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Commission Institutes Proceedings Against Apoteka Janković

kzkThe Commission for Protection of Competition instituted ex officio proceedings against company Zdravstvena ustanova Apoteka Janković to investigate a merger implemented before obtaining clearance under the Law on Protection of Competition, which, based on reasonable grounds to believe, is created by the acquisition of control on the part of Zdravstvena ustanova Apoteka Janković over pharmaceutical operations of Zdravstvena ustanova Apoteka Zrenjanin.

In the investigation procedure, the Commission will assess the criteria provided by the Law (Article 19 of the LPC) on the permissibility of mergers, and in particular, the fact that the case concerns a non-notified merger implemented without authorization and noncompliance by said undertakings with their obligations under the national merger control regime.

The Commission will establish all the relevant facts, evidence, and other elements on which to base its decision on potential actions, that is, deconcentration measures.
The Law provides that concentrations of undertakings are permitted, unless they significantly restrict, distort, or prevent competition on the market of the Republic of Serbia or its part, and especially if that restriction, distortion, or prevention is the result of creating or strengthening of a dominant position.

The conclusion instituting proceedings invites all persons in possession of data, documents, or other relevant information that could contribute to the accurate fact-finding in this proceedings to forthwith present said evidence to the Commission for Protection of Competition at 25 Savska St., 4th Floor, Belgrade.

Commission Institutes Another Proceedings on the Consumer Electronics Market

kzkThe Commission for Protection of Competition instituted antitrust proceedings ex officio and carried out a dawn raid at business premises of company SF1 Coffee d.o.o., a Nespresso importer and distributor, to investigate the existence of restrictive agreements referred to in Article 10 of the Law on Protection of Competition, which restrict competition on the retail and wholesale market for consumer electronics in the Republic of Serbia.

Based on the Eurostat data for 2019, the Commission established that the prices of consumer electronics in the Republic of Serbia are by 13 percent higher than the EU average. In light of the findings above, the Commission has analyzed the conditions of competition on the wholesale and retail market for consumer electronics in the Republic of Serbia. Accordingly, and upon consulting the public data on prices, it is established that in retail outlets, as well as in online sales of the retailer concerned, Nespresso coffee machines are sold at identical or nearly identical prices on the market of the Republic of Serbia.

The Commission found reasonable grounds to believe the existence of resale price maintenance practices carried out by company SF1 Coffee as an importer and distributor of the products concerned, which represent a form of restrictive arrangement, i.e., an act of infringement of competition referred to in Article 10 of the Law.

All persons in possession of data, documents, or other relevant information that could contribute to the accurate fact-finding in this proceedings are invited to submit said evidence to the Commission for Protection of Competition, 25 Savska St., 4th Floor, Belgrade.

Commission Instituted Proceedings Against Undertakings on the Consumer Electronics Market

kzkThe Commission for Protection of Competition instituted ex officio proceedings to investigate infringements of competition, and carried out dawn raids at business premises of companies Roaming Electronics d.o.o., Tehnomanija d.o.o., and Comtrade Distribution d.o.o., to investigate the existence of restrictive agreements referred to in Article 10 of the Law on Protection of Competition, which restrict competition on the retail and wholesale market for consumer electronics in the Republic of Serbia.

Based on the Eurostat data for 2019, the Commission established that the prices of consumer electronics in the Republic of Serbia were by 13 percent higher than the EU average. For example, the prices of certain product categories in the Republic of Serbia were by 33-39 percent higher than the prices in Hungary, where the current value-added tax (VAT) rate is set at 27 percent, while the VAT rate in the Republic of Serbia currently stands at 20 percent. Furthermore, the prices of consumer electronics in Hungary were below the EU average by 2.5 percent.

In light of the findings above and noting the importance of this particular market for consumers, the Commission analyzed the conditions of competition on the wholesale and retail market for consumer electronics in the Republic of Serbia. Accordingly, and upon consulting the public data on prices, it is established that in retail outlets, as well as in online sales of related retailers, consumer electronics are sold at identical or nearly identical prices.

The Commission found reasonable grounds to believe the existence of obligations (contractual) imposed by said undertakings acting in concert, establishing the prices and conditions of trade in resale, which represents a form of restrictive agreement and an infringement of competition referred to in Article 10 of the Law.
All persons in possession of data, documents or other relevant information that could contribute to the accurate fact-finding in this proceedings are invited to submit said evidence to the Commission for Protection of Competition, 25 Savska St., 4th Floor, Belgrade.

Sector Inquiry into the Rail Freight Transport Market in the Republic of Serbia

kzkThe Sector Inquiry into the Rail Freight Transport Market in the Republic of Serbia is done in cooperation with the WB Group representatives under the Serbia Investment Climate Program. Under the Program, the Government of the Republic of Serbia and the International Finance Cooperation have signed the Agreement on Cooperation envisaging, inter alia, the provision of technical support by the WBG to the Commission for Protection of Competition to boost competition and regulate markets in the Republic Serbia. The selection and prioritization of sectors are carried out based on the WBG Markets and Competition Policy Assessment Tool (MCPAT). For the purposes of this project, the inquiry was conducted by the Compass Lexecon and Karanović & Partners Consortium.

