Activity Report of the Commission for Protection of Competition 2018

Republic of Serbia COMMISSION FOR PROTECTION OF COMPETITION

ACTIVITY REPORT OF THE COMMISSION FOR PROTECTION OF COMPETITION 2018

Belgrade, February 2019

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Table of Contents 1. INTRODUCTION ...... 4 2. MISSION AND VISION ...... 6

2.1. MISSION ...... 6 2.2. VISION ...... 6 2.3. ACTIVITIES TOWARDS ENSURING ECONOMIC PROSPERITY AND WELL-BEING OF THE SOCIETY, AND ESPECIALLY THE BENEFIT OF THE CONSUMERS ...... 7 2.4. TRANSPARENCY AS AN UNDERLYING PRINCIPLE ...... 8 3. INSTITUTIONAL AND ADMINISTRATIVE CAPACITY...... 10

3.1. INSTITUTIONAL CAPACITY ...... 10 3.2. ADMINISTRATIVE CAPACITY ...... 10 3.3. BUSINESS PREMISES OF THE COMMISSION ...... 12 3.4. ADDITIONAL EMPLOYEE EDUCATION IN 2018 ...... 12 4. FINANCIAL MANAGEMENT REPORT OF THE COMMISSION ...... 16

4.1. REVENUES ...... 16 4.2. EXPENDITURES ...... 19 4.3. BUDGET PAYMENTS...... 23 5. COMMISSION ACTIVITIES IN ACCESSION NEGOTIATIONS WITH THE EUROPEAN UNION .. 25

5.1. RELATIONS WITH THE EUROPEAN UNION ...... 25 5.2. ASSUMING COMMITMENTS FROM THE STABILIZATION AND ASSOCIATION AGREEMENT AND COOPERATION WITH EU INSTITUTIONS ...... 25 5.3. EC PROGRESS REPORT ON SERBIA – CHAPTER 8: COMPETITION POLICY ...... 26 5.4. HARMONIZATION OF NATIONAL REGULATIONS WITH EU ACQUIS COMMUNAUTAIRE ...... 27 6. COMPETITION INFRINGEMENTS ...... 28

6.1. COMPETITION INFRINGEMENT PROCEDURES ...... 29 6.1.1. Cases closed in administrative procedure...... 31 6.1.2. Pending administrative proceedings – as on December 31, 2018...... 35 6.1.3. Monitoring of the proper implementation of commitment decisions ...... 43 6.2. INDIVIDUAL EXEMPTIONS OF RESTRICTIVE AGREEMENTS FROM PROHIBITION ...... 45 6.2.1. Completed proceedings of individual exemption of restrictive agreements from prohibition, as on December 31, 2018 ...... 46 6.2.2. Pending procedures of individual exemption – as on December 31, 2018...... 52 6.3. ANTITRUST INITIATIVES AND OTHER MEANS OF IDENTIFYING INFRINGEMENTS ...... 53 6.3.1. Processed initiatives and ex officio actions – instituted proceedings ex officio ...... 54 6.3.2. Processed initiatives and ex officio actions – closed without instituted proceedings ex officio ...... 54 6.3.3. PENDING INITIATIVES AS ON DECEMBER 31, 2018...... 58

6.4. DECISIONS OF THE COMMISSION ON REQUESTS FOR REPETITION OF PROCEEDINGS ...... 60 6.5. DECISIONS OF THE ADMINISTRATIVE COURT AND THE HIGH COURT OF CASSATION ...... 60 6.5.1. Decisions of the Administrative Court in 2018 ...... 60 6.5.2. Decisions of the High Court of Cassation in 2018...... 61 6.5.3. Pending cases before the Constitutional Court as on December 31, 2018 ...... 61 6.6. DECISIONS OF THE CONSITUTIONAL COURT IN 2018 ...... 62 7. MERGER INVESTIGATIONS...... 63

7.1. MERGERS APPROVED IN SUMMARY PROCEDURE ...... 69 7.1.1. Mergers created by acquisition of direct or indirect control by one or more undertakings over another or more undertakings or over part or parts of other undertakings (Article 17(1/2) of the Law): ...... 69 7.1.2. Mergers created in cases of joint venture or acquisition of joint control (Article 17(1/3 of the Law): ...... 77 7.2. NOTIFIED MERGERS REVIEWED IN EX OFFICIO PROCEEDINGS ...... 80

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

7.3. MONITORING OF THE PROPER IMPLEMENTATION OF CLEARED MERGERS SUBJECT TO CONDITIONS ...... 81 7.4. INVESTIGATION OF MERGERS COMPLETED WITHOUT CLEARANCE ...... 84 8. OPINIONS ...... 85

8.1. OPINIONS ON DRAFT AND CURRENT REGULATIONS WITH IMPACT ON THE MARKET COMPETITION ...... 85 8.2. OPINIONS ON THE IMPLEMENTATION OF THE LEGAL PROVISIONS GOVERNING MERGERS ...... 94 8.3. OPINIONS ON THE IMPLEMENTATION OF THE LEGAL PROVISIONS GOVERNING INFRINGEMENTS OF COMPETITION ...... 97 8.4. OPINIONS ON REPORTS OF REGULATORY BODIES ...... 100 8.5. OPINIONS ON THE PROVISIONS OF THE LAW ON BANKRUPTCY ...... 102 9. SECTOR INQUIRIES ...... 104

9.1. ROLE AND RELEVANCE OF CASEWORK-RELATED ECONOMIC INQUIRIES ...... 104 9.2. SECTOR INQUIRIES AND INQUIRIES INTO COMPETITIVE CONDITIONS ...... 104 9.2.1. Sector inquiry into the oil derivatives retail market ...... 105 9.2.2. Sector inquiry into the baby equipment wholesale and retail market...... 106 9.2.3. Retail sector inquiry into the sale in nonspecialized stores with food, beverages and tobacco predominating...... 107 9.2.4. Inquiry into competitive conditions on the tire market...... 108 9.2.5. Inquiry into competitive conditions on the cement market ...... 109 10. COOPERATION WITH REGULATORY BODIES, STATE AUTHORITIES AND ORGANIZATIONS, FACULTIES AND THE CIVIL SECTOR...... 110

10.1. AGREEMENTS AND COOPERATION WITH REGULATORY BODIES AND STATE AUTHORITIES AND ORGANIZATIONS ...... 110 10.2. PROTOCOLS ON COOPERATION WITH THE FACULTIES IN THE REPUBLIC OF SERBIA AND THEIR IMPLEMENTATION ...... 111 10.3. PARTICIPATION OF THE COMMISSION REPRESENTATIVES IN THE WORK OF THE COMMISSION FOR STATE AID CONTROL ...... 112 10.4. PARTICIPATION OF THE COMMISSION REPRESENTATIVES AT CONFERENCES, SEMINARS AND ROUND TABLES IN THE COUNTRY ...... 113 11. INTERNATIONAL COOPERATION...... 116

11.1. RELATIONS WITH INTERNATIONAL ORGANIZATIONS ...... 116 11.2. BILATERAL COOPERATION ...... 119 11.3. INTERNATIONAL CONFERENCES AND SEMINARS ...... 123 11.4. ASSISTANCE PROJECTS PROVIDED TO THE COMMISSION ...... 125 12. AWARENESS RAISING ACTIVITIES ON COMPETITION...... 127

12.1. RELATIONSHIP-BUILDING ACTIVITIES OF THE COMMISSION WITH THE BUSINESS COMMUNITY AND EXPERTS ...... 129 12.2. COOPERATION WITH THE MEDIA ...... 129 12.3. COMMISSION’S CONDUCT UNDER THE LAW ON FREE ACCESS TO INFORMATION OF PUBLIC IMPORTANCE ...... 131 12.4. PROTECTION OF BUSINESS SENSITIVE INFORMATION AND TRADE SECRETS ...... 131 12.5. VIDEO PRODUCTION ...... 132 12.6. PUBLICATIONS ...... 132 12.7. E-BULLETIN ...... 133 12.8. INTERNET PAGE OF THE COMMISSION ...... 133 12.9. SOCIAL NETWORKS ...... 134 13. OVERVIEW OF THE COMMISSION’S ACTIVITIES IN 2018...... 135 14. CONCLUSION ...... 136

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

1. INTRODUCTION

The Commission for Protection of Competition (hereinafter, Commission) is established by the Law on Protection of Competition enacted in 2005, and commenced its operating activities following the initial convening of the Commission Council in April 2006.

