Competition Law in Bosnia and Herzegovina: 2018

Bosnia and Herzegovina

Competition Law in Bosnia and Herzegovina: 2018

What were the most notable developments during 2018 in the competition law of Bosnia and Herzegovina?

A new way of calculating merger filing fees

During 2018 there were no significant legislative changes in Bosnian competition law. The only notable novelty is a change in how the merger filing fees are calculated in this jurisdiction.

Earlier, the merger filing fee was determined in a fixed amount. Specifically, the total fee for a Phase I clearance was approx. EUR 2,250. On the other hand, if the Bosnian competition authority would have cleared a transaction only after Phase II, the total fee would have been approx. EUR 13,500.

After the latest changes, the total fee for a Phase I clearance has been raised to approx EUR 3,500. This is still significantly less than, for example, Serbia, where the fee for a Phase I clearance is EUR 25,000.

As for the fee for a Phase II clearance, there is no more a fixed fee – the amount is now linked to the turnover of the parties. If you are interested how this new formula may in practice actually lead to the lowering of the merger filing fee, you can read in our earlier post about this.

Ethnic veto in competition law enforcement strikes again

As we described earlier, the competition law of Bosnia and Herzegovina includes what could be characterized as an ‘ethnic veto’ in competition law enforcement. Specifically, due to the way in which the Bosnian NCA is set up, and also considering the deliberation procedure within the NCA, each of the three ‘constituent peoples’ (Croats, Bosniaks, Serbs) could effectively block the work of the competition authority.

We have already reported how in 2017 at least two such instances occurred and the trend continued in 2018. According to publicly available information, during 2018 the Bosnian NCA failed to reach a decision due to the use of the ‘ethnic veto’ on at least four occasions. Concretely, the NCA had to abandon the enforcement of one of its decisions, could not decide on a notified concentration, and could not adopt two official opinions since the support of the representatives of all three ‘constituent peoples’ was lacking.

High level of antitrust enforcement continues

Compared to the other Balkan jurisdictions, in which merger control dominates the enforcement agenda, competition law enforcement in Bosnia and Herzegovina is characterized by an emphasis on antitrust. On the one hand, this is due to the procedural rules in Bosnia and Herzegovina, which could be even characterized as ‘quasi-private antitrust enforcement’. On the other, relatively high merger filing thresholds additionally contribute to a smaller number of merger cases than in the neighborhood.

This high level of antitrust enforcement, however, is mainly reflected in a higher number of cases, not in a higher number of infringement decisions.

According to preliminary data, in the area of abuse of dominance, during 2018 the Bosnian NCA launched three new cases, established abuse of dominance in two cases, and closed without finding an infringement as many as seven cases. The situation is similar with respect to restrictive agreements – during 2018, the NCA launched four new cases, established an infringement in two cases, and in five instances closed the case without finding an infringement.

Apart from finding an infringement, the Bosnian NCA also has the power to impose fines, in the amount of up to 10% of the infringing undertaking’s annual turnover. In 2018, the NCA imposed fines in the total amount of approx. EUR 300,000. In addition, the authority also collected approx. EUR 100,000 in administrative fees. The proceeds from both belong to the country’s budget.

Individual exemption: Regulation 17/62 revisited

Same as the competition laws of Serbia and Montenegro, the competition law of Bosnia and Herzegovina also has a system of individual exemption from prohibition based on prior notification to the competition authority. In other words, with respect to individual exemption of restrictive agreements in Bosnia and Herzegovina there is no self-assessment by the parties.

Based on currently available information, during 2018 the Bosnian NCA individually exempted one notified agreement. The NCA cleared it only following an in-depth investigation. Also, another agreement notified for individual exemption is still being examined by the NCA.

Merger control: A surprisingly busy year

Due to the relatively high merger filing thresholds in Bosnia and Herzegovina, merger filings in this jurisdiction are not as common as in some of the other Balkan jurisdictions. In this context, 2018 can be characterized as fairly busy for the Bosnian NCA in the area of merger control.

Specifically, during 2018 the Bosnian NCA received 35 merger notifications. Out of that, 24 transactions were cleared in Phase I, in one case the NCA could not decide on the notified transaction due to the ‘ethnic veto’, and the remaining 10 cases are still pending. With respect to the cleared transactions, only one was given the green light after a Phase II probe, while all others were okayed in Phase I.

Also notable about the competition law enforcement in Bosnia and Herzegovina is a relatively high number of dismissed merger filings. Precisely, in 2018 the Bosnian NCA dismissed at least 11 transactions. From a practical point of view, this is since one of the merger filing thresholds in the Bosnian Competition Act refers to a market share and the parties are not always sure in advance whether their transaction is notifiable or not.

What to pay attention to in 2019?

In its plan of activities for 2019, the NCA inter alia noted how it intends to initiate the procedure of amendments of the Competition Act with the Ministry of External Trade and Economic Relations. Since this is not the first time that changes in the competition law are announced, we can only wait and see whether this year they will actually come to fruition.

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