On 16 May 2016, the Serbian Commission for the Protection of Competition ("Commission") started an in-depth investigation (Phase II) of the proposed acquisition of the sugar factory TE-TO in Senta, Serbia (ultimately owned by Italian SFIR SpA) by the domestic sugar giant Sunoko.

Back in 2011, Sunoko attempted to acquire Hellenic Sugar Industry, which would have allegedly increased Sunoko's market share from 50% to 80%. At first, the Commission blocked the merger, dissatisfied with the commitments offered by Sunoko. The Commission had to reassess the case following the judgement of the Administrative Court, which found the Commission to be in violation of procedural rules. However, Sunoko withdrew the notification, only to file a new request based on a new tender process for the sale of Hellenic Sugar. The Commission conditionally approved the merger, which was never implemented.

The Serbian sugar market is presently equally highly concentrated as it was three years ago, with only three sugar producers present: Sunoko (ca.50-60% market share), Hellenic Sugar (ca.20-30% market share) and TE-TO (ca.20-30% market share). The clearance of the merger would result in an asymmetric duopoly, with Sunoko dominating the market and Hellenic Sugar as its only competitor.

In the Phase II investigation, the Commission will assess the effects of the proposed merger on the production and wholesale of sugar, as well as possible barriers to entry on the relevant markets. The Commission will also evaluate to what extent lifting of beet sugar quotas in the EU, which is supposed to take place in September 2017, may increase exports of sugar into Serbia and thus exert competitive pressure on sugar producers.

One may expect Sunoko will have to propose remedies to address competition concerns of the proposed merger. Proposing remedies in the context of a merger is a challenge, given that Serbia still lacks procedural framework regulating proposal and assessment of remedies. Specifically, there are no content and/or form requirements for proposal of remedies, and no guidance as to the conditions under which the remedies would be acceptable. This leaves the Commission with wide discretion and the parties to the concentration with legal unpredictability.