However, unlike the first decade mostly marked by efforts to build institutional capacities, the focus of the Commission’s activities nowadays can be increasingly defined as the institutional upgrading, ensuring increased visibility, both of its work and the importance of efficient enforcement of competition policy towards the well-being of the entire society. In the previous period, the Commission has also worked intensively on achieving the full legal certainty of undertakings in terms of competition policy in the Republic of Serbia.

During 2018, the Commission has continued to take measures in order to secure more efficient enforcement of the provisions of the Law on Protection of Competition (Official Gazette of RS 51/2009 and 95/2013, hereinafter, the Law), both by bringing proceedings decided on the rights and obligations of undertakings and by developing awareness on the competition policy (competition advocacy). During the period observed, pursuant to its legal authority and based on the practice, foremost of the developed European competition authorities, the Commission has used all available legal and economic instruments towards ensuring the protection of competition on the market of the Republic of Serbia.

According to the Commission, the factors contributing to achieving positive results in 2018, comprehensively presented in the Activity Report (hereinafter, the Report) and delivered to the National Assembly of the Republic of Serbia pursuant to Article 20 of the Law, are inter alia the following:

• continuation of activities on regulatory harmonization and converging practices with the EU acquis; • achieving increasingly visible impacts on the legislative framework of the Republic of Serbia, by delivering opinions on draft regulations and regulations with potential relevance to the state of market competition; • considerably intensifying activities on drafting economic inquiries into various industry sectors of the Republic of Serbia, as well as the use of economic/econometric methods when investigating and deciding in proceedings; • conducting dawn raids in the territory of the entire Republic of Serbia, by using forensic equipment for search and seizing of digital evidence; • exercising the powers referred to in Article 58 of the Law, which enable the Commission to suspend proceedings entailing acceptance of commitments offered by the parties involved, thus allowing for more cost-effective and efficient use of resources, along with a faster establishment of conditions of fair competition; • achieving the high level of cooperation with reputable international institutions through active participation of the Commission’s representatives at all important competition events, as well as hosting meetings with representatives of said institutions organized by the Commission (European Commission, European Bank for Reconstruction and Development – EBRD, Organization for Economic Co-operation and Development - OECD, World Bank – WB); • deepening cooperation with other competition authorities. Exchange of experiences and know-hows is particularly improved with the national competition authorities from the

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Western Balkans region (event participation, bilateral meetings during international conferences, study visits, new memoranda on cooperation), but also with competition authorities from around the world (Republic of Korea – participation of CPC representatives at the KFTC seminar, co-organization of a seminar in Belgrade with the JFTC and the Embassy of Japan in Belgrade); • notable increase in the interest shown by exports, but also the general public for the Commission’s work, encouraged by opportune response to situations potentially adversely affecting the market competition, operational transparency and the use of timely opportunities to raise public awareness of the current activities and decisions enacted; • professional approach to selection and education of staff, providing for further strengthening of capacities of the Commission which is seen as a precondition for successful exercise of statutory authorities.

The Report contains information on all important aspects of the Commission’s work during 2018, as well as an overview of the most important proceedings conducted before the Commission:

• competition infringement proceedings; • merger control proceedings; • proceedings on the requests for individual exemption of restrictive agreements from prohibition; • drafting of sector, and inquiries into competitive conditions • proceedings before the courts; • delivery of opinions; • competition advocacy; • promotion of competition rules;

The overview of the most important activities also includes:

• activities of the Commission in relation to the EU accession process; • cooperation with regulatory bodies and national authorities and organizations; • domestic cooperation; • international cooperation, including the international project activities of the Commission; • activities on raising awareness on the role of competition law and policy.

The Report also contains key information on the financial, administrative and institutional framework under which the Commission is exercising tasks delegated by the Law:

• information on institutional and administrative capacities; • information on the Commission’s funding and financial performance in 2018.

As mentioned earlier, the provision of this Report to the National Assembly of the Republic of Serbia is a requirement stipulated by the Law, while its publishing is aimed at ensuring the operational transparency of the Commission, that is, raising the awareness of its work and promoting the importance of the observance of competition rules, i.e., sensitizing the public on the need to protect competition.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

2. MISSION AND VISION

2.1. MISSION

The mission of the Commission is to secure a level playing field for all undertakings on the market of the Republic of Serbia in a manner that will ensure the economic prosperity and well- being of the society, and especially the benefit of the consumers, which is actually the objective of the Law. In its daily work, the Commission is committed to addressing the issues and policies that impact the advancement of competition policy, by removing all perceived barriers, through actual treatment and taking actions directed at identifying the infringements of competition and their removal, that is, by performing activities under its responsibility as stipulated in Article 21 of the Law. To this effect, entrusted tasks are of particular importance, concerning the rights and obligations of undertakings and setting administrative measures in accordance with the Law, as well as taking numerous activities aimed at raising awareness of the need to protect competition, since these activities of the Commission are directly focused on bringing efficient competition, which should contribute to achieving the objective of the Law.

The preconditions required for ensuring the achievement of the mission are as follows:

• permanent work on advancing the employee potential, framework of staff policy and organizational structure of the Commission; • use of complex economic and econometric analysis at full capacity in proceedings before the Commission; • full cooperation and complementary action with relevant institutions of the Republic of Serbia, particularly with regulatory bodies and other competent authorities and organizations, as well as business associations and academia; • use of all available resources provided via EU technical assistance support programs and projects other international and national organizations, in order to ensure continuous professional training of the Commission staff, as well as experts and other stakeholders. • continuation of intensive international activities that enhance the work of the Commission staff.

2.2. VISION

The Commission will continue to work on advancing the operational quality in order to become even more recognizable as an institution whose reputation is based on professionalism, legal certainty of all undertakings, coherent and efficient implementation the Law, because precisely for these reasons, it continues to enjoy the full support of the general public.

