The Cartels guide provides expert legal commentary on key issues for businesses. The guide covers the important developments in the most significant jurisdictions in this area of law.
1. Legislative Framework
1.1 Legal Basis
The main law governing antitrust behaviour and protection of competition in the market in general is the Law on Protection of Competition (Zakon o zaštiti konkurencije, “Official Gazette of RS”, no. 51/2009 and 95/2013) (the “Law”).
It should be noted that there are no provisions that explicitly refer to public enforcement actions regarding “cartels” but that the provisions prohibiting restrictive agreements and anticompetitive behaviour in general apply.
However, there are certain pieces of secondary legislation that foresee situations and conditions under which horizontal agreements may be exempt for the purposes of research, development and specialisation between market participants, namely the Rulebook on Agreements on Research and Development between Market Participants which Operate on the Same Level of Production or Distribution to be Exempt from Prohibition (Pravilnik o sporazumima o istraživanju i razvoju između učesnika na tržištu koji posluju na istom nivou proizvodnje ili distribucije koji se izuzimaju od zabrane,“Official Gazette of RS”, no. 11/2010) (the “Rulebook 1”) and the Rulebook on Specialization Agreements between Market Participants which Operate on the Same Level of Production or Distribution to be Exempt from Prohibition (Pravilnik o sporazumima o specijalizaciji između učesnika na tržištu koji posluju na istom nivou proizvodnje ili distribucije koji se izuzimaju od zabrane,“Official Gazette of RS”, no. 11/2010) (the “Rulebook 2”).
Also, as the procedure conducted before the Commission for Protection of Competition is administrative in nature, the general rules of the administrative proceedings prescribed under the Law on General Administrative Procedure (Zakon o opštem upravnom postupku,“Official Gazette of SRJ”, no. 33/97 and 31/2001 and “Official Gazette of RS”, no. 30/2010) and the Law on Administrative Disputes (Zakon o upravnim sporovima, “Official Gazette of RS”, no. 111/2009) apply.
It is also important to mention the Rulebook on Conditions for Exclusion from the Obligation to Pay a Fine as a Measure for Protection of Competition (Uredba o uslovima za oslobađanje obaveze plaćanja novčanog iznosa mere zaštitie konkurencije, “Official Gazette of RS”, no. 50/2010) (the “Rulebook 3”) and accompanying Guidelines for the Application of Article 69 of the Law and Rulebook on Conditions for Exclusion from the Obligation to Pay a Fine as a Measure for Protection of Competition (Smernice za primenu člana 69. Zakona o zaštiti konkurencije i Uredbe o uslovima za oslobađanje obaveze plaćanja novčanog iznosa mere zaštitie konkurencije) (the “Guidelines”) adopted by the Counsel of the Commission for Protection of Competition (the “Commission”) on 30 August 2010.
When it comes to criteria based on which the sanctions, ie fines and procedural penalties, are imposed, the Rulebook on Criteria for Determining the Amount to be Paid on the basis of Measures for Protection of Competition and Procedural Penalties, Manner, Deadlines for their Payment and Conditions for Determining the Measures (Pravilnik o kriterijumima za određivanje vizine iznosa koji se plaća na osnovu mere zaštite konkurencije i procesnih penala, načinu I rokovima za njihovo plaćanje i uslovima za određivanje tih mera, “Official Gazette of RS”, no. 50/2010) (the “Rulebook 4”) provides detailed guidance. It is also important to mention the Law on Consumer Protection (Zakon o zaštiti potrošača, „Official Gazette of RS“, no. 62/2014 and 6/2016 – other law) as it regulates the special procedure for protecting collective consumers interests.
1.2 Cartel Conduct
Horizontal agreements are agreements between market participants which operate on the same level of production or distribution, ie agreements between competitors.
