The Commission for Protection of Competition has instituted ex officio proceedings against company Konica Minolta Poslovna Rešenja SE d.o.o. Beograd, 11a Milutina Milankovića Blvd., Belgrade. The proceedings is instituted in order to investigate the infringement of competition from Article 10 of the Law on Protection of Competition.

During the course of investigation proceedings instituted on May 28, 2018 against companies Original doo Beograd, Mikops doo Niš, Birolinija doo Beograd, Biro print sistemi doo Beograd, Dikti Line doo, Birodeveloping doo Niš, and Birotehnika doo Jagodina, the Commission has gained knowledge indicating that company Konica Minolta Poslovna rešenja SE has also participated in the infringement of competition stipulated in Article 10 of the Law on Protection of Competition. As an importer and distributor of equipment manufactured by Konica Minolta, company Konica Minolta manages the sale of equipment via company Original doo Beograd, from which all other partners are procuring the related equipment, such as Birotehnika, Mikops and Birolinija, not excluding the independent sales. The sales and aftermarket services of equipment manufactured by Develep, owned by company Konica Minolta, are managed via partners Birodeveloping and Dikti Line.

For reasons of procedural economy, given that legal requirements on the consolidation of two proceedings are met, the Commission has enacted a conclusion on conducting single proceedings in this case.

The Commission for Protection of Competition has approved a concentration of undertakings created by the acquisition of control over Mining and Smelting Combine RTB Bor d.o.o. Bor, executed on the part of company Zijin Mining Group Co. Ltd., PR China.

Zijin Mining Group as a China-based company is engaged in the exploration and mining of gold, copper, zinc and other mineral resources, with no previous market presence in Serbia.

The Commission for Protection of Competition has instituted ex officio proceedings for investigation of infringement of competition against four pharmaceutical companies, namely Farmix d.o.o., Beohem-3 d.o.o., Makler d.o.o. and Pharmaswiss d.o.o., all from Belgrade. It is reasonably assumed that said undertakings have been involved in collusive bidding in public procurements of medications used for Hemophilia, i.e. have shared the Hemophilia public supply market in the period from 2014 to 2017. The market sharing practices between competitors are considered to be a form of very serious infringement of competition.

Based on the Commission for Protection of Competition’s reasonable assumption of the existence of objective risks of removal or alteration of evidence in the possession of the parties, the authorized officials of the Commission have conducted dawn raids on the business premises of companies subject to the proceedings concerned immediately following the opening of investigations. On the occasion, they have inspected and checked business premises and belongings of the parties, including computers and other e-data storage media. Also, the Commission has examined contracts, financial and other business documentation, as well as business correspondence, all related to the investigation into the existence of competition infringement.

All persons in possession of data, documents or other relevant information which could contribute to the accurate fact-finding in the proceedings concerned are called upon to submit said to the Commission for Protection of Competition, 25/IV Savska St., Belgrade.

The Commission for Protection of Competition has imposed a procedural penalty measure in the amount of 8,500 euro against undertaking „MIMO” d.o.o. Beograd, due to its failure to act on the Commission’s Request for the provision of information.

In the aforementioned request ordering the submission of data for the purpose of a proceedings for investigation of competition infringement instituted ex officio by the Commission against company Industrija smrznute hrane „Frikom” d.o.o., company „Mimo” was on two occasions warned of the consequences of omission in respect of the Commission’s order.
Taking into account that extended deadline for the submission of requested data has also been reached on August 25, 2018 and that said company failed to address the Commission with a request for the deadline extension or otherwise informed the Commission of the reasons not to act on the Commission’s Request for the provision of information, the Commission Council has enacted a decision on the procedural penalty measure.

Company „MIMO” d.o.o. Beograd is obligated to execute the penalty payment in the aforesaid amount within two months of receipt of the decision concerned, under the threat of enforcement measure. The amount set as a procedural penalty measure is paid into the Budget account of the Republic of Serbia.
Conducts contrary to the Commission’s orders, that is failures to act on its orders, are subject to the procedural penalty measures in the amount of 500-5,000 euro for each day of such conduct or omission, which is regulated by the provisions of Article 70 of the Law on Protection of Competition
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When setting the amount of penalty payments, the Commission implements the criteria stipulated in the Law on Protection of Competition and the Regulation on criteria for setting the amount payable on the basis of measure for protection of competition and sanctions for procedural breaches, manner and terms for payment thereof and conditions for determination of respective measures, as well as in the Guidelines for implementation of the Regulation on criteria for setting the amount payable (…), enacted by the Commission Council on May 19, 2011.

