Competition Law in Serbia: Five Ideas for Reform

Serbia

Competition Law in Serbia: Five Ideas for Reform

Serbia has had modern competition enforcement for more than a decade, which is sufficient time for an assessment of which parts of the system can be modified for the better. While the list is not exhaustive, here are five things which could make antitrust enforcement in Serbia better:

1. Merger filing thresholds should be increased

Serbia has very low merger notification thresholds – if you are big and are doing business in Serbia, you basically need to notify any acquisition you make anywhere in the world. The purpose of examining such mergers is questionable, especially in the case of foreign-to-foreign transactions with no effect in Serbia.

As a result of such low filing thresholds, very few notifiable concentrations raise competition concerns. This is evident from the statistics which show that the vast majority of notified concentrations are cleared in Phase I.

By raising the bar for notifiable mergers, the Serbian competition authority would be able to focus its resources on mergers which can realistically raise competition concerns. In addition, the resources which would otherwise be wasted on examining no-issue concentrations could instead be used for pursuing cartels and other forms of anti-competitive conduct.

2. Merger filing fee should be lowered

Currently, the merger filing fee in Serbia is quite substantial: it is generally EUR 25,000 for mergers cleared in Phase I and EUR 50,000 for those approved after a Phase II investigation. This is much higher than other similar fees in the Serbian legal system and seems more like a transaction tax than a filing fee.

The issue of the merger filing fee is also related to the filing thresholds: if for any reason the state wishes to have low filing thresholds and engage its resources to examine mergers with no effect in Serbia, it is unfair that the applicants finance it.

3. Self-assessment should be introduced for individual exemption

While Serbian competition rules generally follow the EU model, they still diverge concerning some issues. One of those is the system of individual exemption for restrictive agreements.

Specifically, Serbia still has an exemption system based on prior approval by the competition authority, similar to the system which in the EU existed under EC Regulation 17/62. In such system, the Serbian Competition Commission is burdened by more than a dozen individual exemption requests each year.

The resources the Competition Commission engages for examining them could probably be better utilized for completing the pending or opening new antitrust investigations. It therefore seems reasonable to introduce self-assessment in this area, especially since in the EU it has been in place for quite some time now.

4. EU antitrust damages directive should be transposed into the Serbian legal system

Even though private antitrust enforcement on paper existed even in communist Yugoslavia, modern Serbian legislation regulates antitrust damages only in passing. Due to this, private antitrust enforcement is virtually non-existent in Serbia.

Since private enforcement is an important supplement to the enforcement activities of the competition authority, more should be done to facilitate private actions. In this respect there is no need to reinvent the wheel – Serbia can simply adopt the EU antitrust damages directive. This makes sense especially taking into account the process of Serbia’s accession to the EU, which is ongoing.

5. Antitrust criminal offense should be limited to cartels

In Serbia, conclusion of a restrictive agreement is a criminal offense punishable by a prison sentence and a fine. This does not include only cartels, but also other forms of horizontal and vertical agreements.

Justifiability of having such a criminal offense is disputable – even if it may be reasonable to criminally pursue cartels, going to prison for entering into a vertical agreement seems too harsh. The criminal offense should therefore be narrowed so as to cover only cartels.

Also, the relationship between criminal leniency and leniency under competition regulations should be regulated more adequately, as the current text of the law creates some confusion.

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