During the session held on August 11, 2016, the Commission for Protection of Competition’s Council enacted decision on conditional approval of implementation of concentration created by the change of control of the Sunoko d.o.o Novi Sad company over Star Šećer d.o.o. Senta company, and consequently over TE-TO Senta A.D. sugar factory.

Based on the state of the matter determined during investigation procedure, the Commission concluded that by implementing of concentration, the Sunoko’ dominant position shall be strengthened, foremost in the sugar production and sugar distribution markets in the Republic of Serbia. For those reasons, implementation of the mentioned concentration can be approved only if accompanied by certain conditions prescribed by the decision. The Commission for Protection of Competition believes that by determining behavioral measures referring to Sunoko d.o.o Novi Sad, secures a prevention of potential adverse effects of the concentration in question.

The decision imposed conditions in a form of behavioral measures and mandatory regular reporting towards the Commission with the goal of securing market structure and retaining all production capacities, including the TE TO Senta sugar refinery on the market, transparent monitoring of the level, alterations in sugar prices on the market, improvement of sugar sale policy’s transparency and consumer business relations, as well as full disclosure of information to the Commission on the level and type of investments to be implemented in the TE TO Senta with the aim of increased production effectiveness, in the following manner:

1. Reporting on the processed sugar beets and manufactured sugar, separately for each of the sugar refineries owned by Sunoko.

2. In the case of liquidation, or Sunoko’ decision resulting in permanent closing of some of sugar refineries under their management, Sunoko is obliged to previously publically announce the sale of sugar refinery’s equity or property in no less than three daily newspapers regularly distributed in the whole territory of the Republic of Serbia, and in one foreign newspapers specialized in economy and finances and published in the territory of the EU, or on an Internet portal usually utilized for distribution of business related news.

3. Obligation of reporting on prices, on consequential changes in sugar prices individually for the Serbian market, EU, CEFTA and eventually the third market, on FCO sugar refineries parity, VAT free, with the submission of a rationale on samples and intensity of consequential changes.

4. Obligation to, no later than in six months, submit to the Commission a document with which it defines its domestic costumer sugar sale policy.

5. Reporting on possible alterations of existing contracts between TE-TO Senta A.D. sugar factory and costumers, and a rationale of those.

6. Commitment of submitting annual reports on measures and activities taken with the goal of maintaining business operations of the TE-TO Senta A.D. sugar factory, which may include, but are not limited to the following: repayment or debts, assumption of other financial expenditures, transfer of technical and technological know-how and experiences, transfer of managerial know-how and experiences, measures that influence increase of production effectiveness and reduction of sugar cost prices, as well as other, direct or indirect, financial, technical and technological, managerial, and other measures.

Ordered measures (except under Item 5), shall be implemented until the abolition of customs duties and levies on sugar imports in the Republic of Serbia, and no longer than for period of subsequent five years from the Commission decision’s legal validity date. Measure under Item 5 shall be implemented ending 2017.

Throughout the investigation procedure, the Commission obtained necessary data, information, as well as opinions on the effects of concentration from competitors as the concentration participants, their biggest suppliers and customers, in addition to the state authorities and organizations in charge of data relevant to this proceeding.

During the determination of conditions for approval of concentration, the Commission also kept in mind opinions and views on the effects of concentration that other undertakings have presented in the course of the proceeding, particularly industrial costumers.

The Commission also had in mind financial position of the TE-TO Senta A.D. factory. Regulated conditions, deadlines and manners for monitoring of their execution should eliminate Commission’s concerns related to securing efficient protection of competition, via preserving production capacities, implementation of planned investments that can achieve increased production efficiency, and thus, lower sugar cost prices, alongside transparent sale policy (discount policy) and price policy (intensity and causes of price alternations).