The Law on Protection of Competition specifies that procedural penalty may not exceed 10% of the total annual revenue calculated in a manner stipulated by the Law. Also, procedural penalty measure does not release a party for the obligation to submit requested data, i.e. to act on the Commission’s requests.

The Commission for Protection of Competition has instituted ex officio proceedings for investigation of infringement of competition against 172 undertakings operating on the baby care products market. This is the seventh such proceedings opened this year against undertakings operating on the baby care products market.

As in the case of previous six proceedings instituted against undertakings operating on the baby care products market, the Commission has reasonably assumed that the seller and buyers of baby care products have set selling prices and other conditions of trade when arranging the cooperation. The reasonable assumption in this proceedings is based on the fact that the agreements concerned contain the provisions that fix resale prices. The provisions mentioned restrict buyers to independently and autonomously make business decisions relating to the respective pricing policies.

The Law on Protection of Competition defines restrictive agreements as agreements between undertakings which as their purpose or effect have a significant restriction, distortion or prevention of competition in the territory of the Republic of Serbia. They may have a form of contracts, certain contract provisions, express or tacit agreements, concerted practices, as well as decisions made by associations of undertakings, which directly or indirectly set the purchase or selling prices or other conditions of trade.
The Commission believes that the baby care products market is of utmost importance for consumers, as well as for the society as a whole and, for that purpose, all instituted proceedings relating to this market are considered to be of primary importance for the Commission which works intensively on a sector inquiry into the overall baby equipment market, the results of which will be presented to the general public.

All persons in possession of data, documents or other relevant information which could contribute to the accurate fact-finding in the proceedings concerned are called upon to submit said to the Commission for Protection of Competition, 25/IV Savska St., Belgrade.

The Commission for Protection of Competition has instituted ex officio proceedings for investigation of infringement of competition on the payment card market against MasterCard payment organization, comprised of companies МasterCard Incorporated, 2000 Purchase Street, Purchase New York 10577, USA; MasterCard International Incorporated, 2000 Purchase Street, Purchase New York 10577, USA; and, MasterCard Europe S.p.r.l, Chaussee de Tervuren 198А, В-1410 Waterloo, Belgium (hereinafter, MasterCard).

The Commission has reasonably assumed that MasterCard, as an association of undertakings on the market of the Republic of Serbia, sets fallback interchange fees in an unfair amount, implemented by MasterCard bank members in the territory of the Republic of Serbia, which are several times higher than those implemented in EU countries.

Considering the fact that interchange fees determine a floor for the price which merchants must pay as a service charge for accepting payment cards to banks, the Commission has reasonably assumed that the competition between acquiring banks is in such manner restricted, which are prevented from negotiating the amount of merchant service charge below the interchange fee. That in turn may affect the consumers if merchants pass on such merchant fees to all consumers through higher retail prices, making products or services more expensive irrespective whether the payment is made by using payment cards or in cash, and potentially adversely affecting the competition on the payment card issuing market in the territory of the Republic of Serbia considering the banks’ incentive to offer payment cards that yield the highest interchange fee revenues.

All persons in possession of data, documents or other relevant information which could contribute to the accurate fact-finding in this proceedings are called upon to submit said to the Commission for Protection of Competition to the address 25/IV Savska St., Belgrade.

The Commission for Protection of Competition has instituted four new in-depth antitrust investigation proceedings against ten undertakings operating on the baby care products market, based on reasonable doubt that the parties have concluded restrictive agreements in order to fix prices of baby care products in further sale (such as pacifiers and dummies, soothers and teethers, baby bottles, milk pumps, baby cosmetics, textile, etc.).

The ex officio proceedings instituted to establish the infringement of competition concern the following companies: Yuglob doo Beograd, Keprom doo Beograd, Aksa doo Beograd, „K-Pharma“ HI Pharmacy from Beograde and HI Pharmacy Kraljevo, as well as pharmaceutical wholesalers, companies Farmalogist doo Beograd, Vega doo Valjevo, Lekovit doo Šabac, Medicom doo Šabac and NS Pharm doo Novi Sad.

Note that already in April 2018, the Commission for Protection of Competition has instituted two in-depth investigation proceedings in order to establish potential infringements of competition on the baby care products market.

The Commission for Protection of Competition believes that the baby care products market is of utmost importance for consumers, as well as for the society as a whole, and uses this opportunity to remind the public that in addition to the mentioned investigation proceedings, the Commission is conducting a sector inquiry into the entire baby equipment market, the results of which will be presented to the general public.

