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CEE Legal Matters Experts Review: Competition

Mind the Gap! European Union and Serbia

This Article was originally published in Issue 7.8 of the CEE Legal Matters Magazine

 

It’s no secret that competition law across the Western Balkans has been greatly shaped by accession, with local developments regularly driven by EU practice and the EU’s regulatory framework.

Even if this were not the case in practice, the Stabilization and Association Agreements are quite clear: any anti-competitive practices are to be assessed on the basis of criteria arising from competition rules in the EU, as well as interpretative instruments adopted by EU institutions. Therefore, precedents by the or the Court of Justice of the European Union are routinely referred to in the decisions of the Serbian Commission for Protection of Competition, while the EC’s annual progress reports underline that the country’s legislative framework is broadly in line with EU rules, and is considered moderately prepared in the area of competition policy.

The nature of the cases themselves has gone relatively less explored. Indeed, there have been several investigations before the Commission that were clearly inspired by the practice of the EC or specific member states. We are not talking about run-of-the-mill resale price maintenance or bid-rigging cases, which can be found everywhere, but highly specific matters, with clear parallels between the different jurisdictions. This trend of comparative interplay has only increased with the growing sophistication, experience, and track record of the Serbian enforcer.

Maybe the first high-profile local case clearly cribbed from European practice was the Commission’s 2012 Frikom decision, inspired by the EC’s landmark 1998 Unilever/Van Den Bergh case, and looking at similar issues pertaining to freezer and outlet exclusivity in the ice cream market. While the lag in this instance was quite long (and involved multiple restructurings of local competition rules, as well as the country itself), further practice would reduce it significantly. The Commission’s 2015 Tobacco Industry investigation (terminated in 2019) echoed Container Shipping, as well as a very similar Romanian investigation pursued between 2010 and 2014, in examining potential price signalling on oligopolistic markets. The Commission’s 2018 Visa and Mastercard interchange fee investigations closely examined the similarities and differences in the framework for payment card schemes in Serbia and the EU. In a recent individual exemption case, the Commission relied on relevant practice by the French Autorité de la Concurrence, decided only a few months prior.

Closely following comparative practice can save the authority significant time and resources by allowing it to focus on issues and matters that have had a recognized potentially detrimental effect on competition. At the same time, since undertakings are more aware of competition rules than ever, both complainants and defendants increasingly rely on examples in international practice to support their claim, finding succour in authoritative analysis and interpretation of often broad rules and principles. This creates a positive feedback loop, forcing the authority to be ever-more vigilant in following the latest trends, lest it risk being overtaken by experienced lawyers. As the world is growing smaller and more interconnected, information about relevant practice has never been easier to track down. This does not mean that the authority should be allowed to uncritically copy/paste international practice – each case is a beast of its own, and local market circumstances might well turn out to be only superficially similar to the original model. Also, the models themselves may be flawed, as a number of decisions and unforeseen consequences by international authorities have proven over the years. However, in Serbian competition law, following authoritative trends and robust analysis and staying updated is no longer a “nice-to-have” perk in your legal representation, but a requirement.

Simultaneously, multinationals should be careful in structuring their operations and procedural strategies with respect to accession countries. Focusing on an investigation by the EC is understandable; however, one should also be mindful of the ripple effects among the EU’s neighbors. After all, although it is likely that any problematic practices would be treated similarly, a decision by the EC does not automatically cover any anti-competitive effects in Serbia, BiH, or Montenegro, and the local authorities are fully justified in pursuing a same or similar investigation. And indeed, why not pick the low-hanging fruit?