Not every horizontal agreement concluded between competitors affects competition in a negative way. Namely, there are certain sorts of agreements, such as those concluded for the purpose of research and development, or specialisation, that are even desirable for competition as they contribute to improvement of production and trade, and stimulate technical and economic progress. In that regard, only those horizontal agreements that are restrictive for competition are prohibited and as such in breach of applicable competition rules in Serbia.
Restrictive agreements, ie particular contractual provisions, tacit or explicit agreements, concerted practices or decisions of associations, are prohibited and void if their object or effect is significant restriction, distortion or prevention of competition in the territory of the Republic of Serbia. In the rest of this text the word “agreement(s)” should be read as including particular contractual provisions, tacit or explicit agreements, concerted practices or decisions of associations. The Law explicitly lists examples of such agreements as those which:
- directly or indirectly fix purchase or sale prices or other trading conditions;
- limit production, markets, technical development or investments; apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts;
- share markets or supply sources.
The most common examples of cartel conduct are reflected through agreements on fixing of the price at which the products will be sold, agreements on allocation of customers or territories, agreements on reduction of output and agreements on public bid rigging.
1.3 Limitation Periods
Upon expiry of five years after action that represented a violation of the Law was committed, the Commission may no longer impose a measure for protection of competition in the form of a fine.
This statute of limitation period will be interrupted by any action of the Commission aimed at determining such violation, and if there are several market participants against which the proceedings before the Commission are initiated, the statute of limitation will be interrupted by delivering the submission of the Commission to any of those participants.
On the other hand, it is important to note that a fine can no longer be collected from the relevant market participant after the expiry of five years since the final decision of the Commission imposing such a fine, or in the case of an administrative dispute, the expiry of five years since the decision of the Administrative Court became enforceable.
There are no sectors or industries singled out for exemption from public cartel enforcement action. Exemptions apply only on a case-by-case basis regardless of the sector, ie an industry where a cartel or restrictive horizontal agreement occurs. Restrictive horizontal agreements may be exempt in one of the three following ways:
- By individual exemption – in order to obtain an individual exemption, the agreement would need to satisfy four cumulative conditions: a) it must contribute to improving the production or distribution of goods or to promoting technical or economic progress; b) consumers must receive a fair share of the benefits; c) the restrictions must be indispensable; and 4) competition in the relevant market must not be eliminated. The parties would need to submit a request to the Commission and prove that the four conditions mentioned above are fulfilled.
- By horizontal block exemption (via self-assessment). In addition to the necessity of fulfilling the four conditions described above that are necessary for individual exemption, the agreement would have to fall under one of the categories prescribed either by Rulebook 1 or Rulebook 2 – agreement on specialisation, or agreement on research and development, and fulfil the other relevant conditions prescribed in the respective rulebook (pertaining to market shares of the parties and certain characteristics of the agreement).
- If it is identified as an “agreement of minor significance” (de minimis rules, applicable via self-assessment)
– restrictive agreements would not be prohibited provided that they are considered to be agreements of minor importance. The law further prescribes that agreements are of minor importance if the market share held by each of the parties to the agreement does not exceed 15%.
1.5 Geographic Reach
The Law explicitly prescribes that its provisions apply to acts and operations performed on the territory of the Republic of Serbia, as well as to acts and operations performed outside of this territory but which affect or could affect competition within the territory of the Republic of Serbia. In other words, cartel conduct in a foreign nation which has an impact on the competition in the territory of the Republic of Serbia would be subject to application of Serbian antitrust legislation.
1.6 The Principle of Comity
Aside from the geographical reach of the application of the Serbian Competition Law, its personal scope of application should also be taken into account.
Namely, the Competition Law explicitly prescribes that it applies to all legal and natural persons that directly or indirectly, permanently, temporarily or one time only participate in the trade of goods and services, regardless of their legal status, ownership, citizenship or nationality.
In that regard, it may be concluded that Serbian Competition Law applies to all acts or operations that violate competition in the territory of the Republic of Serbia, or affect or could affect competition within the territory of the Republic of Serbia, even if they are performed outside the territory of Serbia, regardless of the registered seat (nationality) of the entities in question.