All persons in possession of data, documents or other relevant information which could contribute to the accurate fact-finding in the proceedings are called upon to submit said to the Commission for Protection of Competition to the address 25/IV Savska St., Belgrade.

Regarding the false information published on July 2, 2018 on the Srbija Danas portal, the Commission for Protection of Competition has forwarded the retraction statement to this media outlet. Since the Commission’s reply was not immediately published, i.e. without any delay upon its receipt, pursuant to the provisions of Article 83 of the Law on Public Information and Media, the Commission hereby informs the general public on the information concerning this case.

REPLY

In the Srbija danas media content, distributed via internet page www.srbijadanas.com, a series of false and incomplete information concerning the work of the Commission for Protection of Competition have been published in the article by an unknown author.

In the proceedings against EPS Distribucija, the Commission has enacted a decision in December 2016 on the abuse of dominance effected by said company, by applying dissimilar and unfair business conditions to equivalent transactions with respect to a variety of undertakings, by which individual undertakings are placed in unfavorable position against competitors, and which was originally confirmed by the Administrative Court. By using its right to extraordinary legal remedy, EPS Distribucija has filed a review petition before the Supreme Court of Cassation against the Administrative Court’s ruling, after which the Supreme Court of Cassation has set aside the judgment and referred the case back to the Administrative Court for judgement. In the enforcement of this judgment, the Administrative Court has annulled the Commission’s decision and REFERRED THE CASE BACK FOR ASSESSMENT.

In the published article is correctly mentioned that in the decision concerned the Commission has imposed a measure for protection of competition in the amount of 330 million dinars, but statements from the published article that the Administrative Court has ordered the Commission to fully repay 330 million dinars to EPS Distribucija, with 35 million dinars in interest charges, are incorrect since such order is nonexistent. Furthermore, the Commission would not be able to repay the mentioned amount since such fee is not paid to the Commission’s account but the Budget account of the Republic of Serbia. Also, the Commission only became aware of the alleged interest charges and the related amount after reading this article, and holds no information on the party, institution and instruments used for the calculation of the interest charges or whether the interest will be charged at all. The judgment cannot quote this amount, since the request for reimbursement of funds submitted by EPS Distribucija to the Ministry of Finance – Tax Administration is filed on June 21, 2018, and the Administrative Court’s judgment is enacted on February 23, 2018.

With reference to the statement that the Commission has recognized Kosovo as an independent state, which was even quoted in the headlines, the Commission hereby underlines its refusal to be included in the attempt to politicize this case. As in all previous decisions, the Commission has defined the relevant geographic market in full and complete accordance with the facts and the Law, thus the definition provided in such manner is without prejudice to positions on status of the AP Kosovo and Metohija or territorial structure of the Republic of Serbia. The definition depends on a series of circumstances, mostly economic, and is often the case that the defined relevant market is wider or narrower than the territory of the Republic of Serbia (such as, for example, territory of the City of Belgrade, Western Serbia, airport pair Belgrade-Rome, etc.). Following the author’s logic, when the Commission defines the relevant geographic market as more narrow than the national, does that mean that it recognizes the independence of that part of the territory as well? It is undisputed fact that EPS Distribucija only conducts its operations in a territory defined by the Commission as the relevant geographic market, whereby such position is also confirmed by the Energy Agency of the Republic of Serbia, both on its webpages and in a letter dated April 17, 2018. In this letter, EARS states, inter alia, that “Distribution system operator EPS Distribucija is the only energy subject performing the electric power distribution services via distribution system management operations in the territory of the

Republic of Serbia, excluding the APKM.” The Commission has presented all these points in detail in the decision’s segment on the definition of the relevant geographic market (pages 12-19). We here underline that in the decision’s rationale is also stated that the Commission has established the publishing of the Activity report for 2016 on the EPS Distribucija webpages, where on page 30 under item 6 is stated that company EPS Distribucija performs its activities in the consumption area of the Republic of Serbia, while the Activity reports of EARS for 2015 and 2016 provide a more precise definition where is stated that “Electric power distribution operations in the territory of the Republic of Serbia, excluding APKM, in the first half of 2015 are performed within five electric power distribution companies.”

