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Protection of competition

On November 1, Serbia's new Law on the Protection of Competition (Official Gazette of the Republic of Serbia 51/09, LPC) came into force. It introduced many changes, mostly regarding procedure and sanctions but also on substance.

The new LPC amends the turnover thresholds. This is likely to reduce the number of concentrations that require merger control notification. A concentration triggers the notification requirement where in the preceding business year:

  • The combined worldwide turnover of the undertakings concerned exceeded €100 million, and the turnover of at least one undertaking concerned exceeded €10 million in Serbia; or
  • The combined turnover of the undertakings concerned exceeded €20 million in Serbia, and the turnover of each of at least two undertakings concerned exceeded €1 million in Serbia.

The new LPC also introduces the possibility of opening ex-officio investigations into concentrations where, even when the turnover thresholds are not met, the undertakings concerned have a market share in Serbia of at least 40%.

For public takeover bids, the new LPC mandates a filing obligation even where the above thresholds are not met. The provision generally relates to joint stock companies.

The notification deadline is also extended from seven to 15 days from the triggering event (signing of the agreement; announcement of a public offering, announcement of the start or end date of a public takeover bid; or acquisition of control). The new LPC clarifies that the occurrence of the earliest of these events is the triggering event.

The new LPC introduces Phase I and Phase II proceedings and an explicit legal presumption that the concentration is approved if the competition authority does not take a decision within the deadlines (non-opposition procedure). There is a one-month period for Phase 1. If the competition authority initiates Phase II proceedings within one month of filing, Phase II proceedings should be decided within a further three months.

The new LPC explicitly foresees the introduction of a Block Exemption Regulation for certain categories of restrictive agreements by November 1 2009. At the time of writing, the Block Exemption Regulation was expected to be adopted within a few weeks. As Serbia maintains a prior notification/individual exemption system, this (together with the introduction of de minimis (modelled after the EC De Minimis Notice)) is likely to substantially reduce the number of agreements that need to be notified.

The new LPC considerably broadens the competition authority's powers in sanctioning infringements and it is now vested with the power to impose fines autonomously for infringements of the law without having to take recourse to misdemeanour courts, as was required under the old law (in practice, doing so did not prove effective). The competition authority's decisions imposing fines will be subject to judicial review.

The fines that can be imposed remain unchanged at 10% of the responsible party's annual turnover; however, the minimum fine of 1% has been abolished. For failure to provide information, observe interim measures or notify a concentration, the new LPC introduces procedural penalty payments between €500 and €5,000 per day (up to a maximum of 10% of annual turnover).

Additional sanctions introduced are structural remedies (similar to the EC system) and the possibility of unwinding a merger.

The rights and obligations of the competition authority in granting leniency are defined in greater detail and the new LPC explicitly stipulates that "ringleaders" of a cartel cannot benefit.

The power of the competition authority to carry out dawn raids is elaborated and expanded. Compulsory searches of businesses, vehicles and private homes may be carried out on the basis of a decision of the competition authority. Searches of private homes, if opposed by the owner or tenant, are subject to a judicial warrant. Statements can be taken by officials on the spot during the raid and premises may be sealed.

The new LPC also strengthens private enforcement. Damages for infringements established in a decision by the competition authority may be obtained before a civil court. Administrative decisions are not binding in civil claims, but rather present a rebuttable presumption that an infringement has occurred.

Veljko Milutinovic

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