Subject to the foregoing, the Commission will continue to direct its activities in the period to come at:

• uncompromising fight against cartels, abuses of dominant position and all other forms of infringements of competition; • continued work on the fulfillment of commitments undertaken under the Stabilization and Association Agreement through further harmonization with EU acquis and best competition practices, as well as the full application of legislation and regulations;

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

• further advancement of cooperation and complementary acting with all relevant institutions of the Republic of Serbia, regulatory bodies and other competent authorities and organizations, as well as with business associations and academia; • intensifying work towards publishing uniform practices in antitrust proceedings in order to ensure the legal certainty of undertakings, in addition to raising the level of predictability and certainty in their work; • continuation of in-depth activities towards ensuring the conditions necessary for conducting and drafting economic inquiries into target sectors of the economy of the Republic of Serbia; • more intensive use of economic inquiries in antitrust cases when investigating alleged infringements of competition; • further training and additional professional education of the Commission staff; • continuation of intensive international cooperation – exchange of experiences with other competition authorities via bilateral cooperation, joint work with international institutions and provision of training opportunities for the Commission staff in said organizations; • continuation of activities that contribute to raising the level of knowledge on the importance of competition law and policy in general, inter alia, by ensuring the operational transparency so that the public would be informed on the Commission’s work and pointed out the potential sanctions imposed in the event of violation of competition rules, towards ensuring the preventive action with respect to behaviors of undertakings; • further communication and education of undertakings on options ensuring the protection from potential unfair competition practices; • work on raising the awareness of representatives of all national authorities – proposers and policy makers, on the importance of submitting drafts and proposals of laws and other regulations to the Commission that are likely to have an impact on the market competition, in order to deliver opinions that would have a binding effect and impact on the strengthening of competition on the market of the Republic of Serbia.

2.3. ACTIVITIES TOWARDS ENSURING ECONOMIC PROSPERITY AND WELL-BEING OF THE SOCIETY, AND ESPECIALLY THE BENEFIT OF THE CONSUMERS

The objective of the competition policy in the Republic of Serbia is the economic prosperity and well-being of the society, and especially the benefit of the consumers. The competition as a process of business rivalry between companies plays a central role in fostering economic growth and development, and if the provision of benefits of the consumers is taken as the ultimate objective, the level of economic growth then directly becomes a criterion for the competition policy. Business activities identified to undermine or potentially challenge the benefit of the consumers are considered to be anticompetitive, and therefore illegal.

The competition incites companies to improve the quality of their products and reduce costs, leading to an increase in productivity and innovations, and ultimately to faster economic growth and improvement of the business climate. On the other hand, the competition secures a wide range of products for consumers, offered at lower prices. If the market competition would be distorted, prevented, or restricted, the products and services meeting citizens' needs would be more expensive and more unaffordable, resulting in a reduced people's standard of living.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Although the task of the Commission is not to protect undertakings but to secure a level playing field, the increased competition inherently can also support small producers in improving their business operations. If a market is not monopolized or cartelized, that is, if it is open and competitive, the chances for small producers are increased.

2.4. TRANSPARENCY AS AN UNDERLYING PRINCIPLE

The efficient implementation of competition rules represents an important requirement for the development and strengthening of the Serbian economy. Also, the Commission perceives the full operational transparency as its significant commitment, which is reflected on several levels.

The first level represents the regular delivery of activity reports to the National Assembly of the Republic of Serbia, which is a legal commitment of the Commission. The annual activity reports are also available at the Commission’s official website.

The second level of transparency relates to the established practice of the Commission to publish decisions, results of sector inquiries and opinions on its official website, in addition to press releases relating to efforts to advance competition policy and the most important acts of the Commission. To this effect, the Commission invested additional efforts by parallel dual- language publishing of all documents on its official website, both in Serbian and English. The main information relating to the Commission activities are also presented in an e-bulletin, distributed on a weekly basis to nearly 1,000 email addresses in Serbia. Furthermore, the Commission also publishes certain decisions and conclusions in the Official Gazette of the Republic of Serbia.

The third level of the operational transparency of the Commission relates to activities directed at the general public, that is, encompass the presentation of its decisions, inquiries and analysis, and reports in the media.

During 2018, the Commission continued with its successful and permanent communication both with the expert and general public. In that regard, the Commission made publicly available all its activities, both indirectly – via media outlets, and directly – by organizing four important and highly attended events (one conference and three seminars). Also, the communication with stakeholders was achieved through co-organization and active participation at all events dedicated to the improvement of business environment. A total of nine publications were published in 2018, aimed at providing more qualitative information to all stakeholders on competences and activities of the Commission. Likewise, another promotional video clip on competition policy issues was produced. Furthermore, towards ensuring a wider promotion of competition law and policy, the Commission has also organized debates on potential new legal solutions governing this area, held during 2018 in two major industry centers, Kragujevac and Niš.

The full operational transparency enables the Commission to considerably eliminate the legal uncertainty for companies when making business decisions and stabilize the expectations of economic entities, which positively influences the economic efficiency.

As a result of all of the above activities, companies in the Republic of Serbia are able to pre- assess the circumstances under which certain aspects of their business operations may be considered as anticompetitive, that is, to weigh on forbidden features. This brings the “deterrent

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018 effect” into effect with regard to companies, dissuading behaviors and activities considered prejudicial to the state of competition.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

3. INSTITUTIONAL AND ADMINISTRATIVE CAPACITY

3.1. INSTITUTIONAL CAPACITY

The Law defines the Commission as an independent and autonomous organization that performs public competencies, accountable for its work to the National Assembly of the Republic of Serbia. The Commission’s institutional independence from the executive branch is secured in a manner in which the Commission President and members of the Commission Council are elected, but also through its financial autonomy considering that the Commission is financed from its own revenues and is authorized to enact its annual financial plans, approved by the Government of the Republic of Serbia.

The institution-building of the Commission started since its establishment, by the Law on Protection of Competition (Official Gazette of the RS 79/05), adoption of the Statute and other general acts, delegated legislation stipulated by the Law on Protection of Competition and other legislation and respective regulations, and is considered to be an ongoing process. During 2018, the Commission continued to upgrade normative acts by enacting a number of new and improving the quality of the current acts.

The work of the Commission Council is conducted at the Council’s sessions where decisions from the Commission’s competence are enacted, in accordance with the Law and the Statute of the Commission. During 2018, the Commission Council held a total of 47 sessions. The work of the President and Council members, in the broad sense, also includes holding working sessions, meetings with representatives of national authorities, international entities and professional or trade associations, as well as giving presentations at international and national scientific events and expert meetings, chairing conferences, in addition to publishing scientific papers from the field of protection of competition, all directed towards its comprehensive and active promotion.

3.2. ADMINISTRATIVE CAPACITY

The Administrative and Professional Service of the Commission performs professional operations within the Commission’s competence in accordance with the Law, Statute and other acts of the Commission.

As on December 31, 2018, the number of the Administrative and Professional Service employees reached a total of 53 employees, which presents an increase of eight staff members against the number of employees as on December 31, 2017. Among elected Commission’s officials, that is, individuals elected for the position of the Commission President and members of the Commission Council, the Commission President and three Council members have a fixed-term employment relationship. Two Council members are elected from among staff members and their employment relationship is suspended.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 1 1: Number of employees in the Administrative and Professional Service of the Commission in 2018

Due to the need to strengthen the administrative capacities in the Administrative and Professional Service, eight new staff members are hired during 2018, out of which one staff member is employed under a fixed-term contract. Six out of eight newly employed staff members have a university degree, while two hold a diploma of secondary education. In the same year, the temporary absence from duty in a non-pay status was approved for one employee for the duration of one year, in order to carry out the duties of the President of the Commission for State Aid Control.

The Commission will continue to strengthen its administrative capacities, considering that the competition law is a specific field that permanently develops, requiring constant education of employees and intensive monitoring of comparative practices.