In that regard, the Commission is entitled to enact a decision based on the Law whenever competition in the market of the Republic of Serbia is violated, and to fine the entities whose conduct violated the Law in line with its provisions, regardless of the breaching entities’ nationality and regardless of whether the conduct is subject to enforcement in multiple jurisdictions. Further, the Commission has in place bilateral agreements with various other competition authorities in the region, and cooperates with them on a fairly regular basis.
2. Collecting evidence
2.1 Evidence collected through use of investigative powers
We advise our clients to do the following:
- to make sure to label internal and external communication with the appropriate headings in order to emphasise and mark that the conversation is confidential and privileged, using the “for the purpose of obtaining external legal counsel” label as much as possible
- to make sure that there is a person designated for dealing with dawn raids within the company (inspection coordinator)
- to make sure that such person has direct contacts with external counsel
- to verify the identity cards of the inspectors and the proper issuance of the decision on performance of the inspection to ask inspectors
- to wait for external counsel to arrive to determine the identity of the person (inspection coordinator or another person) who will take a detailed record of the course of the dawn raid
- to make sure to make at least three copies of each document requested by the inspectors (one for the inspectors, one for the company and one for external counsel)
- to ask to be allowed to provide a written statement at a later date instead of providing an oral statement on the spot if the relevant facts cannot be recalled
- to fully cooperate with the inspector to provide to inspectors with oral explanations only with regard to specific facts and facts related to the objective of the inspection and only in the presence of the inspection coordinator and external counsel
- to organise, at least on an annual basis, competition law training for the relevant staff members.
2.2 Standard of proof
Collecting evidence is a procedural operation performed by the Commission within the investigation procedure in order to correctly determine facts, and in particular by collecting statements of the parties, witnesses and experts, data, documents and other items, as well as carrying out dawn raids and seizing objects.
The investigation procedure is part of a regular manner of conducting the proceedings of ‘concentration notification’ or proceedings for determining a violation of the Law before the Commission. However, the Commission is authorised, if it reasonably assumes that the submitted evidence is sufficient for making a lawful decision, to enact such decision without having conducted an investigation.
Besides the “regular” investigation procedure where evidence is collected as a part of the proceedings before the Commission, the Law foresees the possibility of collecting evidence through unannounced investigations – dawn raids. The standard of proof that is required under the Law for the public enforcement agency (ie the Commission) to perform these unannounced inspections is “reasonable doubt” regarding the existence of the risk of disposal or altering of evidence held by the party potentially in breach of the Law or a third party.
2.3 Surprise visits
When the standard of proof is fulfilled, the Commission is authorised to perform an unannounced inspection (dawn raid), ie surprise visit by a sudden control of companies’ premises and employees’ premises or data, documents and objects that are found at such places, about which the party or the holder of premises and items should be informed at the moment of the investigation and on site.
The official conducting the investigation on behalf of the Commission (the “inspector”) is obliged to show their official ID to the owner or holder of the premises, and to hand over a conclusion on conducting an investigation into those premises (issued by the appropriate authority within the Commission), or to demand to enter the premises.
If the owner, ie holder of the premises, unjustifiably opposes the investigation, the inspector may request the help of the police for forced entry into such premises. On the other hand, if it is necessary to conduct an the investigation in an apartment or other premises that has the same, similar or a related purpose (ie the apartment of an employee or director), and its owner or holder refuses, the Commission would need a court order to enter such premises.
The holder of the apartment is entitled to attend the inspection or to engage a representative to attend the inspection that is being performed in the apartment on their behalf, with the presence of two adult witnesses. However, even if neither the holder nor their representative are present, the investigation of the apartment may be conducted only in the presence of two adult witnesses.
2.4 The seizure of evidence
If during the investigation, documents, data, objects that contain data (eg computers, laptops, etc) or other objects are found that are of importance for making the correct and lawful decision, the Commission may order their temporary seizure until all relevant data and facts from these documents and items are determined, but not longer than the end of proceedings.
