Competition Law in Serbia: 2019

Serbia

Competition Law in Serbia: 2019

In a nutshell, what was worth noting in Serbian competition law in 2019?

New Competition Commission

Perhaps the most important event of 2019, at least when it comes to Serbian competition law, was that Serbia got a new Competition Commission. The Commission is Serbia’s competition watchdog, in charge of antitrust enforcement and merger control. (The area of State aid is not its prerogative, though – more on this below).

The highest decision-making body in the Commission is the Council of the Commission, consisting of a President of the Commission and four other, “regular”, Council members. In November 2019, four out of five Council members were replaced.

The new head (president) of the NCA is Mr. Nebojša Perić. Mr. Perić is a lawyer with several years of experience in public service. He replaces Mr. Miloje Obradović, an economist. The new members of the Council are Ms. Danijela Bokan, Ms. Miroslava Đošić, and Mr. Siniša Milošević. They join Mr. Čedomir Radojčić, who made it to the Council back in 2016.

Draft of New Competition Act

In the Serbian competition community, it was expected that Serbia might get a new Competition Act during 2019. In the end, this did not materialize – we still have the law adopted in 2009 and amended in 2013. However, we did get closer to the new legislation, as a draft of the new Competition Act has been published.

Some of the main proposed novelties are new merger filing thresholds, the introduction of self-assessment of restrictive agreements, and the possibility of getting a negative clearance from the competition authority. If you would be interested in learning in more detail what the draft new law contains, you can find it in our article here.

Merger Control

Merger filings abound

During 2019, the trend from previous years has continued – merger filings continue to mark the Serbian competition law landscape. As is widely known, due to Serbia’s extremely low merger filing thresholds, merger notifications continue to be filed even for transactions which have little or no connection with Serbia.

That said, it comes to no surprise that last year the Serbian Competition Commission rendered around 150 merger decisions. We will know the exact number in the spring, once the NCA publishes its annual report.

Two Phase II decisions, another Phase II started

Out of around 150 merger decisions, a vast majority concerned Phase I clearances – there were only two Phase II decisions in 2019. This could be another indicator that Serbia’s merger filing thresholds are set too wide and predominantly catch transactions which have no potential to harm competition on the Serbian market.

One of the two Phase II clearances was an acquisition in the telecom sector, by Serbia’s telecom incumbent (Telecom Serbia). Following a Phase II probe, the competition watchdog cleared unconditionally the incumbent’s takeover of a local cable operator.

The other Phase II clearance was a conditional green light for a takeover in the baking industry. Specifically, the Competition Commission found problematic the proposed takeover of a local bread producer by the Slovenian company Don Don. Eventually, after an in-depth probe, the NCA cleared it with strings attached. You can read more about this here.

Finally, the NCA has also started a Phase II probe concerning a combination between leading retailers of consumer electronics in Serbia. You can find more information about this case here.

Gun jumping: Fortenova Group (Agrokor) on the radar

So far, the Serbian NCA has imposed a fine for gun jumping (implementation of a merger without a clearance) only once. This was back in 2017, concerning a local transaction (see here). And 2019 was significant since the Competition Commission started another gun jumping investigation.

Specifically, the gun-jumping investigation is against Fortenova Group. The Serbian NCA is probing whether Fortenova acquired control of Agrokor’s assets without notifying the transaction in the merger control procedure. If an undertaking jumps the gun and implements a notifiable concentration without the NCA’s green light, it may face a fine of up to 10% of its Serbian turnover.

For more details about this case, please click here.

NCA clarifies whether acquisition of NPLs triggers a merger filing

Finally, in the area of merger control, 2019 was significant since the NCA finally clarified whether acquisition of NPLs triggers a merger filing obligation in Serbia.

As noted above, Serbia’s merger filing thresholds are set very widely and catch a lot of transactions where the target did not generate any turnover on the Serbian market during the relevant period. What is more, due to the way the filing thresholds are set, it is possible that a transaction be notifiable even if the target did not generate any turnover anywhere in the world.

Due to such situation, it was not surprising that undertakings were not certain whether their acquisition of an NPL portfolio could also trigger a merger filing obligation in Serbia. Finally, the Serbian NCA last year issued an opinion clarifying its stance on the issue – finding that NPL acquisition generally does not amount of acquisition of control of the whole or parts of one or more other undertakings.

You can read more about this opinion here.

Antitrust

In the area of antitrust, 2019 was a bit calmer than 2018, as the Serbian NCA appears to have focused on completing the pending cases before starting new ones. Nevertheless, there were two things in the antitrust sphere worth noting.

Antitrust fines following a leniency application

Perhaps the most interesting antitrust case of 2019 in Serbia was that the Competition Commission finally solved a case based on a leniency application. The infringement decision was for bid rigging concerning the supply of Konica Minolta office equipment in the public procurement procedure in Serbia.

The bid rigging investigation was based on evidence contained in a leniency application filed by one of the parties to the bid rigging scheme. As a result of the leniency application, the NCA gave immunity from fine to the leniency applicant. This is significant since it has been years since the last successful leniency application.

You can read more about this case and about leniency in Serbian competition law here.

Still without a cross-border antitrust fine

Another interesting antitrust case was a cross-border one. Back in 2018, the Serbian competition authority started a probe against a Polanik, a Polish manufacturer of sports equipment. The investigation was significant since it was the first time that the Serbian NCA was probing a foreign-based entity.

During 2019, the Competition Commission completed its investigation and concluded that there was no infringement in this case. This means that the wait for the first cross-border antitrust fine in Serbian competition law continues.

For more about this case, please click here.

State Aid

As a third pillar in Serbia’s competition law enforcement (in addition to antitrust and merger control), State aid is a relatively young and undeveloped field in Serbia. Due to this, there were not that many interesting State aid cases during 2019. However, the last year brought two significant regulatory developments, which are without doubt of note.

New Law on State Aid Control

Certainly, the most significant development in the Serbian State aid in 2019 was the adoption of a new Law on State Aid Control.

If you’re interested what novelties the new legislation is bringing, you can read more about this in our article Serbia’s New Law on State Aid Control: Five Things to Note.

New setup of the State Aid Commission

On the back of the new legislation, Serbia also got a new setup of the State aid watchdog – the Commission for State Aid Control.

The Commission for State Aid Control is an independent authority overseeing compliance with state aid legislation in Serbia. The Commission is headed by its president, who is at the same time presiding over the Council of the Commission. Apart from the president of the Commission, the Council has four more members (commissioners).

Both the president and Council members are appointed by the Serbian Parliament, for a term of five years. Under the old State aid legislation, these appointments were being made by the Government. At least theoretically, appointments by the Parliament should provide Serbia’s State aid watchdog more operational independence.

Balkan Competition Blog Turns Three

And last but not least – we are proud to have celebrated the third birthday of Doklestic Repic & Gajin competition blog – www.gajin.rs, covering the most interesting competition law developments in Serbia, Montenegro, Bosnia and Herzegovina, and North Macedonia.

For the occasion, we have looked back at the most read articles during this period. If interested, you can see these article here.

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