Serbian NCA ‘Has No Jurisdiction’ over Extraterritorial Vertical Agreements

Serbia

Serbian NCA ‘Has No Jurisdiction’ over Extraterritorial Vertical Agreements

In a recently published opinion, the Serbian NCA pronounced it had no jurisdiction over an extraterritorial vertical agreement. The extraterritorial vertical was an exclusive distribution agreement between a Serbian supplier and a foreign distributor. How come then the Serbian NCA has jurisdiction over extraterritorial mergers?

Serbian supplier, foreign distributor – Serbian NCA not competent

In reaching the finding that it is not competent for extraterritorial vertical agreements, the NCA relied on the provision of the Serbian Competition Act which governs the territorial scope of the law, which reads as follows:

Territorial Scope

Article 2

The provisions of this law shall apply to acts and actions performed in the territory of the Republic of Serbia, or, as the case may be, to acts and actions performed outside its territory which affect or may affect competition in the territory of the Republic of Serbia.

Therefore, in this particular case the NCA adopted a narrow approach to the territorial reach of Serbia’s competition statute, implying that the law does not apply to the vertical relationship since such an agreement does not affect nor is capable of affecting competition in Serbia.

This seems like a sensible approach – why would the Serbian regulator bother with practices with no effect in Serbia?

Extraterritorial mergers: Serbian NCA always competent

While the approach of the Serbian NCA to extraterritorial vertical agreements makes a whole lot of sense, its approach to extraterritorial mergers is more disputable.

As already discussed earlier, the stance of the Serbian NCA is that all concentrations exceeding the turnover thresholds in the Serbian Competition Act need to be filed with the NCA, even those which clearly have no effect in Serbia. This has led to the situation where there are more than a 100 merger filings each year and where the NCA has rather quickly reached the mark of 1,000 merger decisions.

This begs the question: If extraterritorial vertical agreements are outside the scope of NCA’s jurisdiction, shouldn’t it be the same with extraterritorial mergers? Especially those where the target has no presence in Serbia.

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