The inspector is obliged to draft a conclusion on temporarily seized items and to issue a confirmation to the person from whom the items were seized.
2.5 Legal Privilege
Letters, notices and any other communications (eg emails) that are directly related to the proceedings between the party against which the proceedings are being conducted and its representative/legal counsel, is considered as “privileged communication” under the Law.
This type of information has the status of confidential information, meaning that the only “privilege” in this communication refers to the fact that it will not be made available to third parties and the public.
Even though, supposedly, the concept of privileged communication was, as in other jurisdictions, to ensure free communication between parties and their legal counsel, without fear that such communication might be used against them as evidence in the proceedings, the Serbian legislature did not recognise the significance of this concept and only ensured protection with regards to third parties and the public, ie it gave the Commission full rights to use such communication as evidence against the parties.
Further, in case of doubt about potential abuse of the privileged communication status, the president of the Commission may review the content of the communication and decide on the removal of this status in relation to part or all of it.
2.6 Interviews with Company Employees
The Commission has authority to conduct interviews with company employees and representatives/legal counsel at companies’ premises or at the Commission’s premises (if necessary), as a part of its inspection powers.
The company can request the presence of its representative/legal counsel, and may refrain from providing statements until their arrival (of course, this should be a reasonable period of time). In case written statements of employeesare required or requested by the Commission, it is possible for these statements to be delivered subsequently, by a date determined by the inspector.
The Law is silent on employees’ right to decline to be interviewed, and refers to the application of the Law on General Administrative Procedure in case a procedural issue is not specifically regulated under the provisions of the Law.
The Law on General Administrative Procedure lists situations in which witnesses may decline to answer certain questions – if the response would expose them, their blood relatives in direct line and in the collateral line to the third degree of kinship, their spouse, unmarried partner, and certain other relatives to serious disgrace, considerable damage to property or criminal prosecution, if the witness would violate their obligation to keep the confidentiality of data, or business or professional secrets, or if they would have to reveal facts that they became aware of as an attorney, confessional priest, doctor or by performing another profession, if such profession requires keeping secret the information learned by performing such a profession.
What is important to point out is that risk of property damage does not give the witness the right to refuse testimony on legal matters they attended as a witness, mediator or record keeper, on actions that are related to the disputed relationship, which they performed as a legal predecessor or representative of a party, or in cases where special regulations bind the witness to submit an application or to make a statement about certain actions.
2.7 Requests for information
The Commission is authorised to request information from market participants in a written, electronic or other form, as well as delivery of documents, objects containing data, and other items that may serve as evidence in proceedings, that such a market participant is required to own or is reasonably presumed to possesses.
In case the market participant fails to do so, the Commission will take that fact to the detriment of the party which failed to deliver the requested information, and impose a procedural penalty of EUR500 to EUR5,000 for each day of failure to abide by its request, on condition that the total amount of this penalty must not exceed the 10% of the total annual revenue of the respective party.
Apart from the authority to request information from the parties, the Commission is also entitled to request information, documents or objects from third parties, if it reasonably believes that necessary information, documents or objects are in their possession. Third parties are obliged to fulfil this request under threat of a procedural penalty (in the same amount as mentioned above) for each day of failure to comply with its request.
2.8 Privilege Against Self-Incrimination
As noted above, the competition rules applicable in Serbia do not recognise the concept of privilege against self-incrimination. The legislation does, however, allow the possibility of the parties requesting the Commission to classify certain information or documents as confidential (vis-a-vis third parties).
The Commission will meet the party’s request if it finds that the interest of the party is justified and more important than the interest of the public to have access to this information, and provided that the party has established the likelihood of substantial damage being incurred if the information is disclosed.
The confidentiality does not represent any privilege in proceedings before the Commission, as information and documents that are marked as confidential may be used as evidence in the decision-making process. The only significance of this confidentiality is that such information would not be available to third parties and the public.
