The Serbian Commission for Protection of Competition (the
"Commission") recently intensified its
antitrust activities before the new Administrative Act came into
effect. In one week alone the Commission initiated four antitrust
cases and conducted two dawn raids.
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 `koda 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 position against 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
fines1 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.
Footnotes
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