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Legal framework

Antitrust law

What are the legal sources that set out the antitrust law applicable to vertical restraints?

The antitrust law applicable to vertical restraints is set out in articles 9 to 14 and articles 60, 68 and 69 of the Competition Protection Law (Official Gazette No. 51/2009, 95/2013) (the CPL). The CPL entered into effect on 1 November 2009, whereas the current version applies as of 8 November 2013. The Serbian government adopted the Regulation on the Block Exemption of Vertical Agreements (Official Gazette No. 11/2010) (the BER) on 18 February 2010. The BER entered into force on 13 March 2010. In addition, in late 2010, the Serbian government passed the Regulation on the Level and Method for the Setting of Fines (Official Gazette No. 50/2010) and the Regulation on the Conditions for Immunity from Fines (Official Gazette No. 50/2010 and 91/2010).

Types of vertical restraint

List and describe the types of vertical restraints that are subject to antitrust law. Is the concept of vertical restraint defined in the antitrust law?

The CPL does not define the concept of ‘vertical restraints’ as such. However, the CPL contains a definition of ‘vertical agreements’ and a definition of ‘restrictive agreements’.

Vertical agreements are defined as agreements between undertakings, each of which operates, for the purposes of the agreement in question, at a different level of the production or distribution chain.

Restrictive agreements are defined as agreements that have as their object or effect the prevention, restriction or distortion of competition in Serbia.

Further, for the purpose of the CPL, the term restrictive agreement is understood to include all agreements (explicit or tacit), individual provisions of agreements, concerted practices and decisions by associations of undertakings and, in particular, where:

  • the purchase or sale prices or other conditions of trade are fixed directly or indirectly;
  • the production, marketing, technical development or investments are limited and controlled;
  • unequal conditions of operations are applied in respect of the same activities for different undertakings, through which the undertakings are put into an unfavourable position in relation to their competitors;
  • the contract or agreement is subject to the acceptance of additional obligations that, by their nature and trading customs and practices, do not relate to the subject of the agreement; or
  • the markets or sources of supply are shared.

Restrictive agreements are prohibited and void, except if exempted from the prohibition on restrictive agreements in accordance with the CPL.

The CPL does not list the exact types of vertical agreements that could be prohibited under antitrust law. However, it follows from the practice of the Commission for the Protection of Competition that one needs to be particularly cautious in the case of agreements that involve exclusivity (eg, exclusive sale agreements, exclusive distribution agreements, exclusive supply obligations and certain exclusive agency agreements). In addition, franchise agreements and restrictive technology transfer agreements can be expected to raise the interest of the authority.

Legal objective

Is the only objective pursued by the law on vertical restraints economic, or does it also seek to promote or protect other interests?

The objective pursued by the antitrust rules of the CPL is economic.

Responsible authorities

Which authority is responsible for enforcing prohibitions on anticompetitive vertical restraints? Where there are multiple responsible authorities, how are cases allocated? Do governments or ministers have a role?

The Commission for the Protection of Competition (the Commission) is the agency responsible for enforcing prohibitions on anticompetitive vertical restraints within the meaning of the CPL. The Commission is an independent organisation empowered to implement competition law in the public interest. The Commission reports to Serbia’s parliament in this context.

The decision-making bodies within the Commission are the Council and the president of the Commission (who also represents the Commission in its dealings with third parties). The Council consists of the president of the Commission and an additional four members, all elected by parliament. The Council’s members must not engage in any other public function or professional activity during their term (except teaching and scientific activities). Moreover, such members cannot be officials of a political party.

Jurisdiction

What is the test for determining whether a vertical restraint will be subject to antitrust law in your jurisdiction? Has the law in your jurisdiction regarding vertical restraints been applied extraterritorially? Has it been applied in a pure internet context and if so what factors were deemed relevant when considering jurisdiction?

The CPL applies to agreements that have an effect in Serbia, irrespective of whether the agreement has been concluded in the territory of Serbia or elsewhere. Thus, vertical restraints agreed upon by foreign undertakings may be subject to the CPL if the agreement results in anticompetitive effects on the market in Serbia.

Agreements concluded by public entities

To what extent does antitrust law apply to vertical restraints in agreements concluded by public entities?

Under the CPL, public or state-owned entities are subject to the antitrust rules on vertical restraints if they are deemed to be undertakings within the meaning of competition law. The latter is generally the case if the entity concerned pursues an economic activity. The CPL does not, however, apply to public or state-owned entities that carry out activities in the public interest and to entities endowed with such activities or a fiscal monopoly if such application would prevent these entities from carrying out their activities.