The subject of the inquiry is the market for cargo transportation by railway, providing an in-depth analysis of the competition environment of this market along the value/supply chain, market structure and dynamics, regulatory environment and market performances, in addition to identifying practices and rules that can distort the level playing field and facilitate non-competitive market outcomes.

The inquiry found no material elements that would indicate an infringement of the competition rules. Instead, the main reasons for insufficient market development established in the Report are as follows: low quality of rail infrastructure, outdated train path allocation procedures, and the lack of intermodal transport terminals, constituting substantial barriers to entry and business growth. Despite the deficiencies noted, it is established that the cargo transportation market in the Republic of Serbia is still in the early stages of development since it is open to competition only since 2016. As one of the reasons for such suboptimal situation, the authors also state the domestic price regulation policy in force, noting that the fixed tariffs for national transportation services as provided by the Government of the Republic of Serbia hinder price competitiveness.

The Commission hereby wishes to express its gratitude to all undertakings providing requested information during the inquiry and invites all persons and other experts to provide their commentaries to the Report no later than September 10, 2020, to the email address office.kzk@kzk.gov.rs, with annotation: Commentary to the Sector Inquiry into the Rail Freight

POSITION OF THE COMMISSION FOR PROTECTION OF COMPETITION REGARDING THE APPLICATION OF ARTICLE 61 OF THE LAW ON PROTECTION OF COMPETITION

Obligation to file a merger notification
Article 61

Mergers are to be notified to the Commission if:

1) the combined aggregate annual worldwide turnover of all participating undertakings in the preceding financial year exceeds 100 million euros, provided that the domestic turnover of at least one participating undertaking is more than 10 million euros;

2) the combined aggregate annual domestic turnover of at least two participating undertakings in the preceding financial year exceeds 20 million euros, provided that the domestic turnover of each of at least two participating undertakings is more than 1 million euros in the same period.

The aggregate annual turnover referred to in Paragraph 1 herein shall not count against the turnover generated by these undertakings in a reciprocal exchange.
Merger implemented through a takeover bid within the meaning of regulation governing takeover of joint stock companies, must be notified even if the conditions referred to in Paragraph 1 herein are not fulfilled.

Merger parties

In the case of a merger referred to in Article 17(1/1) of the Law on Protection of Competition (Official Gazette of the RS 51/09 and 95/13, hereinafter – the Law), the parties to the merger are understood to be all undertakings involved in the status change.

In the case of a merger referred to in Article 17(1/2) of the Law, the parties to the merger are understood to be the undertaking acquiring direct or indirect control (acquirer of control or notifying party pursuant to Article 63(3) of the Law) and the undertaking or a part of an undertaking over which control is acquired. Regarding the applicability of said article, i.e. determination of requirements for merger notification, the acquirer of control is the whole group of companies within which the notifying party operates and is a part thereof within the meaning of Article 5 of the Law.
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Communication on the Termination of Application of Deadlines Under the Regulation on the Application of Deadlines in Administrative Proceedings During the State of Emergency

kzkThe Regulation on the application of deadlines in administrative proceedings during the state of emergency (Official Gazette of the RS 041/2020, hereinafter – the Regulation), which entered into force on March 24, 2020, provides for the treatment in respect of the application of deadlines in administrative proceedings during the state of emergency.

The National Assembly of the Republic of Serbia enacted the Decision on the abolition of the state of emergency (Official Gazette of the RS 065/2020), which entered into force on the date of its publication in the Official Gazette of the RS, that is, on May 6, 2020.

Noting the fact that the state of emergency is lifted on May 6, 2020, the application of deadlines in administrative proceedings under the Regulation ceased to apply on the same date.

The deadlines expired during the state of emergency or deadlines expiring in the period from March 24-May 6, 2020, shall be considered expired upon the expiration of 30 days from the day of the abolition of the state of emergency (i.e. on June 5, 2020). This relates to deadlines prescribed by the Law on Protection of Competition (Official Gazette of the RS 51/09 and 95/13, hereinafter – the Law) for filing merger notifications and requests for individual exemption or deadlines for taking administrative actions, closing of administrative procedures (for example, decisions in merger cases) and deciding on the declared judicial remedies.

It follows therefrom that the parties to proceedings, pursuant to the Law, may be liable for the consequences of the improper performance and failure to act within the deadlines set in conclusions and other orders of the Commission for acting in ongoing administrative procedures, including proceedings instituted at the request of the party or ex officio. Under the Law, undertakings may be liable for the consequences of their improper performance and failure to act within the deadlines set in conclusions and other orders of the Commission in sector inquires.

