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 MasterCard 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 198A, V-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.

President of the Commission, Dr. Miloje Obradović, spoke at the meeting of the Subcommittee for Internal Market and Competition, held in Belgrade.

Dr. Obradović introduced EC representatives to all activities concerning the implementation of the Law on Protection of Competition and the degree of compliance of national competition regulations with EU acquis, which fall under the commitments set out in Article 73 of the Stabilization and Association Agreement. He also reminded the audience that the Commission is currently drafting a new competition act, which should contribute to further enhanced implementation of competition policy, in addition to its full compliance with other regulations of the Republic of Serbia, foremost with the Law on General Administrative Procedure.

The Commission President also presented data on results of competition policy implementation during the previous period, noting that the executive authorities in a growing number of cases accept the opinions issued by the Commission for Protection of Competition, proving crucial in the context of ensuring a level playing field for all undertakings.

In his address, the Commission President underlined that institution which he heads, in full and complete compliance with the possibilities and competences, strives to contribute to creating projects which would bring the subject of competition policy closer to judges towards achieving professional specialization in competition cases, which would also have an impact on the increasingly efficient implementation of the Law on Protection of Competition. In that context, President Obradović underlined, as part of the EU Twinning project where the Commission for Protection of Competition is a project beneficiary, a series of workshops will soon be held where representatives of the judicial branch will have an opportunity to acquire qualitative know-hows necessary for enhanced implementation of competition policy in the Republic of Serbia.

“The Commission continues to work intensely on raising the level of awareness on the importance of competition policy in Serbia, while also implements an open-door policy towards all interested parties when drafting regulations, all directed at ensuring the Commission’s full operational transparency”, President of the Commission, Dr. Miloje Obradović, said to his Brussels counterpart.

During the meeting of the Subcommittee, which is regularly held as part of Serbia’s EU accession process, is said that our country is following the dynamics of competition policy development in the EU, and endeavors to align, to the extent possible, related national standards against EU standards. That has also been reconfirmed by the EC assessment given in its recently published 2017 Progress Report, where is underlined that competition policy implementation capacity has increased, both in the number of antitrust cases and the relative size and significance of companies under investigation, as well as that the Commission constantly improves its work, which positively affects the enabling environment for business development in the Republic of Serbia.

The Commission for Protection of Competition approved the concentration of undertakings created by acquisition of control on the part of company VINCI Airports Serbia d.o.o. over business operations of company AD AERODROM NIKOLA TESLA, relating to airport management operations at Nikola Tesla Airport in Belgrade.

The subject of target business operations relates to concession assets, as defined in the Concession agreement for financing, development through construction and reconstruction, maintenance and management of the infrastructure of AD Aerodrom Nikola Tesla Beograd and carrying out airport operator activities at AD Aerodrom Nikola Tesla in Belgrade. VINCI Airports Serbia d.o.o. operates within the VINCI Group, who have not hitherto carried out airport operator activities nor conducted business operations on the airport services market in Serbia.

The decision will be published on the Commission’s website when related conditions are met, that is, on the expiry of the period for bringing an appeal against the conclusion on data protection.

The Commission for Protection of Competition is publishing the Proposal of commitments which the party to the proceedings, company Sirmiumbus from Sremska Mitrovica, is voluntarily willing to undertake in order to eliminate possible infringements of competition, containing terms and conditions for execution of the proposed commitments.

Also, the Commission calls upon all interested parties to submit written remarks, positions and opinions on the proposed commitments, no later than 20 days from the date of publication of the notice.

By way of reminder, the Commission for Protection of Competition had instituted ex officio proceedings against company Sirmiumbus d.o.o. Sremska Mitrovica on September 22, 2017, in order to investigate the infringement of competition from Article 16 of the Law on Protection of Competition (abuse of dominance).

On March 14, 2018, company Sirmiumbus has submitted a submission entitled “Request for suspension of proceedings”, amended by a submission of April 19, 2018, headed “Amendment to the request for suspension of proceedings”. The submissions mentioned also contain the proposal of commitments which company Sirmiumbus is voluntarily willing to undertake in order to eliminate possible infringements of competition, containing terms and conditions for taking the measure.

The Commission has established that the proposal of commitments concerned is admissible, timely and submitted by a duly authorized person.

Pursuant to Article 58(1) of the Law, the Commission may enact a conclusion on suspension of investigation of competition infringement, imposing the measure referred to in Article 59 of the Law, if the party, based on the content of the conclusion on instituting proceedings, that is, facts established in the proceedings, submits a proposal of commitments that is voluntarily willing to undertake in order to eliminate possible infringements of competition, containing terms and conditions for taking the measure. Article 58(2) stipulates a deadline by which the party to the proceedings may place such proposal.

The Commission for Protection of Competition of the Republic of Serbia and the National Alliance for Local Economic Development (NALED) have organized a conference today, presenting the results of phase one of the sector inquiry into the food, beverages and tobacco retail market in the Republic of Serbia, prepared by the Commission for Protection of Competition.

During the conference held in the City Assembly of Belgrade, keynote addresses were given by President of the Commission for Protection of Competition Dr. Miloje Obradović, State Secretary at the Ministry of Trade, Tourism and Telecommunications Vesna Kovač, and Vladimir Čupić, President of the Food and Agriculture Alliance of NALED and Director of the Atlantic Group Representative Office for Serbia.

The inquiry was presented by Aleksandra Ravić from the Economic Analyses Division of the Commission for Protection of Competition.

Following presentation of the inquiry-based results, a panel session on retail market prospects in Serbia was also held, attended by Dr. Siniša Milošević, Head of the Economic Analyses Division of the Commission for Protection of Competition, Bojana Amanović from the Ministry of Trade, Tourism and Telecommunications, Dr. Goran Petković, Full Professor at the Faculty of Economics in Belgrade, and Goran Kovačević, NALED Fair Competition Alliance and CEO of Gomex.