The Rulebook on Internal Organization and Job Classification classifies a total of 66 job positions in the Administrative and Professional Service. The employment of professional and educated personnel contributes to the strengthening of administrative capacities of the Commission, both in view of intensifying activities aimed at detecting and sanctioning infringements of competition and in terms of undertaking the commitments relating to the accession of Serbia to the European Union, that is, harmonization of related practices, and in particular activities aimed at promoting the objective and relevance of the implementation of competition rules.

The qualification structure of the Administrative and Professional Service personnel reflects the current needs of the Commission. A number of the Commission Council members and staff of the Administrative and Professional Service have completed their respective PhD and MA studies, that is, hold Masters of Science degree in economics, legal, organizational management and public administration studies. The CPC employees have passed the Civil Service Exam, while 14 have passed the Judicial State Examination.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Table 1: Number and qualification structure of personnel in the Administrative and Professional Service of the Commission

University Secondary No. Organizational unit Total College degree education 1 Secretary 0 0 0 0 2 President’s Office 3 2 1 0 3 Merger Investigation Division 8 8 0 0 4 Restrictive Practices Division 13 13 0 0 5 Division for Competition Advocacy and 5 5 0 0 International Affairs 6 Legal Affairs Division 4 4 0 0 7 Economic Analyses Division 5 5 0 0 8 Division for Material and Financial 5 4 0 1 Affairs 9 Division for Normative and Legal, HR, 10 3 0 7 and General Administrative Affairs TOTAL: 53 44 1 8

Compared to the number of employees working for competition authorities from the majority of regional countries, foremost ex-Yugoslav republics, and benchmarked against comparable EU member states, the Commission employees a smaller number of personnel by 20-40%.

3.3. BUSINESS PREMISES OF THE COMMISSION

Pursuant to the Commercial Lease Agreement concluded with Srpska banka a.d., the Commission utilizes 1,100 m 2 of business premises in the office building located at 25 Savska St., fourth floor. By entering into this Agreement, the Commission has resolved the issue of business premises until April 30, 2020. The office space and number of offices currently meet the Commission’s needs.

The cost of rental per square meter in the office building located at 25 Savska St. is six euro, VAT included (paid in dinar-currency equivalent value, calculated at the middle exchange rate of the National Bank of Serbia on the day of payment), while the total lease price, maintenance costs included (cost of rental, cleaning services, electricity, utilities and heating) is nine euro, VAT included, (paid in dinar-currency equivalent value, calculated at the middle exchange rate of the National Bank of Serbia on the day of payment).

As of June 2018, the Commission has also taken over a 24-month lease on two business premises in order to secure offices for the resident representative of the Italian partner and his assistant working under the auspices of the Twinning project “Further Development of Protection of Competition in Serbia”, implemented in co-operation with the Italian Competition Authority.

3.4. ADDITIONAL EMPLOYEE EDUCATION IN 2018

With a view to achieving additional know-how and skills, the Commission personnel are referred to training courses and workshops in the field of competition policy.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

In 2018, the employees of the Commission have taken part in a total of 24 workshops, in addition to several one- or multi-day training courses in the country and abroad.

Two representatives of the Commission have participated at an international conference organized by German competition authority Bundeskartellamt, in Bonn, Germany. The authority hosted a panel discussion on the topic “Competition policy in a globalized and digitalized world. The challenges of today and tomorrow”.

Two representatives of the Commission have taken part at a seminar (workshop) organized by the OECD-GVH Regional Centre for Competition, which offered a possibility of obtaining additional expertise on detecting restrictive agreements-cartels, in addition to mandatory requirements for the full or partial immunity from fines (leniency programme) in the practice. A significant part of the seminar was dedicated to public procurements and need for systematic monitoring of data in public procurements in order to detect collusive behaviors and pooling. Two representatives of the Commission have attended a seminar (workshop) on competition law hosted by the OECD-GVH Regional Centre for Competition in Budapest for employees of national competition authorities, titled “Basic concepts and procedures in competition law”. The seminar provided insight into various competition law concepts such as defining relevant markets, use and storage of confidential data in competition cases, abuses of dominance, mergers, restrictive agreements, etc.

Two representatives of the Commission have attended the European Competition Day event, organized by the Bulgarian Commission for Protection of Competition on the occasion of the six-months Bulgarian Presidency of the Council of the EU. Among other renowned gusts, the event was also attended by European Competition Commissioner Margrethe Vestager.

The Commission was also present via a designated representative at the seminar titled “The thematic seminar on competition policy, trade and development: Reviewing practical experience with existing WTO agreements”, held in Geneva, Switzerland. Numerous competition experts from around the globe have been offered with an opportunity to meet and reestablish the “position” of their respective national competition authorities in terms of ratings, independence and competences.

One representative of the Commission took part at a seminar organized by OECD - Regional Centre for Competition and Albanian competition authority, held in Tirana, Albania. The seminar was dedicated to merger control procedures, that is, on the investigation of effects of mergers on competition.

The event “CRESSE 2018 Lawyers’ Course” on “The role of economics in competition law and practice” held in Crete, Greece, was attended by two employees of the Commission. The objective of the course was to introduce the economic theories that underlie competition law, the methods and tools that are used to assess whether business practices are socially harmful or benign and the economic issues related to the enforcement of the law. The philosophy of the course was to enable participating lawyers to communicate effectively with economists when handling practical cases and to read their opinions in an informed manner.

Four representatives of the Commission have participated at the Competition and Regulation European Summer School – CRESSE, held in Crete, supported by the European Bank for Reconstruction and Development through a capacity building project. The school was organized

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018 in eight modules and three advance courses, which have significantly contributed to improving the level of academic achievements.

One delegated representative of the Commission has taken part at a ten-day seminar organized in Tokyo, Japan, by the Japan International Cooperation Agency (JICA). The “Competition Law and Policy” was defined as the topic of this seminar. One representative of the Commission attended a „TAIEX " seminar organized by the Directorate General for Neighbourhood and Enlargement Negotiations of the European Commission in cooperation with the Civil Aviation Authority of Montenegro. The seminar held in Podgorica, Montenegro, offered participants a comprehensive knowledge of, and opportunity to exchange best practices in the field of competition policy implementation under aquis communautaire , in addition to state aid topics and public service obligations in the air transport sector.

One representative of the Commission took a training course in Bratislava on “Collective redress mechanisms in relation to injunctive relief”, held as a part of the Legal Reform project organized by GIZ and the European Consumer Organization (BEUC) from Brussels. The objective of this training was to advance knowledge of participants on regulations and practice of collective redress for consumers through injunctive relief in the EU and member states, as well as strengthening cooperation between institutions and consumer protection organizations.

The Slovenian Competition Day conference organized by the Slovenian Competition Protection Agency was attended by two representatives of the Commission. The topics touched upon during the conference in Ljubljana related to the challenges of competition law enforcement on digital markets, addressing effective competition enforcement mechanisms on digital markets and economic approach, national practice and recent case-law with regard to digital markets.

The three-day ICN cartel workshop organized in Tel Aviv was attended by one delegated representative of the Commission. The ICN workshop was organized in a form of multiple parallel sessions such as: how to start a cartel investigation; intelligence gathering through leniency; cooperation among competition agencies in international hard core cartel cases; digital evidence gathering prior to overt investigation; developing the capabilities required to uncover a cartel, etc.

One representative of the Commission has completed a two-week training course on merger investigations organized by the Korea Fair Trade Commission. The first part of the training course was organized in KFTC headquarters in Sejong City, and the second in the KFTC Meditation Agency in Seoul.

