties for these acts, if committed by a legal person, are, respectively, up to 5 percent of the legal person's turnover or 5 to 10 percent.
The main sources for the relevant legislation are the Anti-Corruption Act and the Penal Code.
Estonia's penal law also applies to the granting, acceptance, or arrangement of the receipt of bribes or influence peddling committed outside the territory of Estonia or to crimes that damage the financial interests of the European Union if such acts are committed by an Estonian citizen, company or official.
The following acts are considered crimes under the Penal Code:
- Acceptance of a bribe;
- Arrangement of a bribe;
- Giving or promising a bribe;
- Acceptance of a bribe in the private sector, i.e., by a person competent to engage in economic activities in the interests of a private law entity and in exchange for the abuse of their competence;
- Giving a bribe in the private sector.
All these acts are punishable either by a pecuniary fine or by up to five years' imprisonment. Giving a bribe, if committed at least twice, by a group, or on a large-scale basis, is punishable by one to ten years' imprisonment. A knowing violation of a procedural restriction established by the Estonian Anti-Corruption Act to a significant extent is punishable by a pecuniary fine or up to one year's imprisonment, or up to three years if committed on a particularly large-scale basis.
Failure to comply with obligations provided by legislation implementing international sanctions or establishing sanctions of the Government of the Republic or violation of the prohibition is punishable by a pecuniary punishment or up to five years’ imprisonment. Misdemeanors related to sanctions can be found in the International Sanctions Act.
All aforementioned crimes, if committed by a legal person, are punishable by a pecuniary fine. In the case of a legal person, the court may impose a pecuniary fine ranging from 4,000 to 40,000,000 euros.
Corruption in Estonia can happen but is not a significant problem. Transparency International’s Corruption Perception Index ranks Estonia at number 14 on their best-to-worst list among the countries of the world.
Please see the section on foreign corrupt practices.
As for business combinations, according to the Code of Criminal Procedure, criminal proceedings are not initiated, and ongoing criminal proceedings are terminated when the legal entity suspected or accused has ended. Estonian laws do not allow for the transfer of personal criminal liability for a crime committed by a legal entity to a successor. This has been confirmed in the practice of the Supreme Court. Liability can only be attributed to the specific legal entity whose representative committed the act in the interest of that particular legal entity. In the case of merger or division, it might not be possible to speak of the same legal entity.
Therefore, the law allows legal entities to avoid criminal proceedings through merger, except for the merging entity that continues to operate with the existing registration code. In the case of companies merging by forming a new legal entity, criminal proceedings can be avoided for all merging entities because the new business entity is assigned a new registration code. The same applies to divisions by forming new entities.
