Serbian Competition Authority Steps Up Antritrust Enforcement

1. What/who will be on the Commission's radar?

• The first two cases are similar. In the first one, the Commission searched the premises of a company distributing and selling hygiene and maintenance products in order to collect evidence of alleged bid rigging for a public tender. The Commission received a complaint that several bidders had colluded over prices and other terms of sale. The second case also relates to collusive tendering for food aliments supply for a public medical centre. One of the undertakings accused was Imlek, against which the Commission brought an infringement decision in 2012 for abusing its dominant position in the raw milk market. 
• The third case is a follow-up of the Sector Inquiry on competition issues in Aftermarkets (home appliances, motor vehicles and spare parts). The Commission initiated a resale price maintenance investigation against an importer of the Škoda brand and its dealers and repairers. Given the current information, the importer agreed with its dealers on the maximum discount that the dealers can offer in tenders to provide sales and services of spare motor parts. 
• The fourth case is déjà vu for the Commission. The Commission opened an investigation for abuse of dominant positionagainst Frikom and raided its premises in Belgrade. Frikom was already fined approximately EUR 3 million in 2012 for abusing its dominant position on the ice cream market. According to the conclusion on initiation of the proceedings, Frikom will be investigated for the same type of abuse as in 2012: exclusion of competitors from the ice cream market. If the Commission establishes the abuse, it would be the first decision in which a company is fined for repeating the same and/or a similar infringement.

2. Significant messages from this latest development in antitrust activities

2.1. Fighting bid rigging in public procurement is one of the Commission's main enforcement priorities

In the previous period, several bidders faced high fines[1] for collusive tendering, while one case is still pending. Making bid rigging a priority for relatively young competition, authority is prudent, hence: (i) it has a positive impact on public spending; (ii) it raises awareness of competition issues in public procurement; and (iii) it creates a positive public image of the Commission. Thus, bid rigging will remain at the top of the Commissions' list of priorities for a long time to come.

Market participants should review the Commission Instruction for detecting bid rigging in public procurement (accessible here) and be aware that this type of collusion has been determined in the Commission's Guidance on setting fines as a "very severe competition infringement", for which the highest fines are being prescribed.

2.2. Dawn raids have become routine

Although the Commission has had the power to conduct a dawn raid since 2009, it was not used until 2015. Since then, the Commission has conducted approximately 10 unannounced inspections.

Unlike in other jurisdictions, the leniency application has never led to the initiation of a dawn raid. In addition, the Commission does not need a warrant to conduct the dawn raid. The increase in the number of dawn raids, when neither judicial scrutiny over such decisions or a developed leniency programme exist, can have a negative impact on legal certainty and the right of defence in antitrust cases. For example, the Commission can perform dawn raids on every occasion, even where there are no legal grounds for it, eg when it can collect evidence by using other investigation tools.

Therefore, the involvement of competition lawyers is important to ensure due process and to protect parties' rights during the dawn raid. In addition, companies are well advised to develop compliance tools while preparing for a potential dawn raid.

2.3. Sector inquiries are the way to find new antitrust cases

Like the EU Commission, the Commission uses Sector inquiries to trigger antitrust investigations. The Commission recently closed two Sector inquires (Aftermarkets and Insurance), and opened one in the food retail sector. It also announced that it would soon conduct a Sector inquiry in the pharmaceutical sector.

The Competition Act authorises the Commission to ask companies to provide data, agreements and other documents in the course of Sector inquiries. In addition, the Commission has the right to levy procedural penalties if companies do not cooperate. Undertakings should therefore carefully examine the Commission's requests for information and prepare their own responses. Companies should know that data provided within the Sector inquiry could be used against them and their business partners in an antitrust investigation.    

One more message to go

This recent antitrust development in Serbia comes with an additional message for companies: they should not underestimate the effectiveness of competition law enforcement in Serbia.

Market participants need to have an awareness and knowledge of competition law when creating their compliance policies. Managers and competition law experts must be constantly vigilant and must work closely on the development of competition compliance programmes that adapt to changes in the law and the Commission's practices.

[1]

http://www.kzk.gov.rs/en/mere-zastite-konkurencije-privrednim-drustvima-bora-kecic-specijalni-transporti-d-o-o-i-large-transport-d-o-o;  

http://www.kzk.gov.rs/en/komisija-izrekla-mere-nakon-utvrdene-povrede-konkurencije-u-postupku-javne-nabavke-ministarstva-odbrane-republike-srbije

This article was written by Srdana Petronijevic and Zoran Soljaga.