The international conference of the Croatian Competition Agency titled “Exchange of information between competitors, fixing prices or price components – the role of professional associations and chambers” organized in Zagreb, Croatia, was attended by two representatives of the Commission.

With the notable participation of two representatives of the Commission at the 16 th annual conference of the Association of Competition Economics – ACE, held in Bologna, Italy, the Commission was provided with an opportunity to present a case study on handling restrictive agreement cases during one of the sessions.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Two representatives of the Commission have attended the OECD Global Forum on Competition held in Paris, France. The Forum participants have been provided with an opportunity to be directly informed on the latest news about competition, as well as to explore possibilities of potential cooperation and implementation of innovative solutions in their mandates.

The Commission representative participated at the international conference on “Competition Law in the Energy Sectors” held in Vienna, Austria. The conference was organized by the Energy Community Secretariat, while the participants were able to acquire a direct insight into the nature of functioning of the Energy Community Secretariat and to understand the manner and degree of participation of the signatories of the Treaty establishing Energy Community.

In line with the activities envisaged under the project “Increasing economic growth through support to the promotion of competition policy”, twenty employees are trained for the use of digital forensic hardware and software. A certified forensics trainer has delivered said training, covering a demonstration and overview of the functionality and capabilities of the digital forensic hardware, functionality of acquisition tools, processing, data overview and search, and creation of reports in EnCase v.8 software package.

The employees of the Commission for Protection of Competition have completed a two-day public debate and lobbying training course. The courses were implemented with a high degree of interaction, covering topics such as – the role of public debate in creating public policies, elements of the organization of public debates, as well as how to conduct a debate. In such manner, the Commission representatives were presented with an opportunity to advance their advocacy skills, as well as to improve their expertise in disseminating their own knowledge- based capital and practical lessons learned from the competition policy field.

The economists working in the Commission for Protection of Competition have took a software training course for the use of new STATA software, procured by the Commission in parallel to the E-Views software upgrade license, as part of the European Bank for Reconstruction and Development support. The training sessions are organized in series, one dedicated to STATA general theoretical training and the other to empirical research based on data collected during a sector inquiry into the retail food, beverages and tobacco market. This will ensure more efficient use of economic analyses in cases pending before the Commission.

The Commission representatives have participated at a two-day seminar held by experts from the French competition authority, Autorité de la concurrence, designed to advance the efficiency of competition policy enforcement in Serbia via the exchange of experiences with peers. The seminar was organized by the Ministry of European Integration of the Republic of Serbia and the Embassy of the Republic of France in Belgrade, in line with the needs of the Commission.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

4. FINANCIAL MANAGEMENT REPORT OF THE COMMISSION

Financing of the Commission for Protection of Competition

Pursuant to Article 31 of the Law, the financing of the Commission is carried out in accordance with a financial plan enacted by the Commission on an annual basis, and submitted to the Government for approval. If based on the annual statement of revenue and expense is determined that the total generated revenues of the Commission are exceeding the expenses realized, and following the allocation of funds for a contingency fund, the difference is paid into the budget of the Republic of Serbia.

The financial management of the Commission in 2018 was conducted in accordance with the 2018 Financial plan, approved by the Government of the Republic of Serbia on December 28, 2017. The Financial plan determines the Commission total revenue and expenditure, distribution of the excess of revenue over expenses, in addition to the elements for an overall view of the wage and employment policy.

Sources of funding

The resources necessary for the Commission work are secured in accordance with the Law, from own revenues that the Commission generates from its activities. The method of financing of the Commission is an important segment of the institutional capacity and one of the essential requirements for the independence of authorities.

In accordance with the Law, the Commission is funded from revenues generated from its activities, particularly from: 1) fees payable in accordance with the Law on Protection of Competition; 2) donations, except from donations made by undertakings to whom this Law applies; 3) revenues from the sale of publications prepared by the Commission; and, 4) other sources in accordance with the Law.

The fee amount applied by the Commission is determined by the Tariff, enacted by the Commission with the consent of the Government.

Financial results 2018

In 2018, the Commission has achieved a positive financial result.

The revenues and expenditures of the Commission are presented on a cash basis.

The generated excess of revenue over expenses, following the allocation of funds for a contingency fund, will be paid into the Budget account of the Republic of Serbia.

4.1. REVENUES

During 2018, the Commission for Protection of Competition has generated fee revenues from activities relating to issuing decisions and acts by the Commission upon undertakings’ requests, and grant revenues received from foreign sources in line with the payment dynamics set out in the Grant agreement between the Royal Norwegian Ministry of Foreign Affairs and

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018 the Commission for Protection of Competition of the Republic of Serbia, signed on November 1, 2017.

Table 2: Comparative overview of the revenues

Year Increase REVENUES 2017 2018 (2018/2017) Realized Planned Realized abs. %

OWN REVENUES 419,629,135 355,515,250 465,059,503 45,430,368 10.82

REVENUES FROM THE PROJECT 7,497,735 7,497,735 MISCELLANEOUS AND OTHER REVENUES 225,473 191,369

TOTAL REVENUES 419,629,135 355,515,250 472,782,711 53,119,472 12.66

As in previous years, the revenues generated by the Commission in the exercise of its competences in the current year were sufficient to finance the work of the Commission and generate a certain excess of revenue over expenses to be transferred into the Budget account of the Republic of Serbia.

Chart 1: Conditioning revenues on the number of notified mergers

ПриходиRevenues - in millions- мил рсд of dinars - -

+13% (53.1m)(52,9mil) +17% (59.7m) +17% (59,7mil)

472,8472,6 419.6419,6 359359,9.9 171 138 111

2016 2017 2018 RevenuesПриход БројNumber пријављених of notified mergers концентрација

The Commission revenue growth in 2018 is the result of the increased number of notified mergers.

In 2018, the revenues realized of the Commission have reached a 112.61% level year-over- year, increasing by 53,119,472 dinars in nominal terms.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Pursuant to Article 31 and Article 32 of the Law on Protection of Competition, the Commission revenues are secured from fee revenues generated from activities relating to issuing decisions and acts by the Commission upon undertakings’ requests, pursuant to the Law.

The Commission revenues of 472.78 million dinars are generated from the following sources:

1. Fee revenues from issuing acts from the Commission competence in the amount of 465.06 million dinars , accounting for 98.37% of the total Commission revenues, and which are realized through: - Fee revenues from issuing decisions on merger approvals in summary or investigation procedure and other acts in merger control proceedings, which represent the most significant revenues of the Commission, whose share in total revenues of the Commission is 97.68%. - Fee revenues from issuing decisions on requests for individual exemption of restrictive agreements from prohibition , approving or not approving the exemption, whose share in total revenues is minimal, amounting to about 0.33% of total revenues . - Fee revenues from issuing acts in relation to Article 132(10) of the Law on Bankruptcy prescribing the sale of all assets of the bankruptcy debtor or of its discrete units, and from issuing acts in relation to Article 157(3) of the Law on Bankruptcy prescribing the measures provided in the reorganization plan, concerning aspects relating to the implementation of said law, whereas their share in total revenues is 0.36% . 2. Grant revenues from foreign sources in the amount of 7.49 million dinars, whose share in total revenues is 1.59% 3. Miscellaneous and other revenues in the amount of 225,473 dinars, whose share in total revenues is 0.05%.

Chart 2: Structure of own revenues

СтруктураStructure сопствених of own revenues прихода - -in % %- -

48% 61%

52% 39%

2017 2018

RSDДинарски revenues FXДевизни revenues

The share of RSD and FX revenues in total revenues is 39% and 61%, respectively.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The fee revenues from issuing decisions on merger approvals in 2018 are mainly realized through payments made by foreign merger applicants, which caused the above-presented revenue structure of the Commission.