2.9 Companies Located Outside the Jurisdiction
Besides prescribing the geographical scope of its application, the Law also regulates the personal scope. Namely, it explicitly prescribes that it applies to all legal and natural persons that directly or indirectly, permanently, temporarily or one time only participate in the trade of goods and services, regardless of their legal status, ownership, citizenship or nationality.
In that regard, the Law and all mechanisms prescribed therein apply to companies regardless of their registered seat (nationality) if their acts or operations that violate competition are performed in the territory of the Republic of Serbia, or are performed outside of its territory but affect or could affect competition within the territory of the Republic of Serbia.
Therefore, the Commission is at least theoretically authorised to request information from companies outside the territory of Serbia and such companies are obliged to comply with those requests, or consequences for failure to comply would apply to them as they do for domestic companies.
However, in case a foreign company which has no operation or assets in Serbia fails to cooperate, it seems the only thing the Commission could do is seek assistance from the competent authorities of the country where the company is registered. However, as Serbia is not yet a member of the European Union, Council Regulation no. 1/2003 which prescribes the cooperation between national competition authorities and the EU Commission does not apply.
2.10 Additional Elements of Proof
The Commission arguably has a wide array of elements of proof at its disposal as the list prescribed under the Law is not exhaustive. However, such additional elements as tapping of phone conversations and performing similar surveillance activities would not be possible without a court order.
It should be noted that, in cases when price fluctuations or other circumstances point to the possibility of restriction, distortion and prevention of competition in the market, the Commission may conduct sector analyses, ie it may analyse the conditions of competition in a particular sector of industry or particular categories of agreement in different sectors of industry. In that regard, the Commission is authorised to request all necessary information, documents, agreements, decisions and notices on concerted practices from market participants for conducting the necessary research.
The Commission is obliged to publish reports on all performed sector analyses on its website, and may invite market participants to comment on the published report.
3. Evidence collected through the leniency program
The Law explicitly provides for immunity from fines to a cartel participant who is first to report the existence of a restrictive agreement to the Commission (so called “first-in-the-door” participant), or submits evidence based on which the Commission may initiate proceedings.
Further, the applicable legislation provides the possibility of reducing the fine for those cartel participants who subsequently provide new and significant evidence on the basis of which the Commission may complete proceedings and enact a decision on a violation of the law.
As the provisions of the Law leave no doubt about the granting of immunity or leniency by the Commission in case of reporting cartels, and since Rulebook 3 and the Guidelines prescribe the procedure for granting immunity/leniency in detail, it is arguable that Serbian antitrust legislation provides significant clarity on the benefits and risks of disclosure or non-disclosure to the authorities.
3.2 First-in-the-door (whistleblower)
According to Rulebook 3 and the Guidelines, the Commission may grant immunity from fines to cartel participants under following the conditions:
- respective cartel participant is the first to report the existence of the cartel to the Commission;
- the Commission, at the time of submission of evidence, did not have knowledge of the existence of the cartel, or had knowledge but did not have enough evidence to initiate proceedings;
- the respective cartel participant submitted to the Commission all available evidence and/or identified the place or person where such evidence could be found;
- evidence enabled the Commission to reach a decision on violation of competition;
- the respective cartel participant did not initiate or organise the creation of the cartel;
- the respective cartel participant did not coerce or encourage other participants to create or implement the cartel;
- and the cartel participant fully and continuously fulfils all other obligations of cooperation with the Commission.
In addition, cartel participants are obliged to fulfil the additional conditions prescribed under Rulebook 3 and the Guidelines that apply to both the granting of immunity and reduction of fines:
- to fully, unconditionally and continuously cooperate with the Commission throughout the proceedings until the final enactment of the decision which determines a violation of competition;
- to, not later than simultaneously with reporting the cartel, suspend any further participation in the cartel, unless the cartel participant, in the interest of further procedure, explicitly agrees with the Commission otherwise;
- to reply, without delay or within a deadline determined by the Commission, to each request of the Commission to supplement the evidence or information; to allow access by authorised persons of the Commission to all employees and former employees who have information and/or evidence regarding the cartel and ensure their full cooperation during the proceedings; not to destroy or conceal information or other evidence relating to the reported cartel;
- to keep confidential all information provided in the report, as well as the fact of cooperation with the Commission during the proceedings;
- and to act in all things in good faith and responsibly, and according to any other orders or instructions they receive from the Commission during the proceedings.
