The whirlwind of 2020 has put many ongoing legislative processes on the back burner with legislators and governments prioritizing the handling of the COVID-19 pandemic and the abundance of regulations and measures that went with it. The new Serbian Competition Act draft shared this destiny.

During 2019, the work on the draft intensified and it was planned that, once finalized, it enters the Parliament’s adoption procedure at some point in 2020. A year later there is no news on when we can expect this process to resume – as of now, it seems that any developments on this front are unlikely at least in the first half of 2021.

While this hiatus continues, we revisit some of the main aspects of the draft and the likely changes that market players should be prepared for.

Hybrid Self-Assessment Regime

If an agreement has restrictive elements but is not exempted under the de minimis rule (agreements of minor importance) or the block exemption regulation, under the current regime, it would need to be notified to the Serbian Commission for Protection of Competition (CPC) for an individual exemption.

The draft plans to (almost) do away with the notification system and introduce the self-assessment regime as a rule of thumb, following in the footsteps of the European Commission that made this transition back in 2004 as a part of its modernization package once it became apparent the system has become unnecessarily bureaucratic for market players that have, by that point, become familiar with competition rules.

Have Serbian market players reached that stage?

Although the CPC invested in advocacy activities in the past years and several of its high-profile cases raised awareness of the importance of competition compliance, this set of rules is still relatively novel to the Serbian market. Indeed, many companies fail to notify and obtain an individual exemption for their agreements.

Still, many companies seek legal certainty that is achieved only with an individual exemption in place. For probably that reason, the legislator has, for now, not excluded the notification system all together but rather left a possibility of a voluntary notification.

In any case, for the self-assessment regime to have a chance of success, the CPC will probably need to put in extra effort to provide sufficient guidance on how self-assessment is to be conducted, continue its advocacy efforts, be open for consultations and be consistent and transparent with its practice.

Negative Clearance

A possibility for undertakings to request a negative clearance from the CPC – a decision determining that certain individual agreement, decision, business practice or other act or action is not restrictive or abusive, has also found its place in the draft. A negative clearance would be possible in case of bilateral/ multilateral conduct, but also with respect to unilateral behaviour, i.e. practices by dominant undertakings.

Giving this option to market players could have its advantages if not mis- or overused. With an appropriate guidance of the CPC, it could help market players attain legal certainty in scenarios which are not clear-cut and at the same time build up an important body of practice.

Merger Control

The Serbian merger control system is known for its ability to catch many foreign-to-foreign deals that usually do not have effects on the local market due to the structure and the value of the merger-filing thresholds.

Currently, it is sufficient for a filing to be triggered that the parties to a concentration together generate a worldwide turnover of more than EUR 100 million provided that one of them generates a Serbian turnover exceeding EUR 10 million. According to the draft, this threshold will be amended so that a concentration is notifiable when the combined annual turnover of all merging parties exceeds EUR 200 million on the worldwide level and EUR 15 million on the Serbian market.

This will lead to only borderline cases escaping the duty to file under the new regime, as the structure of the threshold would remain prevailingly the same with only a minor change in the value of the thresholds. Multinationals and private equity funds with significant turnovers in Serbia will likely continue to meet the new threshold as well.

Other amendments worth noting are the extension of the statutory deadline for filing from 15-calendar-days to two months which would afford the parties more time to prepare a complete filing. Phase I and Phase II deadlines are expected to undergo changes too – the one-month deadline for Phase I could be increased to 45 days and the four-month Phase II investigation could suffer a technical change to 120 days.

The draft also introduces the concept of ancillary restraints – so far recognized by the CPC in practice but not explicitly regulated by law – according to which provisions otherwise deemed restrictive can be allowed in the context of a concentration if they are directly related to and necessary for the implementation of the transaction (most commonly, non-compete obligations imposed on the sellers).