In 2014, in application of these principles, the Commission initiated proceedings against the Serbian Attorney Bar Association for, in particular, allegedly having imposed excessive fees on attorneys for joining the bar association. In the decision initiating the proceedings, the Commission specifically deals with the question of whether the CPL applies to the bar association which is, in part, deemed a public entity as it is entrusted by law with carrying out activities in the public interest. The Commission took the preliminary view (in its decision initiating the proceedings) that the CPL does apply with regard to the bar association’s power to determine the fees for joining it as this power significantly affects the economic activity of rendering legal services in the market. These proceedings are still pending.

Sector-specific rules

Do particular laws or regulations apply to the assessment of vertical restraints in specific sectors of industry (motor cars, insurance, etc)? Please identify the rules and the sectors they cover.

There are currently no comprehensive laws or regulations that apply to the assessment of vertical restraints in specific sectors of industry (cars, insurance etc).

The CPL introduced the possibility for the Commission to investigate a particular sector of the economy (or a particular type of agreement across various sectors) if prices or other circumstances suggest that competition may be restricted or distorted in a certain market. The Commission has carried out several such inquiries, primarily in the petrol and petrol derivatives sectors as well as in the milk sector; it did not, however, find restrictive agreements in these sectors. The Commission pointed out that it would continue to closely monitor these sectors following, in particular, the liberalisation of the regulation of the petrol sector. Furthermore, in 2016, the Commission conducted a sector analysis of the after-sales markets for motor vehicles and home appliances in 2015 and a sector analysis of the insurance sector in the period from 2012 to 2015.

The Commission recently published draft proposals of block exemption regulations for the insurance sector, the transport sector and the distribution of spare parts for motor vehicles as well as technology transfer. These regulations are expected to be adopted in the near future.

General exceptions

Are there any general exceptions from antitrust law for certain types of agreement containing vertical restraints? If so, please describe.

The CPL introduced a de minimis rule in Serbia’s antitrust law. This rule sets out that a vertical agreement of minor importance is allowed unless its purpose is price fixing or market partitioning.

An agreement of minor importance is an agreement entered into by undertakings whose total share of the relevant market in Serbia is:

  • below 15 per cent, for vertical agreements; or
  • below 10 per cent, for those agreements that have features of both horizontal and vertical agreements.

Further, the CPL provides that the Commission may grant an individual exemption from the general prohibition of anticompetitive agreements for vertical restraints if such restraints contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, provided that such agreement does not:

  • impose on the undertakings concerned restrictions that are not indispensable for the attainment of those objectives; or
  • eliminate competition in respect of a substantial part of the relevant goods or services (article 11 of the CPL).

Such an individual exemption can only be granted by the Commission upon a written request by the undertaking applying for an exemption; hence, there is no (automatic) legal exemption. The individual exemption cannot be granted for more than eight years (see question 47).

The CPL also provides that vertical restraints may be block-exempted from the general prohibition of restrictive agreements if they fulfil the general exemption criteria of article 11 of the CPL and if they meet the conditions specified in the BER. Despite the explicit mention in article 11 of the CPL, we believe this merely suggests that where an agreement fulfils the conditions of the BER, it will generally also meet the general exemption criteria of article 11 of the CPL (see question 18).

Types of agreement

Agreements

Is there a definition of ‘agreement’ - or its equivalent - in the antitrust law of your jurisdiction?

The CPL does not define ‘agreement’ as such (see question 10).

In order to engage the antitrust law in relation to vertical restraints, is it necessary for there to be a formal written agreement or can the relevant rules be engaged by an informal or unwritten understanding?

It is not necessary to have a formal written agreement in place for the CPL to apply. Written agreements, oral agreements, meetings of trade associations and gentlemen’s agreements, as well as exchanges of information (eg, benchmarking) can engage the antitrust law in relation to vertical restraints. Even a unilateral policy of one party that received the tacit acquiescence of the other party may be caught.

Parent and company-related agreements

In what circumstances do the vertical restraints rules apply to agreements between a parent company and a related company (or between related companies of the same parent company)?

Related companies as defined by the CPL (a definition that encompasses parent and subsidiary companies, but also companies related by other strong economic ties) are deemed to be one company for the purpose of the CPL. Therefore, it appears that vertical agreements between a parent and a related company fall outside the ambit of the general prohibition on restrictive agreements.

