.
.
.
.
Views/ 2015: Antitrust Returns to the Serbian Commission’s Focus
---
04/02/2016
---

Author: Dragan Gajin, Senior Associate

The past year was an exciting one for the Serbian competition community. Not only did the Competition Commission step up its enforcement activity when it comes to the number of antitrust cases decided, but it also brought a number of new cases. As an indicator of what was in the Serbian Commission's focus last year, and what to expect in the coming period, it may be useful to briefly turn to the main points of the authority's antitrust activity in 2015.

First Dawn Raids Conducted

Perhaps the highlight of the Commission's 2015 activity is that the authority began conducting dawn raids. The Commission has had the authority for such inspections for several years, but until last year it had refrained from using this tool.

The Commission's first dawn raid took place in July last year and concerned the market for distribution of electronic cigarettes. The Commission conducted the raids upon suspicion of resale price maintenance (RPM) arrangements between certain e-cigarette suppliers and their retailers. The authority is examining the existence of illegal RPM in two separate cases (both were brought in July 2015 and remain pending).

Perhaps encouraged by the outcome of its first dawn raid, the Commission soon deployed this instrument once again. At the end of November, Commission staff conducted unannounced inspections on the premises of the Serbian subsidiaries of Philip Morris and British American Tobacco, respectively. The raids were part of the Commission's investigation against several tobacco companies, which is still pending.

A Rise in the Number of Infringement Decisions

During 2015, the Serbian Commission rendered two infringement decisions. This is up from only one case decided in 2014 and no infringement decision in 2013. Based on the number of new proceedings the Commission initiated in 2015 (six), we can expect that this number of infringement decisions will continue to rise.

What is interesting about the two infringement decisions the Commission rendered in 2015 is that both concerned cartel-type cooperation in bid rigging. Such a focus on bid rigging is not really a surprise, especially considering the significance of public procurements for the Serbian economy and that in 2011 the Commission published a special guidance for detecting bid rigging. 

In both of the cases where it established an infringement, the Commission fined the undertakings involved. In addition, in one of the two cases it also banned the infringers from taking part in public procurements for a period of 18 months. That was the first instance that the Commission used the authority to impose such measure, given to it by the "new" Law on Public Procurement from 2012.

The Number of New Investigations Doubles

Another indicator of the rise in the Commission's enforcement activity is that the number of new cases the Commission initiated during 2015 doubled compared to 2014 (from three to six). Three out of the six new cases are related to dawn raids the Commission conducted in 2015, which indicates that the Commission's determination to bring new cases and to collect evidence through dawn raids goes hand in hand.

Commitments: The Practice Develops

A modern-looking commitments system was introduced into the Serbian antitrust system in 2013. This system includes market testing of the commitments proposal offered by the investigated company. The Commission used this instrument to suspend infringement proceedings for the first time in 2014, in a case against the Serbian incumbent Telekom Serbia.

With such experience under its belt, the Commission continued to use the commitments tool in 2015, suspending proceedings against the Serbian state railway company. The Commission published the commitments offered by the railway company in December 2015, and following a market test, in January 2016 the Commission adopted a decision accepting the commitments and suspending the proceedings.

In an opinion published in May last year, the Commission made it clear that the commitments procedure is not appropriate for the most serious competition infringements such as cartels. The authority noted that for such cases the proper instrument is leniency, which is also available in the Serbian antitrust system.

Individual Exemptions: Joint Bidding Leaves the Spotlight

One of the traits of the Serbian antitrust system is that individual exemptions are granted based on pre-notification of the agreement to the Commission. Based on such notifications, the authority usually exempts from prohibition around a dozen agreements each year.

Judging from the decisions available on its website, during 2015 the Commission afforded an individual exemption to 12 agreements in total. That number is the same as the previous year. However, the structure of the decided cases has changed – while half of the agreements exempted during 2014 represented joint bidding arrangements, only two agreements exempted in 2015 were related to joint tendering.

This change can perhaps be explained by a shift in the Commission's stance towards joint tendering: while it previously held the opinion that all horizontal consortium agreements needed to be submitted for exemption in order to escape prohibition, the Commission now recognises that, other conditions being satisfied, there is no need to seek an exemption if the consortium members are not able to bid individually.

***

The Commission's activity in 2015 shows that, following several years of low levels of enforcement, antitrust is back on its list of priorities. And if the trends started last year continue, we can expect 2016 to be an even more eventful year from the antitrust perspective – the Commission has clearly shown it no longer hesitates to use the full scope of its statutory powers to go after suspected infringers and now has the experience of dawn raids as well.