Abuse of dominant position
Restrictive agreements
Merger control
Fines
Competition Authority
Amendments to the Competition Act entered into force on November 8 2013. They aim, among other things, to enhance and refine certain substantive and procedural aspects of Serbia's competition regime, as well as to strengthen the powers and institutional capacity of the Competition Authority. Some of these amendments are expected to have material effects on undertakings whose business is in any way affected by competition law.
The most important change to the substantive aspect of competition rules concerns the concept of 'dominance'. The amendments redefine the concept as provided in the Competition Act and set out that an undertaking is considered dominant if, due to its market power, it has the ability to operate on the relevant market to an appreciable extent independently of its actual and potential competitors, buyers, suppliers or consumers.
This change not only dispenses with an outdated understanding of dominance based on formalistic considerations, but more importantly removes the legal presumption that a given undertaking is dominant if it has a market share equalling or exceeding 40% on a relevant market. The authority must now prove in all abuse of dominance cases that an undertaking is dominant based on its actual market power, instead of relying on the statutory presumption. This also means that the burden of proof of showing that the undertaking is not actually dominant has shifted to the undertaking under investigation. However, the authority will continue to benefit from the 40% market share threshold, as it is now one of the key factors to be considered by the authority in the overall assessment of market power.
Pursuant to the new rules introduced by the amendments, the authority is now empowered to re-examine individually exempt restrictive agreements and to:
- revoke a decision on individual exemption if the conditions under which it was rendered have significantly changed; or
- annul a decision if it was based on incomplete, incorrect or misleading facts, or if the authority was misused.
The authority may re-examine an individually exempt agreement within one year of the date that the respective decision was rendered.
The most important change to the merger control rules brought about by the amendments relates to the merger review timeframe (ie, the deadline within which the authority is bound to render a decision in investigation (Phase II) proceedings, initiated once the authority finds that a given merger may give rise to competition concerns). The deadline within which the authority must render a decision has been extended, and is now four months instead of three months from the date that investigation proceedings are initiated.
Material changes to the procedural aspects of competition rules concern the maximum amount of fines that may be imposed for various violations of competition rules, as well as the way in which fines may be imposed and collected. The maximum fine is now set at 10% of the total annual turnover of an undertaking achieved within the territory of Serbia. Thereby, the amendments significantly limit the maximum amount of potential fines, as the previous wording of the Competition Act – at least in theory – allowed the maximum fine to be set in relation to the total worldwide turnover of an undertaking. However, this limitation is not expected to result in a noticeable change in the authority's fining practice, as in the past it has imposed fines in relation to turnovers achieved in Serbia anyway.
The statutory deadlines within which the authority may impose and collect fines for violations of competition rules have also been altered and extended. Pursuant to the amended rules, the statute of limitations for imposing fines is now five years, with the period beginning on the last date that the violation in question occurred or the date that it ended, as the case may be. Simultaneously, each act of the authority undertaken with a view to establishing a violation resets the five-year period, with the absolute statute of limitations set at 10 years. The same rules now apply to the collection of fines, once the authority's decision on imposing fines becomes final.
The amendments have also refined the procedure regulating the commitment decisions pursuant to which the authority can suspend a proceeding in relation to a potential violation of competition rules, if the undertaking subject to the proceeding submits a proposal of measures which it intends to undertake in order to remedy a potential competition law violation.
The amendments also affect the institutional composition of the authority by mandating that the authority's council, which is its effective decision-making body, be composed of lawyers and economists with expertise and experience in the field of competition, with both professions being represented by at least two members in the council (of five in total). It can thus be expected that new authority council members will be elected by Parliament in the near future, which may also result in significant changes in enforcement policy.
For further information on this topic please contact Srdjana Petronijevic or Danijel Stevanovic at Moravcevic Vojnovic i Partneri in cooperation with Schoenherr by telephone (+381 11 320 26 00), fax (+381 11 320 26 10) or email ([email protected] or [email protected]). The Moravcevic Vojnovic i Partneri website can be accessed at www.schoenherr.rs.
