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New dawn raid and ex-officio proceeding in consumer electronics market for alleged conclusion of restrictive agreements

Further to investigation proceedings initiated on 1 September 2020 against distributers and sellers of consumers electronics in Serbia – Roaming Electronics d.o.o. Beograd, Tehnomanija d.o.o. Beograd, and Comtrade Distribution d.o.o. Beograd – the Serbian Commission for Protection of Competition (“Commission”) continued to investigate this market. Namely, the Commission recently announced that, following a dawn raid, an ex officio proceeding was initiated against SF1 Coffee d.o.o., an importer and distributor of Nespresso coffee machines, due to alleged violation of Article 10 of the Serbian Law on Protection of Competition (“Law”). The Commission explained in the relevant decision on initiation of the proceeding that it found reasonable grounds to believe that SF1 Coffee d.o.o. was setting resale prices of Nespresso coffee machines, which (if proven) represents a restrictive agreement as a form of anti-competitive practice under Article 10 of the Law.

What are restrictive agreements and why are they prohibited?

Restrictive agreements are agreements made by market participants with an objective or the consequence to considerably limit, violate or prevent the competition on the territory of the Republic of Serbia. Restrictive agreements could be contracts, certain items in contracts, specified or implicit, concerted practices, as well as the decisions of associations of undertakings, pursuant to which: 1) the purchase or sale prices or other conditions of trading are determined directly or indirectly; 2) the production, market, technical development or investments are limited and controlled; 3) unequal conditions of operations are applied in same activities for different market participants; 4) the contract or agreement is conditioned with acceptance of additional obligations that by their nature and trading habits and practice are not connected with the subject of the agreement; and/or 5) the markets or procurement sources are divided. Restrictive agreements are prohibited and void, except if exempted from prohibition pursuant to the Law.

When are restrictive agreements allowed?

Restrictive agreements are allowed when they are exempted from prohibitions. Restrictive agreements could be exempted from prohibition, if they contribute to improvement of the production and trade, or facilitate a technical or economic progress, providing the consumers with a fair share of benefits, under condition they do not impose limitations for the market participants that are not necessary for achieving the goal of the agreement, and/or they do not eliminate the competition on the relevant market or in its significant part. Restrictive agreements could be exempted form prohibition either through a process of individual exemption (where the relevant request for exemption is filed with the Commission) or could be “block exempted” (where certain categories of restrictive agreements are exempted by virtue of special decrees adopted by the government, provided that general and specific conditions for exemption are met).

What if the market participants concluded the restrictive agreement which is not exempted form prohibition?

The answer to this question is simple: such agreement is prohibited and void. If the Commission determines infringement of competition arising out of conclusion or execution of a restrictive agreement which is not exempted from prohibition, it will impose the fine onto the parties to such agreement in the amount of up to 10% of the turnover they realised on the territory of the Republic of Serbia in the year preceding the year in which the proceeding was initiated.