One of the key principles of a market economy is competition, which involves competitive rivalry between businesses with the aim of improving their market position and increasing economic efficiency. Creating unfair market conditions is expressly prohibited by both domestic and international regulations and laws.
The Law on Protection of Competition governs the protection of competition in the market of the Republic of Serbia in order to promote economic progress and the welfare of society, particularly benefiting consumers, as it prevents monopolies and allows for fair market competition. It also regulates the establishment, position, organization, and powers of the Competition Protection Commission. The provisions of the law apply to all legal and natural persons who, directly or indirectly, continuously, occasionally, or on a one-time basis participate in the trade of goods or services, regardless of their legal status, ownership form, or citizenship, i.e., nationality.
Violation of Competition
A violation of competition, in terms of the Law on Protection of Competition, refers to acts or actions of market participants that aim to, or may have, a significant effect in limiting, disrupting, or preventing competition. In such situations, a competition law attorney plays a crucial role in analyzing potential violations and protecting the rights of clients. According to the law, competition can be harmed through restrictive agreements, abuse of dominant position, and prohibited market participant concentrations.
Restrictive Agreements
Restrictive agreements are agreements between market participants that have the aim or consequence of significantly restricting, disrupting, or preventing competition in the Republic of Serbia. Restrictive agreements can be contracts, individual provisions of contracts, explicit or implicit agreements, coordinated practices, as well as decisions made by forms of market participant associations, which, in particular:
- Directly or indirectly determine purchase or sale prices or other trade conditions;
- Limit and control production, the market, technological development, or investments;
- Apply unequal business conditions to the same transactions for different market participants, putting certain participants at a disadvantage compared to competitors;
- Condition the conclusion of contracts or agreements with additional obligations that, due to their nature and trade practices, are unrelated to the subject matter of the agreement;
- Divide markets or sources of supply.
Restrictive agreements are prohibited and void, unless an exemption applies. When there is suspicion that agreements violating competition protection have been concluded, timely legal analysis can prevent significant consequences for businesses.
Dominant Position
A market participant holds a dominant position when, due to its market power, it can operate in the relevant market to a significant extent independently from actual or potential competitors, buyers, suppliers, or consumers. The market power of a participant is determined based on relevant economic and other indicators, particularly regarding:
- The structure of the relevant market;
- The market share of the participant whose dominant position is being determined, particularly if it exceeds 40% in the relevant market;
- Actual and potential competitors;
- Economic and financial strength;
- The degree of vertical integration;
- Advantages in accessing supply and distribution markets;
- Legal or factual barriers for other participants to access the market;
- The strength of buyers; and
- Technological advantages, intellectual property rights.
Two or more legally independent participants on the market can hold a dominant position if they are economically connected in such a way that they act together in the relevant market or function as a single participant (collective dominance). The burden of proof for a dominant position on the relevant market lies with the Commission. However, businesses affected by such practices can consult a competition law attorney for legal analysis and initiation of appropriate proceedings before the competent authorities.
Abuse of Dominant Position
The abuse of a dominant market position is prohibited because it directly disrupts the protection of competition, undermining the equality of participants in the market and the rights of consumers. Abuse of a dominant position includes, in particular:
- Directly or indirectly imposing unfair purchase or sale prices or other unfair business conditions;
- Limiting production, the market, or technological development;
- Applying unequal business conditions for the same transactions with different market participants, putting certain participants at a disadvantage compared to competitors;
- Conditioning the conclusion of contracts by requiring the other party to accept additional obligations that, by their nature or according to trade practices, are unrelated to the contract’s subject matter.
Supervision
The supervision of the implementation and enforcement of the provisions of the Law on Protection of Competition is carried out by the Competition Protection Commission. In cases of suspicion of a violation of regulations, companies should engage a competition law attorney who can take appropriate legal steps and ensure the protection of their interests.
The Commission is an independent organization that exercises public powers in accordance with this law. It has legal entity status and is accountable for its work to the National Assembly, to which it submits an annual report by the end of February of the current year for the previous year.
Role of a Lawyer in Protecting Competition
The Law on Protection of Competition regulates many aspects of business, including preventing monopolies and anticompetitive agreements, as well as unfair business practices that can disrupt market balance. Incompetence or ignorance of legal regulations can lead to serious consequences, including fines, invalidation of certain contracts or agreements, which can disrupt cooperation with business partners and cause significant harm to companies.
A competition law attorney provides essential support in understanding and applying the law, helping to avoid potential legal issues by offering strategic advice to ensure business compliance with regulations. An attorney can assist in analyzing specific situations related to competition and the timely identification of any anticompetitive practices. They also advise clients on aligning business activities with legal requirements, preparing legal analyses and opinions, as well as negotiating and drafting contracts that comply with the law.
Legal Services We Provide:
- Legal counseling and expert assistance in understanding and applying the Law on Protection of Competition
- Contract and business arrangement analysis for compliance with the Law on Protection of Competition
- Drafting contracts with related or competing companies that comply with applicable mandatory regulations
- Preparation and representation in proceedings before the Competition Protection Commission, with comprehensive legal support in implementing measures to protect market competition
- Legal counseling regarding merger and acquisition procedures to avoid potential prohibitions
Frequently Asked Questions
Many businesses are unsure whether their contracts, business models, or marketing strategies violate competition protection regulations. If your company is involved in exclusive contracts, sets minimum resale prices for distributors, or makes agreements with competitors regarding market behavior, there may be a risk of breaching antitrust laws. A competition law attorney can analyze your business arrangements and provide guidance on ensuring legal compliance and avoiding potential sanctions.
Yes, if you suspect another company is abusing its dominant market position, entering into illegal agreements, or using unfair business practices, you can file a complaint with the Competition Protection Commission. However, such complaints require legally substantiated evidence and documentation, so it is advisable to consult with a competition law attorney before submitting the complaint to ensure its legal validity and increase the likelihood of a successful outcome.
Violating competition protection rules can have serious consequences, including financial penalties, restrictions on certain business activities, and even the annulment of contracts that violate the law. In some cases, companies may face lawsuits from competitors or consumers who have suffered damages due to a disruption in competition. Therefore, it is crucial to engage a competition law attorney who can analyze business practices and ensure their compliance with relevant regulations.
If a competing company is using unfair business practices, such as price dumping, exclusive contracts that prevent fair competition, or abusing its dominant position, your business could suffer financial harm. Competition protection allows you to file a complaint with the relevant authorities and initiate legal actions against companies that disrupt market conditions. A competition law attorney can analyze the situation and take appropriate steps to protect your business and market position.