In 2016, the Commission issued an opinion on the application of article 10 of the CPL to related companies in public procurement proceedings. The opinion states that agreements between related companies as defined by the CPL are not deemed restrictive.

Agent-principal agreements

In what circumstances does antitrust law on vertical restraints apply to agent-principal agreements in which an undertaking agrees to perform certain services on a supplier’s behalf for a sales-based commission payment?

Agency agreements are subject to the CPL depending, in particular, on the commercial or financial risk borne by the agent with regard to the activities for which the agent has been appointed by the principal. An agency agreement that in principle is subject to the CPL may be block-exempted under the conditions described in question 18.

Where antitrust rules do not apply (or apply differently) to agent-principal relationships, is there guidance (or are there recent authority decisions) on what constitutes an agent-principal relationship for these purposes?

In general, it is understood that the CPL does not apply to ‘genuine’ agency agreements (that is, agency agreements where the agent does not bear any, or bears only insignificant, commercial and financial risks). In October 2012 the Commission published an opinion explaining that, when assessing agency agreements, it will generally take both local and EU competition law rules and guidelines into account. In this opinion the Commission further explained that certain provisions that are otherwise deemed restrictive (such as territorial and customer restrictions and restrictions regarding the price the agent may charge) would not fall within the scope of the CPL when they appear in genuine agency agreements. However, the Commission also stated, very generally and without providing further explanation, that the CPL would nevertheless apply to those provisions of a genuine agency agreement that by and in themselves infringe competition or when such agreements contribute to or enable secret forbidden arrangements between undertakings. We are not aware of decisions by the Commission that deal specifically with what constitutes an agent-principal relationship in the online sector.

Intellectual property rights

Is antitrust law applied differently when the agreement containing the vertical restraint also contains provisions granting intellectual property rights (IPRs)?

The BER sets out that an agreement containing a vertical restraint and provisions granting IPRs may be block-exempted, if it fulfils the general criteria of the BER (see question 18), and where:

  • the transfer of IPRs is not the primary object of the agreement;
  • the agreement does not aim at restricting competition; and
  • the IPRs are directly related to the use, sale or resale of the contract goods by the (direct or indirect) buyers.

Analytical framework for assessment

Analytical framework for assessment

Framework

Explain the analytical framework that applies when assessing vertical restraints under antitrust law.

The Commission must apply the following criteria when assessing whether a vertical agreement prevents, restricts or distorts competition:

  • the structure of the relevant market and the degree and dynamics of changes in that structure;
  • the limitations and possibilities of new competitors entering the relevant market;
  • the reasons for existing competitors to leave the market;
  • any changes that may limit the possibility to supply the market;
  • the level of consumer benefits; and
  • other circumstances that may have an effect on the competitive situation on the market.

In our experience to date, the Commission is generally open to taking account of EU regulations and the European Commission’s guidelines and case law.

Market shares

To what extent are supplier market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other suppliers relevant? Is it relevant whether certain types of restriction are widely used by suppliers in the market?

Supplier market shares are an important factor when assessing individual restraints. The Commission would also take account of other economic factors such as the structure of the market or the position of competitors when assessing the legality of individual restraints.

The Commission would consider it relevant whether parallel networks of similar vertical restrictions (either by the same or other parties) cover a substantial part of the relevant market. More particularly, the BER sets out that agreements containing vertical restraints can in principle no longer benefit from the BER where networks of similar restraints widely used by suppliers cover more than 40 per cent of the relevant market. It is not entirely clear whether the agreement containing a vertical restraint can be individually exempted in such circumstances. This presumably depends on the possible cumulative restrictive effects of all similar agreements entered into on the relevant market as well as on the extent to which the agreement in question contributes to such effects.

To what extent are buyer market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other buyers relevant? Is it relevant whether certain types of restriction are widely used by buyers in the market?

The market share of the buyer is also taken into account for the assessment of individual restraints. For example, the applicability of the BER requires that the market share of each party to the agreement (ie, also the buyer’s market share) does not exceed 25 per cent of the relevant market. However, from the wording of the BER and the Commission’s practice to date, it is not clear whether the relevant market share is the buyer’s share of its purchasing market or of its selling market.

In line with the above (see question 16), it also follows from the BER that agreements containing vertical restraints can in principle no longer benefit from the BER where networks of similar restraints widely agreed to by buyers cover more than 40 per cent of the relevant market.