4.2. EXPENDITURES

The expenditures of the Commission in 2018 amounted to 227.7 million dinars.

Table 3: Comparative overview of the expenditures

INCREASE SHARE (%) IN REALIZED, PLANNED, REALIZED, CONTO DESCRIPTION 2018/2017 TOTAL 2017 2018 2018 (%) EXPENDITURES

411 WAGES AND ALLOWANCES 112,678,795 141,099,310 124,220,541 10.2% 54.6% SOCIAL CONTRIBUTIONS PAID BY THE 412 20,492,846 27,300,956 22,731,899 10.9% 10.0% EMPLOYER COMPENSATIONS PROVIDED UNDER THE 413 260,764 497,000 278,168 6.7% 0.1% RULEBOOK 414 SOCIAL GRANTS TO THE EMPLOYEES 1,395,141 3,650,000 1,630,533 16.9% 0.7%

415 COMPENSATIONS FOR EMPLOYEES 1,557,926 2,419,000 1,675,814 7.6% 0.7% REMUNERATIONS, BONUSES AND OTHER 416 8,588,726 11,420,000 11,126,472 29.5% 4.9% SPECIAL EXPENSES 421 STANDING EXPENSES 18,997,799 21,392,500 18,349,488 -3.4% 8.1%

422 TRAVEL COSTS 2,354,201 5,645,500 2,624,006 11.5% 1.2%

423 CONTRACT SERVICES 10,546,298 32,520,942 14,089,389 33.6% 6.2%

424 SPECIALIZED SERVICES 391,010 500,000 453,900 16.1% 0.2%

425 CURRENT OVERHAULING AND MAINTENANCE 169,280 1,260,000 109,622 -35.2% 0.0%

426 MATERIAL 3,411,948 5,835,000 2,487,521 -27.1% 1.1%

444 ANCILLARY COSTS OF BORROWING 0 1,800,000 120,024 - 0.1%

462 INTERNATIONAL MEMBERSHIP DONATIONS 0 1,000,000 0 - -

465 OTHER GRANTS AND TRANSFERS 12,845,601 19,201,141 14,372,977 11.9% 6.3%

482 TAXES, COMPULSORY TAXES AND FINES 23,783 1,000,000 317,542 1235.2% 0.1%

512 MACHINES AND EQUIPMENT 1,556,137 14,812,500 11,910,914 665.4% 5.2%

515 INTANGIBLE ASSETS – SOFTWARE 600,000 2,900,000 1,196,390 99.4% 0.5%

TOTAL EXPENDITURES 195,870,255 294,253,849 227,695,199 16.2%

All main headings relating to the revenues generated are at the level or below the planned amounts for 2018.

In 2018, the Commission expenditures have reached a 116.25% level year-over-year, increasing by 31,824,945 dinars in nominal terms.

The biggest share in total expenditures of 54.6% relates to the wages and allowances with the social contributions paid by employees. The share of Gross II wages that also include the social contributions paid by the employer has reached a level of 64.5% of the Commission total expenditures. Relative to the previous year, the wage costs have increased by 10.2%.

The increase in wage costs against 2017 was conditioned by the new staff hiring in the Administrative and Professional Service of the Commission. The wage growth rate is smaller

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

than the number of newly hired staff. The number of employees in 2018 was increased by 17.0%. The other employee-related costs are also proportionally increased.

These expenditures remained below the 2018 planned level by 11.96%.

At the same time, the average salary per employee has not increased significantly due to the implementation of the provisions of Law on Temporary Regulation of Salary i.e. Wages and other Steady Income Calculation and Payment Bases of Public Fund Users (Official Gazette of the RS 116/14) and amendments to the Labor Law (Official Gazette of the RS 24/2005, 61/2005, 54/2009, 32/2013 and 75/2014).

The standing expenses represent outlays for the lease of business premises, phone and postal services, payment transaction costs, and have a share of 8.1% in total expenditures. Relative to the previous year, these expenses are reduced by 650,000 dinars.

Budget transfers – under the provisions of the Law on Temporary Regulation of Salary i.e. Wages and other Steady Income Calculation and Payment Bases of Public Fund Users, the Commission has made payments into the Budget account of the Republic of Serbia in the amount of 14.37 million dinars in 2018, accounting for 6.3% of the Commission total expenditures.

The contract services relate to expenditures and outlays for professional service contracts, compensations for the provision of temporary and periodical jobs, printing services, professional education and training services, translation, media monitoring services, software development and maintenance services, publication of tenders, organization of an international conference, catering services, as well as allowances for the Commission Council members. These expenses are realized in the amount of 14.09 million dinars, accounting for 6.2% of the Commission total expenditures.

The increase in these expenses against the previous year is directly related to the implementation of the project “Increasing economic growth through support to the promotion of competition policy”, supported by the Kingdom of Norway. The total amount of approved and spent Project funds allocated for the contract services is 2,990,796 dinars.

The share of the costs of material in total expenditures is 1.1% , and has remained below the realized amount of funds in 2017 by 27.1%, owing to the utmost rational spending policy and overall savings in various office materials and other overheads.

The expenditures under the conto 512 – Machines and Equipment have increased almost seven-fold in 2017. A significant share of this increase is caused by the procurement of forensic hardware and software, supported by the Kingdom of Norway.

Other expenditures account for 8.5% of the Commission total expenditures, and relate to the other expenditures for employees, travel costs (1.2% of the total expenditures), current overhauling and maintenance, and other costs.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 3: Expenditure structure

РасходиExpenditures - структура – structure - in % - MATERIAL МАШИНЕMACHINES И ANDОПРЕМА EQUIPMENT - % - МАТЕРИЈАЛ 1.1% 5,2% 5.2% 1,1%

OTHER EXPENSES ОСТАЛЕOTHER ДОТАЦИЈЕ GRANTS AND И ОСТАЛИ ТРАНСФЕРИTRANSFERS ТРОШКОВИ 8.5% 6,3% 6.3% 8,5%

CONTRACT SERVICES УСЛУГЕ ПО УГОВОРУ 6,2%6.2%

СТАЛНИ ТРОШКОВИ STANDING EXPENSES 8,1% 8.1% WAGES AND ALLOWANCESЗАРАДЕ (with И ДОДАЦИ the social contributions paid(са by доприносима the employer) на 64.6%терет послодавца) 64,6%

EXCESS OF REVENUE OVER EXPENSES

Table 4: Excess of revenue

REALIZED INCREASE In nominal 2017 2018 % terms REVENUES 419,663,239 472,782,711 12.66% 53,119,472

EXPENSES 195,870,255 227,695,199 16.25% 31,824,944 NEGATIVE FX TRANSLATION -26,415,412 -1,858,825 -92.96% 24,556,587 EXPOSURE EXCESS OF REVENUE 197,377,572 243,228,687 23.23% 45,851,115

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 4: Excess of revenue

ExcessВишак of revenueприхода - мил рсд - +13%+13% (53,1мил) (53.1m) - in millions of dinars -

473 420 +16%+16% (31.8m)(31,8мил) +23% (45.9m)(45,9мил)

228 243 196 197

RevenuesПриходи ExpendituresРасходи ExcessВишак of прихода revenues

2017 2018

The excess of revenue over expenses is increased by 45,851,115 dinars, representing an increase of 23.2% compared to the previous year.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Table 5: Income statement 2018