Also, in the article is imputed that the Commission “fails to observe laws and disrespects the courts of the Republic of Serbia” which is absolutely unacceptable, by presenting a false claim that the Commission was ordered by the Administrative Court’s judgment to perform a court witnessing and conduct an oral hearing, while failing to do so according to the statements presented in the article. To illustrate, we hereby provide a quote from the judgment: “In the repeated proceedings…the claimant’s proposal (EPS Distribucija, A/N) for an appropriate court witnessing shall be also assessed…”. In the repeated proceedings, the Commission has assessed the presented proposal, and thus has acted in line with the order from the court’s judgment. Therefore, the judgment does not order the court witnessing, while the oral hearing is not even mentioned.
Perhaps the author’s overlooking particular wording from the judgement and such omission of facts in the article published on the Srbija Danas website seems trivial to the average reader, but those words are proving crucial for evidencing the Commission’s acting in accordance with the Administrative Court’s orders.

One more way of compromising the competition policy and work of the Commission relates to the statement presented in the article that “the Commission finds citizens unimportant, since the Commission has failed to consider the effect of EPS Districucija’s market behavior on end-users, that is, Serbian citizens.” In the light of wellbeing of consumers, the Commission has eliminated the infringement of competition by its acting, thus has prevented indirect negative spillover effects on end-users. The Commission has explained in detail the effects of competition infringements effected by EPS Distribucija, by presenting a chain of effects from direct buyers dealing with EPS Distribucija to end-users.

The Commission hereby underlines that the purpose of the proceedings concerned was to secure equal business conditions for all buyers dealing with EPS Distribucija, regardless of their ownership structure. The infographic entitled “Free electric power market” as part of the article, supports the justification of the Commission’s acting, because it demonstrates the electric power prices and market share of EPS Snabdevanje which are invalidated following the institution of proceedings before the Commission, as well as following the enactment of a decision from December 2016.

The goal of competition policy is to secure a level playing field for the largest possible number of players, leading to price reductions or quality improvements, which was a principle honored when enacting this decision of the Commission as well. The Commission achieves these goals in its operational activities vis-à-vis undertakings regardless of their ownership structure and size, as an obligation under the Law on Protection of Competition.
Owing to this approach in commenting its work and decisions, the Commission was forced to deviate from its usual no-comments practice and engaging in controversy with the general public before the validity of its enacted decisions.

Finally, regarding the author’s allegations that the Commission “has not found it necessary to provide an answer to the questions raised to the citizens”, we hereby underline that on June 22 (by issuing two statements), as well as on June 25 and 26, 2018, we have attempted to provide answers to all questions presented, and have provided to journalists of the Srbija Danas portal a link to the decision in question, where the Commission’s decision is rationalized in detail in the 50-page document.

Signed: Commission for Protection of Competition of the Republic of Serbia

President of the Commission for Protection of Competition of the Republic of Serbia, Dr. Miloje Obradović, and Dean of the Faculty of Economics, Finances and Administration – FEFA, Prof. Dr. Nebojša Savić, have signed the Memorandum of Cooperation between the Commission for Protection of Competition and FEFA.

The Memorandum of Cooperation defines the establishment of technical and educational cooperation between the two institutions in the area of competition policy through the organization of seminars, guest lectures of experts from the Commission, joint thematic workshops, development of student internship programs and an elective course for Master’s level students, joint publishing activities focusing on competition policy topics, cooperation with the FEFA Institute in the preparation of economic analyses, etc.

The signed document will enable the parties to implement common activities directed at promoting competition policy and raising the level of knowledge in the area of competition law, in addition to improved education of students towards achieving the set goals.

The Memorandum of Cooperation with FEFA is the fifth such agreement of the Commission signed with the representatives of academia.

The Commission for Protection of Competition has instituted an ex officio proceedings for investigation of infringement of competition, against Public Utility Company Gradska Toplana Niš, in order to establish the existence of infringement of competition, namely, the abuse of dominance from Article 16 of the Law on Protection of Competition.

The State Audit Institution has previously established that the price of thermal energy supply services has been set in a manner which deviates from the prescribed methodology, resulting in an increased amount of the service cost relative to the level that would have resulted from the use of prescribed methodology for the calculation of thermal energy supply prices for end-users. The State Audit Institution has also found that connection costs to the district heating network are calculated in a manner not provided for by the relevant legal framework. The Commission reasonably assumed that such invoicing, in a manner as established by the State Audit Institution, could depart from the “cost principle”, which may represent an anticompetitive action from Article 16(2/1) of the Law on Protection of Competition. The Commission will investigate and establish the existence of a potential infringement of competition in full and complete compliance with Article 41 of the Law.

All persons in possession of data, documents or other relevant information which could contribute to the accurate fact-finding in this proceedings are called upon to submit said to the Commission for Protection of Competition to the address 25 Savska St., Belgrade.