Block exemption and safe harbour

Function

Is there a block exemption or safe harbour that provides certainty to companies as to the legality of vertical restraints under certain conditions? If so, please explain how this block exemption or safe harbour functions.

The BER entered into force on 13 March 2010. It lists in particular the following groups of vertical agreements that may benefit from the block exemption, if the market share of each party to the agreement does not exceed 25 per cent of the relevant market:

  • exclusive distribution agreements;
  • agreements on exclusive customer allocation;
  • exclusive supply agreements;
  • selective distribution agreements;
  • trade agency agreements, where the agent does not bear the commercial risk;
  • franchise agreements;
  • agreements on the transfer of intellectual property rights, where such transfer is not the primary object of the agreement; and
  • agreements between associations of retailers (or their members, or both), and between associations of retailers and their suppliers, under certain conditions.

The BER also contains a list of hard-core restrictions that lead to the exclusion of the whole vertical agreement from the scope of the application of the BER. The list of hard-core restrictions contained in the BER is largely in line with EU Regulation No. 330/2010.

The CPL also provides for a safe harbour in the form of a general de minimis exemption (see question 8).

Types of restraint

Assessment of restrictions

How is restricting the buyer’s ability to determine its resale price assessed under antitrust law?

An agreement that limits the right of a buyer in a vertical agreement to freely determine its resale price is generally deemed a restrictive agreement which cannot benefit from the de minimis rule and the BER. However, imposing a maximum resale price may be permissible under the CPL. Furthermore, price recommendations may be lawful provided that there is no pressure on or incentives for the buyer to honour the recommendation.

In an opinion published in December 2009, the Commission held that a vertical agreement fixing the level of rebate that a buyer can grant to its customers qualifies as resale price maintenance. Such an agreement cannot be exempted, nor can it benefit from the safe harbour of the de minimis rule. In 2012 the Commission imposed fines on various manufacturers and wholesalers in the pharmaceutical sector for having agreed on several vertical restraints, including resale price maintenance in the form of fixing the rebates to be applied down the supply chain.

Have the authorities considered in their decisions or guidelines resale price maintenance restrictions that apply for a limited period to the launch of a new product or brand, or to a specific promotion or sales campaign; or specifically to prevent a retailer using a brand as a ‘loss leader’?

In an opinion of 2012, the Commission addressed maximum and recommended resale prices during a promotional period. The Commission confirmed the general rule that maximum and recommended resale prices are permitted, provided that the supplier does not exert pressure on, or offer incentives to, the buyer to actually apply the maximum or recommended resale price. In this opinion, the Commission also stated that it would take account of the effects a particular promotional pricing arrangement has on the market (eg, according to the Commission, a high market share of the supplier or a long duration of the relevant period would provide an indication of restrictive effects).

In 2013, the Commission issued another opinion in response to the question of whether a manufacturer can lawfully advertise a promotion by printing the discounted price on a product’s packaging. Under the particular circumstances of the question at hand, the Commission held that this practice would exceptionally be lawful if the manufacturer of the products concerned grants a discount to a retailer for specified outlets and a very short period of time and if the entire discount is passed on to the final consumer.

Relevant decisions

Have decisions or guidelines relating to resale price maintenance addressed the possible links between such conduct and other forms of restraint?

The opinion on resale price maintenance published by the Commission (see question 19) does not address possible links between such conduct and other forms of restraint. We are not aware of any decisions addressing such links.

Have decisions or guidelines relating to resale price maintenance addressed the efficiencies that can arguably arise out of such restrictions?

There has been no discussion on the efficiencies that can arguably arise out of such restrictions in the Commission’s decisions and opinions published to date.

Explain how a buyer agreeing to set its retail price for supplier A’s products by reference to its retail price for supplier B’s equivalent products is assessed.

We are not aware of any precedents by the Commission that would address pricing relativity agreements. Such an agreement may, however, be regarded as a form of resale price maintenance if it has the effect that the retailer is restricted from reducing its retail prices for supplier A’s or supplier B’s products. We also believe that the Commission would assess whether the agreement has the object or effect of restricting competition between suppliers A and B.

Suppliers

Explain how a supplier warranting to the buyer that it will supply the contract products on the terms applied to the supplier’s most-favoured customer, or that it will not supply the contract products on more favourable terms to other buyers, is assessed.