REALIZATION – INCOME STATEMENT 2018

REVENUES AMOUNT EXPENDITURES AMOUNT

REVENUES 472,782,711 EXPENDITURES 227,695,199

742321 – FEE REVENUES (1+2+3) 465,059,503 CLASS 4 (1+2+3+4+5+6+7+8+9+10) 214,587,895

1. decisions in merger cases 461,795,973 1. total labor costs 161,663,425 2. opinions with regard to the Law on 1,703,379 2. standing expenses 18,349,488 Bankruptcy 3. decisions in restrictive agreement 1,560,151 3. travel costs 2,624,006 cases 731121- CURRENT GRANTS FROM 7,497,735 4. contract services 14,089,389 FOREIGN SOURCES 744 - POSITIVE FX TRANSLATION 0 5. specialized services 453,900 EXPOSURE 771 - MISCELLANEOUS AND OTHER 225.473 6. investment maintenance 109,622 REVENUES

7. material 2,487,521

8. ancillary costs of borrowing 120.024

9. taxes, compulsory taxes and fines 317.542

10. grants and budget transfers 14,372,977

CLASS 5 (11+12) 13,107,304

11. fixed assets procurement 11,910,914

Negative FX translation exposure -1,858,825 12. software purchase 1,196,390

TOTAL 470,923,886 TOTAL 227,695,199

EXCESS OF REVENUE OVER EXPENSES 243,228,687

4.3. BUDGET PAYMENTS

If based on the annual statement of revenue and expense is determined that the total generated revenues of the Commission are exceeding the expenses realized, and following the allocation of funds for a contingency fund, the difference is paid into the budget of the Republic of Serbia.

In 2018, the Commission has transferred 50.66% of the excess of revenue over expenses generated in 2017 into the Budget account of the Republic of Serbia, that is, 100.00 million of dinars, while the remaining 49.34% is allocated for the contingency fund.

Since 2006, the Commission has transferred a total of 947,811,465 dinars from the excess of revenue over expenses into the Budget account of the Republic of Serbia.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 5: Funds transferred into the Budget account of the Republic of Serbia, by years

УПЛАТЕBUDGET У TRANSFERS БУЏЕТ ИЗ ОСТВАРЕНОГFROM THE EXCESS ВИШКА OF REVENUE ПРИХОДА - мил рсд - - in millions of dinars -

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

140 120 98 100 95 91 95 100 78 69 57

28 17

Based on the 2018 final statement of account, funds in the amount of about 140 million of dinars will be transferred into the Budget account of the Republic of Serbia.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

5. COMMISSION ACTIVITIES IN ACCESSION NEGOTIATIONS WITH THE EUROPEAN UNION

5.1. RELATIONS WITH THE EUROPEAN UNION

The Commission is active in the accession negotiations of the Republic of Serbia with the European Union and provides a considerable contribution to the country’s progress in terms of regulatory compliance with the EU acquis in relevant areas and ensuring the adequate implementation of the Stabilization and Association Agreement (SAA) with regard to the implementation of competition regulations and rules.

In addition to the Negotiating Group 8: Competition Policy, the Commission representatives also take an active role in drafting materials for the negotiation procedure in the following Negotiating Groups:

Chapter 5: Public Procurements, and Chapter 23: Justice and Fundamental Rights.

In addition to the aforementioned groups where the Commission participates a member, designated representatives of the Commission also participate in the work of the Negotiating Groups for Chapter 10: Information Society and the Media, Chapter 14: Transport Policy, and Chapter 15: Energy Policy, in addition to drafting materials for meetings of the EU/Serbia Subcommittee for Economic and Financial Issues and Statistics.

5.2. ASSUMING COMMITMENTS FROM THE STABILIZATION AND ASSOCIATION AGREEMENT AND COOPERATION WITH EU INSTITUTIONS

The Commission acts in accordance with Article 73 of the SAA in its work, which regulates the competition policy area. Pursuant to said provisions, the Commission is required to implement criteria resulting from the implementation of EU competition rules when establishing the infringement of competition (particularly from articles of the Treaty on the Functioning of the European Union that regulate restrictive agreements and abuses of dominance), and from interpretive instruments adopted by EU institutions, but only in cases of undertakings’ behaviors that affect the trade between the Republic of Serbia and EU.

In terms of assuming commitments under the SAA relating to regulatory compliance, the Law and regulations enacted pursuant to the Law are considerably harmonized with the EU acquis, reconfirmed in the annual EC Progress Reports on Serbia. The Commission continuously participates in the work of the Subcommittee on Internal Market and Competition, established in accordance with the SAA provisions, whose competence is to monitor the implementation of obligations under the SAA in these areas.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

5.3. EC PROGRESS REPORT ON SERBIA – CHAPTER 8: COMPETITION POLICY

The screening process for Chapter 8: Competition Policy (including market liberalization and state aid) within the EU accession process is implemented during 2014. In accordance with the current screening results for Chapter 8: Competition Policy, no criteria relating to competition policy is identified that would need to be fulfilled for the purpose of opening this chapter.

In mid-June 2018, the Subcommittee meeting on Internal Market and Competition took place in Belgrade. On the occasion, President of the Commission Dr Miloje Obradović informed the European Commission representatives about all activities related to the implementation of the Law on Protection of Competition, as well as on the degree of competition policy regulatory compliance with EU acquis, which complies with the commitments of the Republic of Serbia from Article 73 made under the SAA. Also, the President presented information on competition law and policy enforcement results achieved in the previous period, noting the increasing number of opinions delivered by the Commission that are being accepted by the executive branch, which remains important in the context of ensuring a level playing field for all undertakings.

During the Subcommittee meeting, it was stated that Serbia is keeping track of the on-going EU development trends in the competition policy field and endeavors, as much as possible, to align its standards with the EU. The next Subcommittee meeting on Internal Market and Competition is scheduled for June 4, 2019, in Brussels, when the Commission will present its work, according to the established principles, on further regulatory harmonization with EU acquis, competition enforcement results and activities on further improvement of the Commission administrative capacities.

During 2018, the Commission regularly submitted its contributions to the Annual Progress Report on Serbia to the European Commission via line ministries. Submitted contributions related to the Commission’s legislative activity, administrative capacity and decisions in antitrust and merger control proceedings, as well as other activities taken to achieve an efficient implementation of the Law.

Also, the Commission actively cooperates with representatives and experts from the EC Delegation to the Republic of Serbia during particular regulatory analyses. This cooperation is also implemented via the Ministry of European Integration of the Republic of Serbia.

In the EC Annual Progress Report on Serbia, published on April 17, 2018, the following is mentioned:

• legislative framework is broadly in line with the EU acquis communautaire and the SAA, that is, the Law is largely harmonized with articles of the Treaty on the Functioning of the European Union concerning restrictive agreements (Article 101) and abuse of dominant position (Article 102); • the Law envisages ex ante control of merger effects on the state of competition which exceed certain turnover thresholds, following the principles of the EC Merger Regulation; • regulations that ensure the development of fundamental rules and guidelines on how to implement antitrust rules are principally enacted and harmonized with relevant EC regulations and guidelines.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Also, based on the EC assessment, over the past two years since the publication of the previous report, the number of antitrust cases and the relative size and significance of companies under investigation has increased. “The Commission investigations of large private and public companies contributed to improving its credibility and public image. Competition advocacy activities have also increased. The Commission’s decisions have been increasingly upheld by appeal courts; however, the capacity of the judiciary to handle complex competition cases needs to be strengthened significantly”, reads the EC Progress Report on Serbia.

