From 1 January 2020, Serbia will have a new state aid regime under the new Act on State Aid Control.

One of the goals of the new act is to harmonise Serbia's state aid legal framework with EU law, which will help to advance the EU accession process and the implementation of Negotiation Chapter 8 – Competition Policy.

Until now, market participants have not focused on compliance with the state aid rules, likely due to a lack of awareness and relatively lenient enforcement; this is expected to change under the new act.

Although the new act largely mirrors the pertinent EU legal framework, it contains the following novelties:

  • a comprehensive definition of 'state aid' modelled after Article 107(1) of the Treaty on the Functioning of the European Union, including exemptions and de minimis aid;
  • the codification of the so-called 'Altmark criteria' regarding compensation measures for services of general economic interest and the introduction of the so-called 'private investor' test;
  • the overhaul of the State Aid Agency (ie, it will be operationally independent from the government but will report to Parliament);
  • the detailed regulation of proceedings before the State Aid Agency (eg, party standing, ex ante and ex post control, confidential status of information, dawn raids, sectoral analyses, administrative measures and procedural penalties); and
  • improved transparency following the launch of the State Aid Registry.

For the private sector, the overhauled state aid set up ultimately means that particular caution must be paid in each transaction with state bodies (including other entities managing or disposing of public funds). Such transactions should be carefully assessed for:

  • any signs of potential state aid measures; and
  • if these are detected, their compatibility with the new act.

The risk of failing to undertake a proper assessment is now significant, as the State Aid Agency can oblige the state aid grantor to undertake measures to recover any incompatible aid within 10 years from the date on which such aid was granted.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.