The CPL does not contain specific rules addressing wholesale MFNs. The Commission, however, issued an opinion in February 2010 that sets out how the Commission may assess most favoured customer clauses. It appears to follow from this opinion that vertical agreements by which the supplier undertakes to grant to the buyer the ‘most favourable terms’ currently applied to any of its customers may be deemed anticompetitive if the buyer enjoys a dominant position. Further, the Commission addressed possible competition risks that may arise from continuous discussions between the supplier and the buyer with respect to the terms applied to other customers of the supplier. According to the Commission, such exchange of information may negatively affect competition, as it may facilitate collusive practices. The Commission has not provided a detailed reasoning for its position in this regard. Ultimately, the Commission recommended that the precise terms of an agreement should be determined directly in the agreement itself (rather than by reference to most favourable terms).

Explain how a supplier agreeing to sell a product via internet platform A at the same price as it sells the product via internet platform B is assessed.

We are not aware of any decisions or guidelines of the Commission that would have assessed such agreements to date.

Explain how a supplier preventing a buyer from advertising its products for sale below a certain price (but allowing that buyer subsequently to offer discounts to its customers) is assessed.

At the time of writing there have not been any decisions or guidelines of the Commission that have assessed such agreements.

Explain how a buyer’s warranting to the supplier that it will purchase the contract products on terms applied to the buyer’s most-favoured supplier, or that it will not purchase the contract products on more favourable terms from other suppliers, is assessed.

The CPL does not contain specific rules with regard to such clauses.

Restrictions on territory

How is restricting the territory into which a buyer may resell contract products assessed? In what circumstances may a supplier require a buyer of its products not to resell the products in certain territories?

In general, the CPL provides that a vertical agreement must not include provisions that divide markets or sources of supplies in the territory of Serbia.

The BER provides that vertical agreements that restrict the territory into which the buyer may resell contract goods or which limit the sales of such goods to certain groups of end customers shall not benefit from the BER. However, as an exception to that rule, the following vertical agreements can benefit from the BER:

  • the restriction of active sales into the territory or to customer groups that the supplier exclusively allocated to another buyer or reserved to itself, provided that there is no restriction on sales by the customers of the buyer;
  • the restriction of (active or passive) sales to end users by a buyer active at the wholesale level of trade;
  • the restriction of (active or passive) sales to unauthorised distributors by a member of a selective distribution system; and
  • the restriction of the buyer’s ability to sell components, supplied for the purposes of incorporation, to customers who would use them to manufacture the same type of goods as those produced by the supplier.

Have decisions or guidance on vertical restraints dealt in any way with restrictions on the territory into which a buyer selling via the internet may resell contract products?

We are not aware of decisions or guidelines of the Commission that have specifically dealt with restrictions on the territory into which a buyer selling via the internet may resell contract products.

Restrictions on customers

Explain how restricting the customers to whom a buyer may resell contract products is assessed. In what circumstances may a supplier require a buyer not to resell products to certain resellers or end-consumers?

As a general rule, the Commission would potentially regard such restrictions as unlawful (see, however, question 28).

In an opinion dated December 2009, the Commission held that a provision in a distribution agreement by which the seller reserves the right to sell the products to its ‘key customers’ (larger customers) in a market otherwise assigned to the distributor is not per se deemed restrictive.

Restrictions on use

How is restricting the uses to which a buyer puts the contract products assessed?

To the best of our knowledge, the Commission has not yet taken an official view in this regard. However, in some opinions of the Commission (which are not directly related to the issue at hand), the Commission takes the general view that the buyers must be free to engage in their business activity as they see fit.

Restrictions on online sales

How is restricting the buyer’s ability to generate or effect sales via the internet assessed?

We consider it likely that the Commission would take an approach similar to the European Commission in this regard.

In particular, the Commission would find the restriction of passive sales (including orders coming via the internet from territories assigned to other buyers) to be restrictive under the CPL, with no possibility of exemption.

Have decisions or guidelines on vertical restraints dealt in any way with the differential treatment of different types of internet sales channel? In particular, have there been any developments in relation to ‘platform bans’?

To date, no decisions or guidelines of the Commission have specifically addressed the question of the differential treatment of different types of internet sales channel or platform bans.

Selective distribution systems

Briefly explain how agreements establishing ‘selective’ distribution systems are assessed. Must the criteria for selection be published?

A selective distribution agreement (to the extent it falls within the ambit of the general prohibition on restrictive agreements) may be exempted under the conditions discussed in questions 8 and 18.

The BER does not exempt agreements containing a restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade. A member of a selective distribution system may, however, be prohibited from operating out of an unauthorised place of establishment. Also, a restriction of cross-supplies between distributors within a selective distribution system, including between distributors operating at different levels of trade, will not benefit from the BER.