3.3 Second-in-the-door companies and late comers
A company, ie a cartel participant, that fulfils the following conditions prescribed under Rulebook 3 and the Guidelines is entitled to seek a reduction of fines:
- it does not fulfil the conditions prescribed for full immunity;
- it did not initiate or organise the cartel;
- it did not coerce or encourage other cartel participants to conclude or implement the cartel;
- it submitted evidence to the Commission which was unavailable to it, and which enabled the finalisation of the proceedings and enactment of the decision on violation of competition;
- it fully and continuously fulfils all other obligations of cooperation with the Commission.
In addition, these cartel participants are obliged to fulfil all additional conditions prescribed under the Guidelines that apply for granting of both immunity and reduction of fine, in order to be fully eligible for reduction.
As the ranges of reductions are set under the Guidelines and are transparent, each cartel participant is aware of the benefit from reduction that would apply to it.
Namely, the Commission may reduce the fine of the cartel participant who filed a request for reduction of fine and fulfilled all conditions and obligations in accordance with the Law, Rulebook 3 and the Guidelines, in the following manner:
- from 30% to 50%, if the respective cartel participant is finally granted the status of first applicant for a reduction of fine;
- from 20% to 30%, if the respective cartel participant is finally granted the status of second applicant for a reduction of fine;
- up to 20% if the respective cartel participant is finally granted the status of third or subsequent applicant for a reduction of fine.
3.4 Corporate Oral Statements
Apart from what has been described above, Serbian legislation does not foresee any special process regarding the submission of corporate oral statements.
The Commission is obliged, as far as possible, to protect the identity of the leniency applicant, their request and confidential data until issuance of the notice on relevant facts, evidence and other elements on which it based its decision in the proceedings.
From this it follows that after issuance of the decision there is no obligation of the Commission to keep this information confidential.
4. Disclosure of evidence in private damage actions
4.1 Investigative Powers
Serbian legislation does not specifically regulate the disclosure of evidence collected through the use of the Commission’s investigative powers in court. Generally speaking, the only limitation with regard to usage of evidence is that it was not obtained in an illegal manner.
4.2 Leniency program
Serbian legislation does not specifically regulate the disclosure of evidence collected through the leniency programme in court. Generally speaking, the only limitation with regards to usage of evidence is that it was not obtained in an illegal manner.
5. International cooperation between enforcement agencies in multi-jurisdictional cases
5.1 Extent of cooperation
As Serbia is not yet a member of the European Union, EU regulations and directives stipulating cooperation in legal matters between member states do not apply. Hence, cooperation between Serbia and other countries depends solely on whether the two jurisdictions have concluded a bilateral agreement on providing mutual international legal assistance or not.
This also means the EU Commission is not entitled to perform any actions on the territory of Serbia by itself. Any actions to be taken on the territory of Serbia by the EU Commission or an EU member state may be performed only by the Serbian Commission after receiving a filed request for cooperation.
What should be noted is that rejecting cooperation with the EU Commission or its member states by the Serbian Commission would be treated as failure to abide by the Stabilisation and Association Agreement between Serbia and the EU.
5.2 Impact of Cooperation
As cooperation between jurisdictions is not strictly regulated, but mostly depends on good faith between the countries, the impact that such cooperation might have on cartel cases is unpredictable.
6. Decision Making
6.1 Settlements / plea bargaining
The Competition Law does not foresee the possibility of settlement or plea bargaining in administrative proceedings conducted before the Commission, outside the leniency regime described above. However, in practice there have been cases where the Commission agreed to terminate proceedings on the basis of commitments proposed by the market participant being investigated.
