Challenges for the Serbian National Competition Authority (“NCA”) and the Serbian Commission for State Aid Control (“CSAC”) have ratcheted up over the last ten months. New members of Councils were appointed to both authorities. The start of their mandates coincided with the onset of the COVID-19 pandemic (“COVID-19”) which certainly derailed their original plans and ideas.
Competition
COVID-19 is keeping competition authorities on their toes on two fronts: keep an eye on crisis cartels whilst allowing necessary competitor collaboration. Unfortunately, unlike the European Commission (“EC”) which published the Temporary Framework for assessing antitrust issues related to business cooperation during COVID-19, the NCA has not published any notice or guidance so far to provide clarifications regarding competitor cooperation without breaking the Competition Act and facing sanctions. The NCA has only recently informed undertakings about the application of the Decree concerning time limits in administrative proceedings during the state of emergency (for more information see here). Attention was drawn to procedural deadlines concerning concentration review proceedings and individual exemptions of restrictive agreements without so much as a word about competition concerns faced by undertakings during COVID-19. The NCA’s lackadaisical approach could prove problematic for undertakings having in mind that COVID-19 has caused significant disturbances across the markets in Serbia.
In terms of enforcement this year, the NCA has, all things considered, had many irons in the fire. As already announced by the NCA, it is taking aim at restrictive agreements. The first investigation centered on five undertakings for engaging in collusive joint bidding agreement in public procurement. Next up, following the sector inquiry, covering the period 2017-2018, into the retail sale in non-specialized stores with food, beverages, and tobacco predominating, the NCA instituted proceedings against 23 undertakings (two suppliers and 21 buyers – food retailers) reasoning that their agreements contained resale price maintenance (“RPM”) clauses. In September, the NCA published that it had instituted two RPM cases by carrying out dawn raids at the business premises of consumer electronics undertakings. A few days later, another RPM case was initiated against Nespresso’s distributor.
However, abuse of dominant position cases is not off the NCA’s radar. In July, it launched an investigation into a bus company. This type of investigation is familiar ground for the NCA considering that it had already conducted a similar investigation and found the company in question guilty as charged.
State aid
According to the new Serbian State Aid Act which entered into force on January 1, 2020, the institutional and functional independence of the CSAC has been further strengthened. It is worth noting that the CSAC was swift in its response to COVID-19 demonstrating a proactive approach. Namely, in order to help mitigate the impact of the pandemic on the Serbian economy, the CSAC adopted the Notice on Application of State Aid Rules Regarding New COVID-19 Circumstances on March 17, 2020. The Notice is a Serbian transposition of EC’s COVID-19 Communication from March 13, 2020, pursuant to Article 73(2) of the Stabilization and Association Agreement between the European Union and Serbia and Article 107 of the Treaty on the Functioning of the European Union. This development showed that the CSAC is not shying away from aligning its practice with that of the EC.
In addition, the Government of the Republic of Serbia enacted two regulations to alleviate the aftermath of COVID-19. State aid Regulation – the remedy of harmful effects lays down the following as conditions subject to which Stade aid may be granted: (i) where the total amount of aid does not exceed the amount necessary to cover eligible costs; (ii) under a scheme, provided the validity of the measure, the total budget, the aid instrument, the intensity and the beneficiaries have been determined; (iii) where the actual loss did not occur as a result of non-compliance with regulations in force during the COVID-19 pandemic, i.e. such costs would have been incurred regardless of COVID-19; (iv) where the beneficiary is not directly responsible for i.e. it has not contributed to the actual loss, by gross negligence or deliberately.
On the other hand, the State aid Regulation – the remedy of a serious disturbance in the economy prescribes that State aid to keep companies afloat may be granted through the following instruments in the form of: (i) subsidies, debt cancellation, tax breaks; (ii) subsidized interest rates on loans; (iii) guarantees on loans under favorable terms; (iv) deferral of payments of employment taxes and/or social contributions; (v) salary subsidies in order to avoid layoffs during COVID-19; (vi) short-term export credit insurance.
Conclusion
It is probably not a stretch to say that the NCA has a penchant for RPM investigations. Whether because it is the most common infringement or because it is the easier option for the NCA, we can only assume, but it will be interesting to see, in the coming days, how the NCA will conduct ongoing investigations. On the other side, the new CSAC Council has shown a willingness to face down the challenge of COVID-19, but the real battle is just over the horizon when the consequences of the pandemic will become much clearer.
