As has been the case in previous years, the Serbian Competition Commission used the end of the year to close some of the cases it had been working on. This time, the Commission did so with two investigations: one concerning bid rigging in the field of overhaul of rail vehicles and the other about vertical price fixing. In both investigations the Commission had used dawn raid to gather evidence.

Bid rigging: Econometric tools and meeting in a cafe

The bid rigging investigation was launched in 2016, upon a complaint by a power plant operating within the Serbian electric power industry. Specifically, the plant was conducting a public tender for the procurement of overhaul of rail vehicles used for coal transportation and found suspicious the bids submitted by the four investigated tender participants. Upon conducting its probe, the Commission confirmed such suspicion.

The investigated companies were all locally registered companies active in the market for the overhaul of rail vehicles in Serbia. Among them was a Serbian subsidiary of Slovak Tatravagonka. The Commission established that, prior to submitting their bids in the public tender, the four bidders had communicated and colluded concerning the bids that were to be submitted.

The Commission based its decision on a variety of evidence. For instance, it engaged in an econometric analysis to show that the behavior of the parties in the bidding in question was a result of collusion, not of their independent behavior. It also looked at structural indicators of the relevant market and found that the market for the overhaul of rail vehicles is extremely prone to collusion, due to a small number of participants.

The most interesting evidence were probably some of the notes the Commission seized from the parties in dawn raids. The notes apparently showed that the parties had agreed on the bids, establishing a mechanism which guaranteed that all participants were awarded at least a part of the tender. The communication apparently also included a meeting in a cafe in Belgrade – which would resemble a text-book example of a cartel.

What didn’t help the investigated undertakings was the statement of the representative of one of them, who said that his company always cooperates with competitors, since they have a principle agreement for the submission of bids. He also stated that he and his competitors agree concerning each particular job and that they are in touch by phone to exchange price information.

Each of the undertakings was fined 2% of its respective annual turnover on the Serbian market. In absolute amounts, the fines ranged between approximately EUR 12,000 and EUR 42,000.

Minimum resale prices a foul even if not implemented

The other case the Commission closed at the end of 2017 concerned the imposition of minimum resale prices by a Serbian distributor of sportswear N Sport. Apart from the distributor, the Commission also investigated (and fined) 14 retailers which had an agreement with N Sport with a minimum resale price obligation. Also, the retailers had to obtain N Sport’s approval for implementing any special discounts/sales.

Vertical price fixing is a practice the Serbian Competition Commission has already pursued on several occasions. In this case it confirmed that it considers the setting of minimum prices as an infringement by object and that it represents a competition infringement even if not implemented in practice.

The distributor was fined approximately EUR 140,000 (0.62% of its relevant annual turnover) while the retailers were fined between 0.2% and 0.29% of their respective annual turnovers (in absolute terms, the highest of those was approximately EUR 130,000).