Serbia: What’s in Draft of New Competition Law?

Serbia

Serbia: What’s in Draft of New Competition Law?

For more than two years already, a new Serbian Competition Act has been brewing. Now, a draft of the new legislation has been published. If adopted, what changes will it bring to Serbian competition law?

New merger filing thresholds, negative clearance, self-assessment…

A first impression of the draft new law is that it is more detailed than the currently applicable Competition Act (adopted in 2009 and amended in 2013). As a comparison, the current Competition Act has 81 article, while the proposed new law has no less than 129. A large part of this additional volume went to a more detailed regulation of the procedure; however, there are also several provisions bringing novelties in the substantive law.

Here are some of them:

  • Relevant market: No more ‘narrower’ and ‘wider’ relevant market. A welcome change in the draft is that it finally dispenses with the notion of a ‘narrower’ and ‘wider’ relevant market, a concept the purpose of which was not clear. A market is either relevant or not – and the draft new Competition Act acknowledges that.
  • The concept of relevant turnover introduced. The draft of the new Competition Act introduces the concept of relevant turnover, which is used as a basis for calculating the amount of fine for competition infringements. This is a welcome change compared to the present situation, where the turnover is calculated based on the undertaking’s entire turnover.
  • Self-assessment finally introduced, but notification remains too. At the moment, Serbia still has a system of individual exemption of restrictive agreements based on prior notification to the competition authority, comparable to the one which in the EU existed under Regulation 17/62.  The draft finally introduces self-assessment, but at the same time keeps the possibility of notification. This could turn out as an optimal solution for Serbia, as it combines the advantages of both systems.
  • Negative clearance introduced. Another novelty the new Competition Act would bring to Serbian competition law is the introduction of the institute of negative clearance. Specifically, parties would be able to turn to the Serbian NCA and request that the authority declare that the notified act is in line with Serbian competition legislation.
  • Still no presumption of dominance, regardless of the market share. Until 2013, in Serbian competition law there was a presumption of dominance if the undertaking’s market share on the relevant market exceeded 40%. Now, a market share in excess of 40% is just one of the factors the NCA must consider when assessing the existence of dominance. The draft new Competition Act does not change this.
  • New merger filing thresholds. Adoption of a new Competition Act is a good opportunity for Serbia to get more reasonable merger filing thresholds, since the current ones catch too many transactions with little or no connection with Serbia. Unfortunately, the draft new competition law does not deal with this adequately:
    • On one hand, the draft new Competition Act raises one of the thresholds for merger filing, increasing the turnovers which trigger the merger filing obligation. However, the relevant turnover thresholds still do not require that the target has at least some turnover in Serbia, which would mean that concentrations with no effect in Serbia would continue to be notifiable in Serbia.
    • On the other hand, the draft introduces a new threshold for mandatory notification, which is triggered if the parties’ combined market share on the relevant market exceeds 40% – regardless of the turnover of the parties.
  • Deadline for merger filing extended to two months. Currently, in Serbian competition law there is a 15-day deadline for filing a notifiable transaction. The deadline starts to run from the date of the execution of the relevant transaction document. The extension of this deadline is certainly welcome, though it could be even more optimal if such deadline were scrapped in entirety.
  • Settlement procedure introduced. For a few years already, Serbia has had a functioning system of commitments. Apart from commitments, the draft new Competition Act also introduces into Serbian competition law the institute of settlement. It remains to be seen how these settlements would work in practice.

When should we expect the new law?

Since it has been in the making for quite some time now, and considering the condition of the available draft, the new Competition Act can be expected by the end of this year. After that, there would also be a process of adopting numerous bylaws required for full implementation of the law, including several new block exemption regulations. Together, this should enable a total revamp of Serbian competition law during this and next year.

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