Are selective distribution systems more likely to be lawful where they relate to certain types of product? If so, which types of product and why?

To the best of our knowledge, the Commission has not yet taken an official view in this regard. Given the European Commission’s approach, we consider it likely that selective distribution systems in Serbia are more likely to be deemed to comply with antitrust law where they relate to products that require selective distribution to ensure the quality of the product and its adequate use (such as high-tech products and luxury goods).

In selective distribution systems, what kinds of restrictions on internet sales by approved distributors are permitted and in what circumstances? To what extent must internet sales criteria mirror offline sales criteria?

To date, the Commission has not addressed this question by way of decisions or guidelines. However, it is likely that the Commission would take an approach similar to the European Commission.

Has the authority taken any decisions in relation to actions by suppliers to enforce the terms of selective distribution agreements where such actions are aimed at preventing sales by unauthorised buyers or sales by authorised buyers in an unauthorised manner?

We are not aware of decisions of the Commission that have specifically dealt with this question. In an opinion issued in 2014, the Commission held, however, that in a public procurement tender a contracting authority may require bidders that are wholesalers of pharmaceuticals to provide a written statement in which the manufacturer of these pharmaceuticals, which operates a selective distribution system, approves of the wholesaler’s participation in the tender. The Commission found that the manufacturer can refuse to grant such an approval to wholesalers which are not members of its selective distribution system.

Does the relevant authority take into account the possible cumulative restrictive effects of multiple selective distribution systems operating in the same market?

It is submitted that the authorities may take into account the market structure and other economic factors when assessing vertical restraints. The cumulative effects of multiple selective distribution systems in the same market are therefore likely to be considered. However, to the best of our knowledge, the Commission has not yet taken an official view in this regard.

Has the authority taken decisions (or is there guidance) concerning distribution arrangements that combine selective distribution with restrictions on the territory into which approved buyers may resell the contract products?

To the best of our knowledge, the Commission has not yet taken an official view in this regard.

Other restrictions

How is restricting the buyer’s ability to obtain the supplier’s products from alternative sources assessed?

A restriction of the buyer’s ability to source the supplier’s products or services from alternative sources is likely to be regarded more favourably than a non-compete clause (provided that it is not imposed on a reseller in a selective distribution system).

How is restricting the buyer’s ability to sell non-competing products that the supplier deems ‘inappropriate’ assessed?

To the best of our knowledge, the Commission has not yet taken an official view in this regard.

Explain how restricting the buyer’s ability to stock products competing with those supplied by the supplier under the agreement is assessed.

Under the CPL, a restriction limiting the buyer’s ability to manufacture, buy or sell products competing with those of the supplier (non-compete obligation) would regularly be regarded as falling within the ambit of the general prohibition of restrictive agreements. However, such a restriction may generally benefit from the BER under the conditions set out in question 18, provided it is concluded for a period not exceeding five years. In addition, it is likely that such an agreement would not be deemed restrictive even if concluded for a period exceeding five years, provided that the parties’ market shares are below 15 per cent (ie, provided that the de minimis rule applies).

How is requiring the buyer to purchase from the supplier a certain amount or minimum percentage of the contract products or a full range of the supplier’s products assessed?

An obligation on the buyer to purchase more than 80 per cent of its total demand of the contract products from the supplier would be regarded as a non-compete obligation (see question 42). In an opinion published in the Commission’s activity report for 2015, the Commission explained it would assess all relevant circumstances of the case in this situation, in particular the fact whether the buyer’s total annual demand was known to the supplier and whether the supplier took this total demand into account when determining the minimum quantity requirement that exceeded 80 per cent of the buyer’s total demand. To the best of our knowledge, the Commission has not yet taken an official view regarding minimum quantity requirements of less than 80 per cent.

Explain how restricting the supplier’s ability to supply to other buyers is assessed.

In general, a restriction of the supplier’s ability to sell its products or services to other buyers is likely to be regarded more favourably than a non-compete clause. Agreements containing such clauses may be exempted under the BER.

Explain how restricting the supplier’s ability to sell directly to end-consumers is assessed.

Restricting the supplier’s ability to sell directly to end consumers is assessed under the same principles as restrictions on the supplier’s ability to sell to other buyers (see question 44). If the supplier and the buyer are active or potential competitors, restricting the supplier’s ability to sell to end consumers may raise concerns from the perspective of horizontal collusion.

