Armenia's competition law has evolved significantly to align with EAEU and CEPA requirements. Interim measures remain a powerful but underutilized enforcement tool, creating a complex dynamic where potential damage claims may influence the Competition & Consumer Protection Commission's (CCPC) approach to finding infringements. However, beneath the surface of procedural efficiency lies a more complex dynamic: the potential for substantial damage claims should interim measures prove unjustified, creating perverse incentives that may influence the Commission's approach to finding infringements.
Understanding the System
Armenia's competition authority, known as the Competition and Consumer Protection Commission (CCPC) , has the power to impose interim measures during investigations. Unlike court orders that require extensive legal proceedings, the CCPC can act quickly when they suspect a business is breaking competition rules. This gives the authority significant power and responsibility. They can essentially tell a business to stop certain activities, change how they operate, or even restructure parts of their operations – all before determining whether the business actually infringed any rules.
The Compensation Problem: A Double-Edged Sword
Here's where things get complicated. Armenian law allows businesses that have been wrongly accused or restricted to seek compensation for their proven losses. If a business is cleared of wrongdoing after being subject to interim measures, they can demand payment for the money they lost during that period.
This creates what one would call a "damned if you do, damned if you don't" situation for the competition authority. When they impose interim measures to protect competition, they're simultaneously putting themselves at financial risk if their investigation concludes that the business did nothing wrong.
Perverse Incentives: The Path to Infringement Findings
This compensation risk creates a subtle but powerful psychological pressure on the competition authority. Once they've imposed interim measures, they face a troubling choice: either find that the business broke the rules (justifying their initial action) or potentially face massive compensation claims.
Human nature suggests that people tend to justify their previous decisions rather than admit mistakes, especially when admitting mistakes comes with severe financial consequences. This means the competition authority might unconsciously lean toward finding violations once they've already restricted a business, even if the evidence doesn't strongly support such findings.
Nevertheless, for the sake of fairness it shall be underlined that Armenian system tries to somehow mitigate such risks by mandatory collegial decisions on the cases by the voting. However, this concern becomes more serious when we consider that competition law is extremely complex. Even well-meaning businesses can struggle to understand all the rules without professional legal help. This complexity makes it easier for investigators to find technical violations that can justify their earlier decisions to impose restrictions.
Comparative Perspectives
Armenia's approach represents an extreme version of a problem that exists worldwide. The European Commission, which has similar powers, uses temporary measures very rarely – only eight times since the 1980s – precisely because they're aware of the risks and potential challenges.
This extreme caution in Europe suggests that authorities there may be too conservative, potentially allowing harmful business practices to continue while lengthy investigations proceed. However, Armenia may have swung too far in the other direction, creating incentives that could undermine fair enforcement. Some countries have tried to find a middle ground. The United Kingdom, for example, lowered the standard required for interim measures in 2014, making them easier to obtain but presumably with appropriate safeguards to prevent abuse..
Finding the Right Balance
Temporary measures serve an important purpose in competition enforcement. In fast-moving markets, waiting years for a full investigation to conclude can allow irreversible harm to competition and consumers. Quick action is sometimes necessary to maintain fair markets. However, Armenia's current system creates concerning incentives that may systematically push the competition authority toward finding violations once they've imposed restrictions. This undermines the fairness and credibility of the entire system.
The challenge is creating a system that allows swift action when necessary while ensuring appropriate checks and balances to prevent systematic bias. This might involve independent oversight of temporary measures, stricter standards for imposing them, or different approaches to handling compensation claims.
Professional Legal Counsel Necessity
Given these complexities and risks, businesses operating in Armenia need professional legal guidance throughout any competition matter. This guidance becomes essential at three key stages:
Before any problems arise: Legal counsel can help structure business practices to comply with competition rules and identify potential risks before they become formal investigations.
During investigations: When the competition authority's broad powers are at stake, professional guidance becomes crucial for navigating complex procedures and protecting business interests.
After proceedings conclude: Whether seeking compensation for unjustified restrictions or defending against private lawsuits, legal expertise remains vital for managing the aftermath of competition proceedings.
The reality is that Armenian competition law is extraordinarily complex. Even businesses with the best intentions can inadvertently cross regulatory lines without professional guidance. For any company operating in Armenia's evolving competitive landscape, continuous legal counsel isn't just advisable – it's practically essential for survival.
Conclusion
Armenia's competition law framework represents a work in progress. While the country has made significant strides in modernizing its approach to competition enforcement, the current system for temporary measures creates problematic incentives that could undermine fair enforcement.
As Armenia continues to refine its competition law to meet international standards, addressing these interim measures dilemma should be a priority. The goal should be a system that empowers quick action when necessary while ensuring fairness and preventing systematic bias toward finding violations.
For businesses, understanding these dynamics is crucial for managing risk and making informed decisions about legal strategy. In a system where the rules are complex and the stakes are high, professional legal guidance isn't just helpful – it's essential for navigating Armenia's competitive landscape successfully..
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Author:
Arthur Buduryan
Partner, Legelata Legal and Tax
DISCLAIMER:
This material is produced by or for Legelata LLC. The information contained in this piece is provided for general informational purposes only and does not contain a comprehensive analysis of each item described. Prior to undertaking (or omitting) any action, the reader is advised to seek professional advice tailored to their specific situation. Neither Legelata nor the author accept and hold liability for acts or omissions taken in reliance upon the contents in this material.
LEGELATA LLC 21/11/2025
