Commission for Protection of Competition
Proceedings Initiated Against Producers and Distributors of ‘KAPRO’ Branded Tools

kzkOn April 4, 2024, the Commission for the Protection of Competition initiated proceedings against “Društvo sa ograničenom odgovornošću za trgovinu električnim alatima Metabo centar Kragujevac” and KAPRO INDUSTRIES LTD from Israel, based on a reasonable assumption of a competition infringement through the conclusion of a restrictive agreement in accordance with Article 10 of the Law on the Protection of Competition.

The decision to initiate proceedings was delivered to the “Metabo Centar Kragujevac” company on April 4, 2024, when authorized officials from the Commission for the Protection of Competition also conducted a dawn raid at the company’s premises.

As KAPRO INDUSTRIES LTD from Israel, the second party in the proceedings, does not have a direct presence in the territory of the Republic of Serbia, nor an affiliated company, the decision to initiate proceedings was formally delivered on July 1, 2024, through official channels, specifically via diplomatic means, facilitated by the Embassy of the Republic of Serbia in Israel.

The proceedings were initiated based on information that “Metabo Centar Kragujevac”, as the importer of mechanical and laser measuring instruments produced by “Kapro,” through the manufacturer KAPRO INDUSTRIES LTD from Israel, has been exerting pressure on other foreign suppliers of “Kapro” tools, urging them to halt deliveries to other market participants in the Republic of Serbia. In the course of the investigation, a comparison of price lists from several market participants who imported tools of the aforementioned brand revealed that the prices of products in the price list of “Metabo Centar Kragujevac” were higher than the prices of identical products in the price lists of other observed market participants, who were being restricted from importing.

Based on the foregoing, the Commission has reasonably concluded that “Metabo Centar Kragujevac” and “Kapro” Israel are undertaking actions with the aim of, or resulting in, the elimination of competition for Metabo Center in the wholesale market for “Kapro” branded tools within the territory of the Republic of Serbia. Consequently, customers purchasing these tools are incurring higher costs than they would if additional distributors were permitted to operate in the market.

It was further established that the contracts concluded by “Metabo Centar Kragujevac” with its customers include a prohibition on selling below the purchase price, which may serve as a supporting mechanism for the import ban to maintain the prices of “Kapro” branded tools at a desired level. This practice also constitutes an infringement of competition in the form of establishing minimum resale prices.

All individuals possessing data, documents, or other relevant information that may be pertinent to establishing the factual circumstances in the aforementioned proceedings are kindly invited to submit such information to the Commission for Protection of Competition, located at 25 Savska Street, Belgrade.

Commission Initiates Proceedings Against VILLAGER for Unnotified Concentration

kzkThe Commission for Protection of Competition has, ex officio, initiated proceedings against the company VILLAGER, trgovina na debelo, d.o.o, Ljubljana, Republic of Slovenia, to investigate a concentration that was executed without approval in accordance with the Law on Protection of Competition. It is reasonably presumed that this concentration arose from VILLAGER, d.o.o. acquiring control over SEMENARNA Ljubljana, a production and trading company, d.o.o., located in Ljubljana, Republic of Slovenia.

The Commission will evaluate the criteria prescribed by law (Article 19 of the Law on Protection of Competition) during the investigative proceedings to determine the permissibility of the concentration. In particular, it will consider the fact that this concentration was executed without notification, which constituted an obligation for the market participants. The law provides that concentrations among market participants are permissible, except where they would significantly restrict, distort, prevent competition in the market of the Republic of Serbia. This is particularly relevant if that restriction, distortion or prevention is the result of creating or strengthening of a dominant position.

The Commission will ascertain the essential facts, evidence, and other elements that will serve as the basis for its decision regarding the potential imposition of competition protection measures, specifically measures of deconcentration.

Through the conclusion initiating the proceedings, all individuals possessing data, documents, or other relevant information that may be pertinent to establishing the factual circumstances in the aforementioned proceedings are kindly invited to submit such information to the Commission for Protection of Competition, located at 25 Savska Street, Belgrade.

Commission Initiates Proceedings Against AGROMARKET for Unnotified Concentration

kzkThe Commission for Protection of Competition has, ex officio, initiated proceedings against the company DRUŠTVO ZA PROIZVODNjU PROMET I USLUGE AGROMARKET DOO KRAGUJEVAC, based in Kragujevac, to investigate a concentration that was carried out without the necessary approval in accordance with the Law on Protection of Competition. It is reasonably presumed that this concentration resulted from AGROMARKET DOO acquiring control over AM Hotel, a specialized real estate company located in Ljubljana, Republic of Slovenia.

The Commission will assess the criteria established by law (Article 19 of the Law on Protection of Competition) during the investigative proceedings to determine the legality of the concentration. In particular, it will take into account that this concentration was executed without notification, which constituted an obligation for the market participants. The law stipulates that concentrations among market participants are permitted, unless they significantly restrict, distort, or prevent competition in the market of the Republic of Serbia, particularly if such restriction, distortion, or prevention is the result of creating or strengthening of a dominant position.

