Montenegro: Competition Watchdog to Also Cover State Aid

Montenegro

Montenegro: Competition Watchdog to Also Cover State Aid

Apart from antitrust and merger control issues, the Montenegrin Competition Agency will soon also be in charge of State aid control. The draft law to that effect has already reached parliament and is expected to be adopted at the next parliamentary session.

Current setup: Separate Bodies for Antitrust/Merger Control and State Aid

In the institutional setup currently in place in Montenegro, State aid issues are the prerogative of the Commission for the Control of State Aid. It is a body consisting of five members, all of which are appointed by the Government. This may have cast doubt on the independence of the watchdog and hindered Montenegro’s progress in EU accession negotiations (specifically, with respect to Chapter 8 – Competition Policy).

Separately from the Commission for the Control of State Aid, Montenegro also has an Agency for the Protection of Competition (or simply – the Competition Agency). This body is in charge of competition law enforcement in the narrow sense, performing the function of an antitrust (restrictive agreements and abuse of dominance) and merger control watchdog.

New Setup: One Watchdog for All competition Matters

According to the draft amendments to the Montenegrin Competition Act, the institutional setup of the Competition Agency is about to change, in that it will also take over State aid enforcement. This will include assessing the compatibility of notified State aid as well as investigating ex post non-notified aid.

It remains to be seen how transferring the State aid functions to the Agency will positively affect the impartiality of State aid enforcement in Montenegro, as the members of the Agency will also be appointed by the Government. Specifically, if the proposed amendments to the Competition Act were to be adopted, the main body of the Competition Agency would be the Council, consisting of a President and two members – all of whom are to be appointed by the Government.

About State Aid in Montenegro

Montenegro has a State aid system based on the EU model. This is understandable, taking into account that establishing an effective system of State aid enforcement is an important condition for the success of Montenegro’s EU accession bid.

Apart from domestic legislation (a Law on State Aid Control and a number of accompanying regulations), an important element of Montenegrin State aid legislation is the country’s Stabilization and Association Agreement (SAA) with the EU. The SAA, signed in 2007 and in force since 2010, provides a framework for Montenegrin State aid control.

The SAA prohibits incompatible State aid which may affect trade between Montenegro and in the EU. It also provides that such aid is to be assessed in accordance with the criteria applicable in the EU, thereby providing a basis for application of EU State aid rules in Montenegro. Finally, the EU-Montenegro agreement also obliges Montenegro to establish an operationally independent authority which would be entrusted with the powers necessary for the full application of the State aid provisions in the SAA.

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