Companies which have violated competition as determined by the final decision of the Commission, and which are not granted immunity, will be fined by the Commission directly. Supervision of the implementation of the Law as well as imposing sanctions, ie fines, due to its violation is in the competence of the Commission. Apart from authorisation to impose fines, the Commission is entitled to impose procedural penalties if companies fail to abide by its orders in the proceedings or act contrary to behavioural measures imposed.
Fines represent a regular sanction, ie measure for protection of competition, imposed for violations of competition under the Law. The amount of fine to be paid by a company which has acted contrary to the antitrust legislation is determined by the Commission after lawfully conducted proceedings.
The Commission may impose a fine of up to 10% of the company’s annual revenue before taxation, achieved in the territory of the Republic of Serbia, in the year that precedes the year in which the proceedings before the Commission were initiated.
On the other hand, the amount of procedural penalties that can be imposed on companies that fail to abide by the Commission’s orders and instructions ranges from EUR500 to EUR5,000 for each day of failure to do so, on condition that the total amount of this penalty does not exceed 10% of the their total annual revenue.
The criteria for determining the amount of fine and procedural penalty is set out in Rulebook 4. The criteria encompass the following:
- intention of market participant to violate competition – mitigating circumstance in this case for market participants would be the fact that they were aware that the action they were undertaking would violate competition but that they carelessly assumed that such violation would not occur, or market participants were unaware that their action might violate competition, but under the circumstances of the case and characteristics of their actions they should and could have been aware of this possibility.
- gravity, consequences and duration of the violation of competition – mitigating circumstance in this case for market participants would be the fact that the action they undertook caused extremely short-term or a completely insignificant violation of competition or that the violation of competition did not cause any adverse effects to competition or was not large-scale;
- market participants have violated competition before;
- encouraging other market participants to commit actions that for their object or effect have or may have a significant restriction, distortion or prevention of competition;
- time when market participant ceased committing actions that constitute violation of competition – mitigating circumstance in this case for market participants would be the fact that the market participant ceased with committing actions that constitute a violation of competition before it found out that such actions were discovered or before any procedural action was taken against it;
- undertaking measures in order to alleviate the consequences of the violation of competition – mitigating circumstance for market participants would be the fact that market participant alleviated the consequences of violation of competition it caused to a substantial extent and before any procedural action was taken against it;
- cooperation of market participants with the Commission in the process of determining violation of competition or preventing or impeding the performance of procedural actions.
6.5 Joint and several liability
The Law explicitly prescribes that two or more market participants which are connected in a way that one or more market participants control another or other market participants, are deemed to be affiliated market participants, and hence are considered to be one participant in the market, jointly and severally liable for any sanctions imposed on any of the affiliated participants.
Control over another market participant in terms of this law represents the possibility of decisive influence on business operations of another or other market participants, and in particular:
- if the controlling market participant has the status of the controlling (parent) company, ie controlling member or shareholder, either individually or through a joint action;
- based on ownership and other property rights on property or part of property of another market participant;
- based on agreement or securities;
- on the basis of claims or assets securing the claims or on the basis of conditions of business practice determined by the controlling market participant.
6.6 Other sanctions
Apart from imposing fines and procedural penalties, the Commission is authorised to impose measures aimed at removing violation of competition, and prevention of possible emergence of the same or similar violations, by issuing orders to market participants to undertake certain actions or to prohibit certain actions (non-structural measures).
In addition, if it is determined that the structure of market participants represents a significant risk of repeating the same or similar violations, the Commission may impose a measure aimed at changing the structure of market participants by dividing the structure of market participants, in particular through requiring the divestiture of some of its parts or property to other market participants who are not associated with the respective market participant (structural measures). However, it should be noted that this type of measure is the ultimate step, and may be imposed only if no other measure is effective.
6.7 Sanctions against company employees
Serbian legislation does not provide any sanction for company employees for violation of antitrust regulations.