Communication on the application of deadlines in administrative proceedings during the state of emergency

kzkThe Regulation on the application of deadlines in administrative proceedings during the state of emergency („Official Gazette of the RS“, no. 41/2020, hereinafter – the Regulation), which entered into force on March 24, 2020, applies to administrative proceedings before the Commission, including concentration review proceedings and requests for individual exemptions of restrictive agreements, pursuant to the Law on Protection of Competition („Official Gazette of the RS“, nos. 51/09 and 95/13, hereinafter – the Law). The Regulation only refers to deadlines concerning written applications submitted during the state of emergency, and does not affect the implementation of other provisions in the Law, by-laws and other regulations.

In order to achieve legal certainty, protect the rights of the parties and foster the public interest, the Commission wishes to provide the following clarifications:

- while undertakings are still legally bound to notify concentrations and request individual exemptions, they shall not bear the consequences of their failure to comply with the deadlines set by the Law for notification of concentrations and requests for individual exemptions;

- deadlines expiring during the state of emergency, which concern taking administrative action, closing administrative proceedings (for example, adopting decisions in concentration summary proceedings) and deciding upon legal remedies, shall be deemed to have expired 30 days after the termination of the state of emergency;

- delivery of acts in administrative proceedings causing non-extendable deadlines to start running (acts such as decisions, resolutions closing the proceedings, resolutions on the protection of information), which occurs during the state of emergency, shall be deemed to have occurred, for the purpose of the prescribed deadlines, 15 days after the termination of the state of emergency;

- parties to the proceedings shall not bear the consequences of their failure to comply with the timelimit set in resolutions and other acts of the Commission requiring specific actions or conduct in ongoing ex parte and ex officio administrative proceedings; however, since the accurate and complete determination of facts is in the interest of the parties, the Commission invites them to act in a timely manner to the extent possible under the circumstances of the state of emergency;

- undertakings shall not bear the consequences of their failure to comply with timelimit set in resolutions and other acts of the Commission requiring their action in the context of sector inquiries.

While ensuring the consistent enforcement of this Regulation, the Commission will continue to decide on the rights and obligations of undertakings in accordance with the Law.

Communication on the working arrangements of the CPC during state of emergency

kzkBased on the Decision on the declaration of the state of emergency on the territory of the Republic of Serbia due to the infectious disease outbreak caused by the SARS-CoV-2 virus, no meetings shall be held with the parties on the premises of the Commission for Protection of Competition until further notice, as part of the measures to prevent further spread of the disease. During the state of emergency, communication shall be conducted via email (office@kzk.gov.rs).

Written submissions (apart from notifications of concentrations) and other correspondence can be submitted electronically, at the e-mail address pisarnica@kzk.gov.rs or using the PE Pošta Srbije postal services.

Notifications of concentrations and e-mails with attachments exceeding 100MB in size should be submitted by post or directly at the Registrar’s Office.

The Commission for Protection of Competition wishes to thank you for your understanding and responsible behavior during these extraordinary circumstances.

Instituted Antitrust Investigation Proceedings in Milk and Dairy Products, Beer Wholesale Markets

kzkFollowing the sector inquiry into the retail sale in non-specialized stores with food, beverages and tobacco predominating for the period 2017-2018 and the analysis of obtained agreements entered into by suppliers of individual goods and their buyers, the Commission for Protection of Competition instituted antitrust investigation proceedings against 23 undertakings.

Based on reasonable grounds for believing that the parties have entered into a restrictive agreement referred to in Article 10 of the Law on Protection of Competition, that is, agreements containing the resale price maintenance clauses, the Commission for Protection of Competition instituted proceedings against two suppliers – AD Imlek and Apatinska pivara, and buyers – food retailers.

The Commission hereby invites all persons in possession of data, documents or other relevant information that could contribute to more accurate fact-finding in this proceeding to present said evidence the Commission for Protection of Competition, 25 Savska St., 4th Floor, Belgrade.

Commission Institutes Proceedings on Suspicion of Collusion in Public Procurements

kzkThe Commission for Protection of Competition instituted proceedings against undertakings, companies „MITECO“ – Kneževac, „YUNIRISK“ – Beograd, „MODEKOLO“ – Beograd, „BREM GROUP“ – Beograd, and „KEMIS“ – Valjevo, based on a reasonable belief that the said parties have committed a competition law infringement referred to in Article 10 of the Law on Protection of Competition, by engaging in collusive joint bidding agreements in a public procurement announced by the Ministry of Environmental Protection as the Contracting Authority.

In parallel to instituting proceedings, authorized officials of the Commission for Protection of Competition have conducted a dawn raid in five locations and collected relevant documentation necessary to establish facts in the proceedings.
All persons are invited to submit data, documents or other relevant information in their possession that could contribute to the accurate fact-finding in this proceeding to the Commission for Protection of Competition, 25 Savska St., 4th Floor, Belgrade.