The expansion of digital markets is undeniable, and the need for special regulations in these areas is clearly proved by the EU in rendering the Digital Services Act and Digital Markets Act. The mentioned regulations build on the EU Electronic Commerce Directive to address new challenges online.
In Serbia, the only law regulating the digital markets sectors is the Law on Electronic Commerce (LEC). The LEC consists of very basic provisions relating to information society services, commercial communication rules, and entering into contracts by electronic means. It is explicitly provided that the LEC does not apply to restrictive agreements in terms of antitrust regulations.
With respect to antitrust rules, apart from the Law on Protection of Competition (LPC), which contains only general rules, there are several more decrees and guidelines regulating antitrust issues, none of which touches upon the subject of digital markets.
In practice, in the last two years, the Serbian Commission for Protection of Competition (CPC) has initiated five ex officio proceedings where for the purpose of infringement determination relating to retail price fixing, the CPC reviewed the prices of the retailers’ online sale websites, whereby it was determined that the retail price was the same or almost the same among retailers. It may be concluded that e-commerce is of particular interest to the CPC in order to not only protect competition and consumers but also detect anticompetitive behavior.
In two of the above-mentioned cases, the CPC has also performed dawn raids, collecting from the companies under review relevant agreements and other documents, including e-mail correspondence. Through such correspondence, it was determined that the suppliers under review monitored the online prices of their retailers, mainly by visiting their online sale websites or by using price comparison tools. Based on such information, suppliers enforced restrictions on their retailers to freely determine the retail price. Any such actions that directly or indirectly set the purchasing or selling prices are considered to be restrictive agreements under the LPC and are therefore null and void.
In the cases that have been finalized, the CPC has determined that most of the undertakings concerned have committed infringement by entering into restrictive agreements relating to price fixing, and were thus fined.
In addition to the above, the CPC has completed a sector analysis of the market of digital platforms that intermediate in the sale and delivery (on-demand delivery platforms) of mainly restaurant food and other products. The CPC stated the dynamic development of digital on-demand delivery platforms and the rendering of new regulations in the EU regarding online platforms as reasons for the analysis of this particular sector. The CPC’s aim was to review the state of competition in the market in question and to point out possible problems in terms of antitrust issues.
In its final remarks, the CPC has recommended that the competent Ministry of Trade begins drafting relevant legislation that would regulate the operation of digital platforms, and establish a register of digital platforms and one of services for the delivery of mainly restaurant food.
During the course of this analysis, the CPC initiated a proceeding for the determination of abuse of a dominant position against one of the major market participants. Based on the agreements delivered to the CPC during the process of sector analysis, the CPC noted provisions that result in behavior that can represent an abuse of a dominant position. At the time of writing, the mentioned proceeding is still ongoing.
In light of all the above, it may be argued that the CPC has certainly recognized the need for monitoring and controlling digital markets, focusing for now primarily on e-commerce, i.e., online sale and digital on-demand delivery platforms.
On the other hand, considering the described current legal framework, the dynamic development of digital markets, and the obligations undertaken by Serbia under the EU Stabilization and Association Agreement, it may be argued that the harmonization of local legislation with the current legislation of the EU is promptly needed. The purpose of such a legislative update would be to create a safer digital space where the fundamental rights of both consumers and businesses would be protected, as well as the establishment of a fair, transparent, and predictable business environment, thus further fostering competitiveness and a level playing field.
By Darija Ognjenovic, Partner, and Iva Popovic, Associate, Prica & Partners
This article was originally published in Issue 10.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.