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Serbian Commission for Protection of Competition Enacts Measure for Protection of Competition for the First Time

Serbian Commission for Protection of Competition Enacts Measure for Protection of Competition for the First Time

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On 12 July 2017, Serbian Commission for Protection of Competition (the “Commission”) enacted a Decision by which it enacted a measure for protection of competition due to implementation of concentration contrary to the legal obligation to notify the Commission of the concentration and to receive its prior approval, even though the legally stipulated revenue thresholds for reporting the concentration in this particular case were met (the “Decision”).

The Decision was enacted against the Serbian company „Prointer IT Solutions and Services” LLC, given the fact that the stated company implemented concentration created by acquisition of individual control over company “Alti” LCC, also a Serbian company. The established measure for protection of competition imposed by the Commission in this particular case amounts to 6.7 million RSD. According to the Competition Act, the measure for protection of competition is to be imposed against a market participant that breached specific provisions of the Competition Act in the monetary equivalent of up to 10% of total annual revenue generated on territory of the Republic of Serbia. The exact amount of the measure is valued in each specific case. The Commission released a statement regarding the Decision, in which it explained that the imposed measure is set at 6.7 million RSD in this particular case, given the fact that the concentration in question would not have distorted or prevented the competition on the Serbian market had it been reported in accordance with the law.

The Decision was enacted after completion of ex officio instituted proceedings for the investigation of the above described breach of the Competition Act.

It needs to be pointed out that the Decision is not yet final and binding, and that administrative proceedings may be initiated against it by filing an administrative suit within 30 days.

This marks the first time the Commission enacted a decision by which it imposed a penalty for failure to notify a concentration and obtain Commission’s prior approval before implementing it, and should serve as an indicator for Commission’s future behavior – one may expect its greater proactivity in detecting and punishing these kinds of breaches in the future.

Bearing in mind that the competition law is still a relatively new area of law in Serbia (the first Competition Act was introduced in 2005, merely 12 years ago), it is safe to say that the Commission’s practice is still being established, greatly relying on EU Commission’s guidelines and practices.

It can be noted that there is no sufficient awareness of legal consequences of breaching the Competition Act in Serbia. Additionally, the Commission’s fees for notifying a concentration are fairly high, which can be considered as a possible reason for one’s failure to submit a concentration notification, thus breaching its obligation under law.  Up until now, there has not been a case of imposing a measurement for failure to notify the Commission of a concentration, which also may be interpreted as one of the reasons why concentration participants were willing to risk not notifying the concentration because of the chances of being punished were not as high.

Given the Commission’s practice to interpret the law extensively and even consider itself competent to decide upon not only concentrations implemented on Serbia’s soil, but also the extraterritorial ones, and now taking into consideration the enacted Decision, it remains to be seen if future concentration participants shall be motivated to notify the Commissions of concentrations more frequently and whether the Commission will, indeed, become more proactive in detecting and punishing Competition Act breaches in similar cases.

By Milan Samardzic, Partner, and Dunja Tasic, Senior Associate, SOG / Samardzic, Oreski & Grbovic

Serbia Knowledge Partner

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