However, the Criminal Law prescribes a sanction of imprisonment of six months to five years or a fine for those responsible (these are in most cases legal representatives such as directors) of a company which, by concluding a restrictive agreement (including a cartel), causes disorder in the market or puts their company in a privileged position compared with competitors, so as to obtain material gain for that company or other entity, causes damage to other business entities, consumers or users of services or abuses its dominant position.
However, what should be noted here is that in practice criminal proceedings for these unlawful actions have never been initiated, to the best of our knowledge.
7. Damage claims
7.1 Collective redress
Compensation for damage caused by acts and actions determined by the Commission to be a violation of competition may be sought in civil proceedings before the competent court. What is important to note is that the decision of the Commission does not lead the court to an assumption that the damage occurred, and the claimant must prove the occurrence of such damage in court.
Serbian legislation foresees the possibility of collective redress in the form of institutional organisations representing consumers. More precisely, the procedure for protection of consumers’ interests is initiated and conducted by the Ministry of Trade, Tourism and Telecommunications, ex officio or at the request of consumer protection associations (upon an initiative filed by at least ten consumers). This procedure is prescribed under the Law on Consumer Protection.
7.2 Indirect purchasers
All persons who have suffered damage (including indirect purchasers) may bring a damages claim. However, they must prove the occurrence of damage in court.
Serbian legislation does not foresee the possibility of a passing-on defence in competition proceedings. The only way of exercising the right to damages is to file a claim in civil proceedings, ie litigation which does not foresee a passing-on defence, nor does it see competition litigation as a special form of civil litigation.
7.3 Types of Compensation
A claimant who proves the existence of damage in civil proceedings is entitled to full compensation, which includes their right to be compensated for both material losses (actual damage) and forgone profits caused by the cartel. Serbian legislation does not, however, foresee any punitive damages for damage caused by a cartel, nor any other special types of damages.
7.4 Quantifying damages
Serbian legislation does not prescribe any precise criteria based on which the damage caused by cartels might be quantified. In that regard, the competent court is entitled to decide on the amount of damages based on the circumstances of the particular case and in its absolute discretion.
The only standard that the court must take into consideration when quantifying damages is the need to establish the state of things as they were before the violation (restitution).
8. Judicial Review
8.1 The Appeal Process
Serbian antitrust legislation does not prescribe a regular appeal process regarding final decisions of the Commission. The only way of contesting a final decision is to file a lawsuit asking the Administrative Court to review its legality.
Proceedings before the Administrative Court are conducted based on the provisions of the Law on Administrative Disputes.
Filing of the lawsuit does not postpone enforcement of the Commission’s decisions, unless the enforcement would cause irreparable harm to the plaintiff, especially if it would likely lead to the plaintiff’s bankruptcy or cessation of business activities, provided that the postponement is not contrary to the public interest.
The deadline within which the lawsuit should be filed is 30 days as of the receipt of the Commission’s decision. Upon receipt of the lawsuit the court delivers it to the Commission for response within 15 days of its receipt, assuming it contains the necessary elements and is not rejected by the court.
The deadline within which the response should be delivered to the court by the Commission is within 30 days of receiving the lawsuit. The court is obliged to reach a decision on the lawsuit within three months of receiving the response to it or as of the expiration of the deadline for response.
8.2 Extent of Review
The Administrative Court will review the Commission’s decision to the extent requested in the lawsuit, without being bound by reasons indicated in the lawsuit.
As for the legality of the Commission’s decision on the amount of the fine, the Administrative Court is authorised to review it in line with requirements for such decisions prescribed under antitrust regulations. If the court finds that the Commission’s decision on the fine is illegal it will modify that part of the decision.
As for the material aspect of the decision, the Administrative Court which finds that the decision was illegal will return the case to the Commission with instructions to review it.
Cartels 2018 was published by Chambers & Partners. The Serbia chapter was authored by Uroš Popović, parter at Bojović & Partners – a member of SELA.