The Commission will ascertain the critical facts, evidence, and other elements that will serve as the basis for its decision regarding the possible implementation of competition protection measures, specifically measures aimed at deconcentration.

Through the conclusion that initiates the proceedings, all individuals in possession of data, documents, or other relevant information that may aid in establishing the accurate factual situation in this case are hereby invited to promptly submit such information to the Commission for Protection of Competition at the address: 25/IV Savska Street, Belgrade.

Notification on the Outcomes of Mobile Telephony Market Initiatives

kzkEnd of February and throughout March, the Commission for the Protection of Competition, based on publicly available information, became informed of the intention of all three mobile operators to raise the prices of mobile telephony services. In relation to this issue, the Commission has received several initiatives requesting an investigation into the potential existence of a competition infringement. Acting upon these initiatives, the Commission gathered and analyzed the regulatory framework, publicly available data, and requested statements from all three mobile telephony operators in the Republic of Serbia.

Upon analyzing the regulatory framework, the Commission established that, pursuant to Article 87 of the Consumer Protection Law and Article 131 of the Electronic Communications Law, there is an obligation to notify, in advance, mobile telephony service users, among others, of any price changes. Based on publicly available information, it was confirmed that all three mobile operators had announced price increases for their services in advance, including public notification methods, 30 days prior to the price changes. As per the statements submitted by the operators in response to the Commission’s request, prior to announcing the price increases, certain operators consulted with the National Consumer Organization of Serbia or informed the Regulatory Authority for Electronic Communications and Postal Services in advance, through official correspondence, of the planned price increases. The Commission notes that it did not evaluate whether the notification to mobile telephony service users was in accordance with the aforementioned regulations, nor whether such a method of notification was adequate; rather, the notifications were assessed solely from the perspective of enhancing transparency in the market.

In the theory of competition protection, it is well recognized that markets characterized by classic oligopolistic market structures, such as the mobile telephony market in the Republic of Serbia, are particularly conducive to the alignment of behavior among competitors. In this regard, the Commission specifically analyzed data regarding the timing of the price increase announcements and the amount of the increases, particularly considering media reports related to similarities concerning these two factors, as well as the behavior of mobile operators during previous price increases for the same service.

Concerning the timing of the price change announcements, as previously stated, all three operators complied with regulatory requirements by notifying customers of the price changes for mobile telephony services 30 days in advance. Based on the data provided by all three mobile telephony operators at the Commission’s request (including the sequence of price increase announcements, documentation published in this context, etc.), there were no reasonable grounds to assume the existence of a prior agreement regarding the price increases.

Regarding the amount of the price increases, it was also determined that there are no reasonable grounds to assume the existence of a prior agreement concerning this pricing element. Specifically, an analysis of the data submitted at the Commission’s request regarding price increases among all three operators—both for individual packages that are comparable and for the average values of the increases—revealed that the price increases are not equivalent, either in nominal terms or as a percentage, across the three mobile telephony operators under consideration.

Additionally, the Commission analyzed previous behaviors to ascertain whether there was any discernible pattern in the actions of mobile operators during earlier price increases for the same service. However, based on the available data, no such pattern was identified.

In the light of the factors previously outlined, as well as the fact that the operators publicly announced and published their price increases 30 days prior to the implementation of the new prices to ensure compliance with the Consumer Protection Law and the Electronic Communications Law, and noting that such notification methods were not observed during prior price increases for mobile telephony services, coupled with the absence of any behavior suggestive of prior collusion, it has been determined that, based on the collected evidence, no conclusions can be drawn regarding the existence of direct or indirect secret agreements.

Thus, in highly concentrated markets, a price change that is not associated with any prior agreement, and which is neither simultaneous nor equal in nominal or percentage terms, and has been communicated in advance to consumer organizations, the regulatory authority, and publicly disclosed in accordance with relevant regulations, is inadequate for the Commission to reliably infer behavior that would suggest a violation of competition law. This falls short of the legal standard required for the ex officio initiation of proceedings—specifically, the existence of reasonable grounds under Article 35 of the Law indicating that a competition infringement has occurred.

New Block Exemption Regulations

kzkThe Commission for Protection of Competition has prepared proposals for four regulations, which it intends to submit to the Government of the Republic of Serbia for adoption, pursuant to the authorities conferred by the Law on Protection of Competition. The proposed legislative acts include the following:

1. Regulation on categories of vertical agreements exempted from the prohibition of restrictive agreements;
2. Regulation on categories of technology transfer agreements exempted from the prohibition of restrictive agreements;
3. Regulation on categories of vertical agreements on repair and maintenance of motor vehicles and agreements on the sale of spare parts in the motor vehicle sector exempted from the prohibition of restrictive agreements; and
4. Regulation on categories of agreements in the railway and road transport sector exempted from the prohibition of restrictive agreements.

The texts of the proposed regulations have been published on the portal https://ekonsultacije.gov.rs/. The Commission invites all market participants, business associations, law firms, experts, and other interested parties to submit their comments, proposals, and suggestions by July 15, 2024, via the eKonsultacije portal.