Have guidelines or agency decisions in your jurisdiction dealt with the antitrust assessment of restrictions on suppliers other than those covered above? If so, what were the restrictions in question and how were they assessed?

We are not aware of guidelines or decisions by the Commission that have dealt with the antitrust assessment of restrictions on suppliers in the context of vertical agreements other than those covered above.

Notification

Notifying agreements

Outline any formal procedure for notifying agreements containing vertical restraints to the authority responsible for antitrust enforcement.

In general, the parties to an agreement that contains vertical restraints need to notify the Commission of such agreement if it does not benefit from the BER or the safe harbour of the de minimis rule.

The content of the request for individual exemption is regulated in detail in a Decree on the Content of the Request to Receive an Individual Exemption, which entered into effect on 31 December 2009. The information to be provided in the request is relatively detailed and includes information on the undertakings involved, their representatives and related companies, an explanation of the agreement and the agreement itself, an estimate of the relevant market and the respective market shares (including the main competitors and their market shares). Also, the request must include information on the expected effects of the agreement on consumers, a reasoned explanation of each restriction and the degree of distortion of competition on the relevant market resulting from the agreement, as well as all available studies, analyses and other reports prepared for the undertakings involved that relate to the competitive conditions on the relevant market.

It is important to note that the CPL does not provide for a formal exemption from the imposition of fines once a notification is submitted; in other words, the filing does not provide undertakings with immunity from a possible fine imposed by the Commission if the relevant agreement is implemented before an exemption is granted and later found to infringe Serbian competition law.

As to the timeline, the CPL requires the Commission to reach a decision within 60 days following the filing of the request. The decision of the Commission will set out the conditions and the duration of the exemption (which can differ on a case-by-case basis). If the Commission finds that a notified agreement contains vertical restraints for which an exemption cannot be granted, it may require the parties to amend the agreement within a certain period of time.

In 2016, the Commission published guidelines regarding requests for individual exemption. The Commission explains in these guidelines that if the Commission determines in investigative proceedings that an agreement (which has previously not been notified to the Commission for an individual exemption) is restrictive of competition, it is not possible to suspend these investigative proceedings for an individual exemption procedure even if the undertakings proved that the conditions for an individual exemption are met. The Commission also recommends in its guidelines that undertakings submit the signed version of the agreement together with the request for individual exemption and make the validity of the agreement conditional upon granting of the individual exemption. Furthermore, the Commission explains it will grant the individual exemption starting from the date of submission of the complete request for individual exemption and not from the date of conclusion of the restrictive agreement. The Commission announced that it will issue further guidelines in order to assist undertakings in assessing whether agreements fulfil the conditions for block exemption or should be notified for individual exemption.

Authority guidance

If there is no formal procedure for notification, is it possible to obtain guidance from the authority responsible for antitrust enforcement or a declaratory judgment from a court as to the assessment of a particular agreement in certain circumstances?

Besides the filing procedure, the Commission has in the past regularly been open to provide (non-binding) informal guidance in antitrust matters either through consultations with the parties involved or by issuing opinions on the interpretation of the CPL. Since 2011 the Commission has, however, been less willing to provide informal guidance and to issue formal opinions in response to anonymous or hypothetical inquiries.

Enforcement

Complaints procedure for private parties

Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?

Under the CPL, private parties can complain to the Commission about allegedly unlawful vertical restraints. The CPL does not determine the formal requirements of such a complaint. However, the CPL provides that the Commission must inform the party filing the complaint about the outcome of the complaint within 15 days following its receipt thereof. In 2016, the Commission received a total of 32 complaints, seven of which resulted in the opening of an investigation. Out of these investigations, two concerned abuses of dominance and three concerned restrictive agreements.

Regulatory enforcement

How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?

Vertical agreements have not been the focus of the Commission’s activities in the Commission’s first years of existence. According to the Commission’s activity reports, during its first year (2006), it dealt with only four cases involving restrictive agreements (both horizontal and vertical) and no requests for individual exemption. From 2007 through 2013, the number of requests for individual exemption gradually increased, with, on average, approximately 10 cases per year and a peak in 2014 (23 cases) and 2015 (35 cases heard with 31 resolved). This increase in the number of requests may be due to the fact that the Commission started to extensively apply its powers to fine companies from 2011 onwards. In addition, in 2015 and 2016 respectively, the Commission started to carry out dawn raids and published its first guidelines on the individual exemption process.

