LAW ON PROTECTION ON COMPETITION

Understanding the Protection of Competition in Serbia

There is ongoing public debate about potential solutions to improve competition protection in Serbia and further align the country’s regulations with European Union standards. The current Law on Protection of Competition (“Official Gazette of the Republic of Serbia”, No. 51/09 and 95/13), hereinafter referred to as the Law, is already aligned with EU Regulation 1/2003 on competition rules. Recently, the EU adopted a new Directive 1/2019, which aims to help national competition authorities more effectively implement Regulation 1/2003.

This article outlines key concepts and mechanisms within the framework of Serbia’s competition protection laws.

The Role of the Commission for the Protection of Competition

The Commission for the Protection of Competition (hereinafter: the Commission) was established in 2005 as an independent body to oversee the enforcement of the Law and monitor competition within Serbia’s market.

The Law applies to various entities, including domestic and foreign companies, entrepreneurs, public authorities, and market participants performing activities of general interest. Additionally, the Law has extraterritorial application, meaning it applies to actions outside Serbia that affect competition within the country. For instance, an international company operating in Serbia through a subsidiary must notify the Commission of mergers or acquisitions that exceed concentration thresholds set by the Law.

Forms of Competition Infringement

The Law identifies three main types of competition infringements:

1. Restrictive Agreements
   Agreements that significantly restrict, distort, or prevent competition are prohibited. Cartel activities, such as price-fixing or market-sharing, are criminalized, with penalties including imprisonment (6 months to 5 years) and monetary fines.

   However, under certain conditions, restrictive agreements may qualify for exemption if they improve production, trade, or technical progress. Exemptions can be individual or category-based. Agreements classified as “hard-core,” such as collusion on minimum pricing in public procurement, are strictly prohibited and considered null and void.

2. Abuse of Dominant Position
   A dominant position is assumed when a market participant controls more than 40% of a market. Misusing this position, such as through unfair pricing or imposing discriminatory conditions, distorts competition and is prohibited.

3. Market Concentration
   Concentration arises from mergers, acquisitions, or joint ventures. Serbia’s thresholds for mandatory notification of concentration are lower than the EU’s. For example, notification is required if total annual global revenue exceeds EUR 100 million, with at least EUR 10 million generated in Serbia. Parties must suspend all concentration-related activities until the Commission approves.

Enforcement and Penalties

The Commission has broad enforcement powers, including the authority to:

• Conduct inspections and dawn raids.
• Perform sectoral analyses to identify potential issues.

If the Commission identifies a competition infringement, it may impose fines of up to 10% of annual revenue generated in Serbia. It may also require corrective measures, such as revising pricing policies if a dominant player is found to have set unreasonably high prices.

Leniency Policy and Procedural Safeguards

Participants in restrictive agreements may benefit from a leniency program. Full or partial immunity from fines is available to those who voluntarily disclose the existence of restrictive agreements or provide key evidence.

Procedural safeguards ensure fair treatment during investigations, including the right to information, to submit statements, and to challenge decisions in court. Decisions by the Commission can be reviewed by the Administrative Court.

Commitments and Investigation Suspension

Market participants under investigation may propose commitments to eliminate competition concerns. If the Commission accepts these commitments, the investigation is suspended. Failure to fulfill the commitments within the specified timeframe will result in the continuation of the investigation.

Importance of Legal Support

Given the Commission’s extensive powers and the severity of penalties, businesses must be aware of their obligations under competition laws. Legal support can play a crucial role in navigating investigations and resolving disputes related to competition infringements.

Attorney at Law Damir Petrović

The information provided herein is for general informational purposes only and does not constitute legal advice. Petrović Mojsić & Partners disclaims all responsibility for actions taken or not taken based on this content.