In 2016, the Commission carried out 10 investigative proceedings with regard to restrictive agreements (both horizontal and vertical) and dealt with 28 individual exemption cases (involving both horizontal and vertical restrictive agreements). In the same period, the Commission dealt with four cases relating to an abuse of dominance and 117 merger control notifications. At the time of writing, the statistics for 2017 were not yet available.

What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?

Agreements or provisions of agreements containing a prohibited vertical restraint are null and void, and as such, are unenforceable.

Publicly available information on the issue of severability is scarce. However, it appears to follow from the Commission’s practice that it would only find the provisions containing a prohibited vertical restraint to be null and void (rather than the entire agreement).

May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?

The Commission may impose fines of up to 10 per cent of an undertaking’s annual turnover generated in the territory of Serbia in the preceding financial year. In July 2010, the Serbian government adopted the Regulation on the Level and Method for the Setting of Fines, which lays down the criteria relevant for the setting of fines.

In January 2011, the Commission for the first time made use of its power to impose fines. This fine concerned the sector of purchasing raw milk in Serbia and amounted to approximately €3 million. The case, however, did not concern vertical restraints but rather an abuse of dominance. Later in 2011, the Commission imposed fines of approximately €4.2 million and €2.4 million on two undertakings in the supermarket sector for resale price maintenance. Furthermore, also in 2011, a fine of approximately €1.2 million was imposed on the Veterinary Chamber of Serbia for fixing the minimum prices of veterinary services down the supply chain.

This trend continued in 2012, with repeated fines in the supermarket sector (again for resale price maintenance) and with fines against various undertakings in the pharmaceutical sector (a total of 12 pharmaceutical manufacturers and wholesalers were fined for agreeing on several types of vertical restraints, with fines varying from €52,000 to €3.9 million). Also in 2012, the Administrative Court, which is competent to review the Commission’s decisions, overturned the 2011 fining decisions concerning the supermarket sector, for substantive and procedural reasons.

The Commission may also order certain behavioural and structural measures in order to re-establish the status that existed before the infringement occurred.

Furthermore, the Commission may impose preliminary measures in order to prevent the occurrence of irrevocable damage (eg, the Commission may order that infringing activities are ceased or that certain measures directed at avoidance of damage are taken) and procedural penalties varying from €500 to €5,000 per day (where the undertakings involved do not cooperate).

As noted in question 50, vertical agreements have not been the focus of the Commission’s activities in the Commission’s first years of existence. As a general trend, it appears that the Commission has moved away from simply assessing merger control cases to enforcing competition law in a broader spectrum of fields.

Investigative powers of the authority

What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?

The Commission has the power to carry out a wide range of investigations it deems necessary for the protection of competition. Such powers vary from the power to request information from the undertakings concerned to the power to conduct searches (dawn raids) on the undertakings’ premises.

The CPL generally sets out an obligation for third parties in possession of information or documents that are relevant for proceedings regarding an infringement of competition law to provide such information or documents upon the request of the Commission. The CPL does not specify, however, if this obligation extends to undertakings domiciled outside Serbia.

Private enforcement

To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?

Private enforcement is in principle possible under Serbian law. Actions for damages can be brought before general civil courts by all those entities or persons that have suffered damages because of anticompetitive behaviour.

The CPL does not tackle the question of private enforcement in detail. The CPL only provides that the Commission’s decision finding an infringement does not in and of itself suggest that damage has occurred, but that this fact must be established separately by the court.

However, Serbian courts generally still have little experience with unlawful behaviour under antitrust law. Furthermore, civil proceedings may take several years before reaching the enforcement stage.

Other issues

Other issues

Is there any unique point relating to the assessment of vertical restraints in your jurisdiction that is not covered above?

In Serbia, vertical restraints infringing the CPL may benefit from the application of the Serbian leniency programme.

Under the Regulation on the Conditions for Immunity from Fines, an undertaking will qualify for immunity from fines if:

  • it is the first to submit to the Commission information and evidence that is considered sufficient to initiate antitrust proceedings;
  • the undertaking genuinely cooperates with the Commission;
  • it did not coerce other undertakings to participate in the infringement; and
  • it is not considered a leader or organiser of the restrictive agreement.

Furthermore, amendments to the Serbian Criminal Code that provide for criminal sanctions for entering into certain types of restrictive agreements will apply as of 1 March 2018. It remains still to be seen to what extent the competent authorities will also apply these criminal sanctions to restrictive agreements containing vertical restraints.