5.4. HARMONIZATION OF NATIONAL REGULATIONS WITH EU ACQUIS COMMUNAUTAIRE

During 2018, the Commission continued with the implementation of activities directed at harmonization of national regulations with the EU acquis Communautaire.

Draft Law on Protection of Competition

The Ministry of Trade, Tourism and Telecommunications continued to implement activities to draft the Draft Law on Protection of Competition. The Commission is included in the Working group through its representatives and in that manner endeavors to secure a new regulatory framework which will ensure increased harmonization with the EU acquis, but also provide adjusted response to specificities of the national market.

During 2018, the Working group for drafting new competition act held several meetings discussing concrete legal solutions, and in particular reviewing new institutes towards regulatory harmonization with the EU acquis.

Noting the specificities of special administrative procedures implemented by the Commission, one important issue discussed by the Working group relates to the scope of the rights of the parties given the principles of the Law on General Administrative Procedure.

Towards finding the best regulatory solutions and given the country-level market specificities, two out of four planned public debates held during 2018 are attended by various stakeholders, organized by the Commission in line with envisaged activities of a project supported by the Kingdom of Norway.

Regulations

In conformity with competences laid down by the Law and the second revised National Programme for the Adoption of the EU acquis, the Commission has drafted and submitted to the Government for consideration and adoption the following regulations:

1. Regulation on agreements on the repair and maintenance of motor vehicles and agreements on the distribution of spare parts for motor vehicles exempt from the prohibition; 2. Regulation on technology transfer agreements exempt from the prohibition; 3. Regulation on agreements between undertakings operating in the rail, road and inland waterways transport sector exempt from the prohibition.

The adoption of the above-listed regulations is expected during 2019.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

6. COMPETITION INFRINGEMENTS

The Law defines the infringements of competition as acts or actions of undertakings that as their purpose or effect have or may have a significant restriction, distortion, or prevention of competition. The forms of competition infringements are restrictive agreements as defined in Article 10 of the Law, and abuses of dominance as defined in Article 16 of the Law.

The efficient implementation of competition policy directly relates to the volume of detected infringements of competition. To this effect, the Commission reacts not only to the submitted initiatives of undertakings and publicly available information, but also through inquiries into certain market segments where it detects elements pointing to potential infringements of competition.

In all cases where the Commission establishes the infringement of competition upon completed investigation procedure, a measure for protection of competition is imposed in the form of a payment commitment. In addition to the mentioned administrative measure that is mandatory in the case of established infringement (under Article 38(3) of the Law), the Commission may also determine measures aimed at removing the infringement of competition, set in the form of behavioral or structural measures. Behavioral measures set against undertakings in order to undertake or prohibit certain behaviors are aimed at the prevention or risk reduction of potential re-occurrence of the same or similar prohibited business practices by undertakings, and in that manner achieve a particular form of prevention.

However, although the Law stipulates the above-mentioned commitments and enforcement options, the Commission remains committed that the principal goal, that is, the objective of its acting is not the setting of administrative measures against undertakings punishable by a fine. For that reason, in its decision-making practice the Commission has also enacted decisions on the suspension of proceedings based on requests of the parties to the proceedings, within the meaning of Article 58 of the Law, relating to those proceedings where it was established, based on market inquiries, that commitments ordered by the Commission can accomplish the goals otherwise needed to be achieved by imposing measures for the removal of infringements of competition.

The Commission monitors and analyzes ex officio the implementation of the measures ordered in a decision on the suspension of proceedings, and in the event giving rise to some of the grounds prescribed by the Law, the investigation procedure relating to the infringement of competition may be continued.

In all cases where the damage to other entities on the market is caused by the established infringement of competition, it is possible to obtain damages but only in a civil procedure before the competent court. Namely, the Commission’s decision that establishes the existence of infringement of competition does not establish whether such damage has occurred or the amount of possible damages, but said needs to be evidenced in a civil action (private enforcement).

An additional administrative measure that the Commission sets – procedural penalty measure, has facilitated, as an efficient mechanism, at establishing the full, complete and relevant facts in all cases of violations of procedural discipline in investigation procedures, committed either

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

by the parties to the proceedings or by the third parties, by not complying with the commitment to cooperate with the Commission. The imposition of this measure has an impact on the more responsible approach and conduct of the parties and other undertakings, based on orders issued by the Commission to submit the required data, which considerably impacts the course and duration of the proceedings and ensures the procedural discipline in cases before the Commission.

6.1. COMPETITION INFRINGEMENT PROCEDURES

In 2018, the Commission had reasonable grounds to believe that the infringement of competition has occurred in 19 cases. By acting ex officio in a total of 27 cases in order to establish the infringement of competition (eight from the previous period and 19 new ones), the Commission has enacted a total of nine decisions, out of which in three decisions has established the infringement of competition, while in three conclusions has suspended further conduct of the Commission. Also, two decisions on the joinder of proceedings are enacted, namely, ordering that five and two proceedings, respectively, will be heard together. As on December 31, 2018, the Commission had 17 open proceedings.

Table 6: Overview of the number and type of proceedings ex officio conducted in order to determine the existence of restrictive agreements / abuses of dominance

DECISIONS OF THE COMMISSION COUNCIL DECISIONS OF THE Carryovers COMMISSION TYPE OF from the Opened PRESIDENT ON Pending 1 INFRINGEMENT previous in 2018 THE JOINDER period OF PROCEEDINGS Decisions on the infringement Suspension proceedings of Closure proceedings of

Abuses of dominance 3 1 1 1 0 0 4

Restrictive agreement 5 18 2 0 3 2 14

8 19 3 1 3 2 TOTAL 18

27 7

1 Single or several decisions can be enacted in an individual proceeding. For instance, in a proceeding conducted ex officio against multiple parties, it can be decided on the suspension of the proceeding against one party, while continuing the proceeding against the others, that is, it is possible to enact a decision establishing the infringement of competition against the remainder of the parties. Also, individual proceedings are joined together in accordance with the provisions of the Law on General Administrative Procedure. Due to the mentioned above, the number of pending proceedings does not represent a difference between the number of cases processed in 2018 and the number of decisions.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

When comparing the 2018 data against data from the previous period, the Commission notes the increase in the number of enacted decisions. This increase has occurred in parallel to the increase in number of initiated proceedings relating to the infringements of competition. This is an indication of significant increase in efficiency in the Commission’s work pertaining to the investigation of infringements of competition.

Chart 6: Number of decisions in ex officio proceedings, 2014-2018

Number of decisions Number of decisions in ex officio proceedings

Number of decisions establishing the infringement of competition

Chart 7: Number of proceedings opened in the reporting period, 2014-2018 (caseload by year, upon the joinder of cases)

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

6.1.1. Cases closed in administrative procedure

Party/ies to the proceeding : B2М d.o.o. Beograd, Grafo Trade d.o.o. Beograd, Trgodunav d.o.o. Beograd, Master Clean Express d.o.o. Palić, AD HI Panonija Pančevo

Type of the infringement of competition : Restrictive agreement – Article 10 of the Law.

Summary of the proceeding and the Commission’s decision: The initiative submitted to the Commission contained allegations of infringements of competition in the public procurement procedure JN 49/16 – Consumables for personal and collective hygiene maintenance in the territory of the Republic of Serbia, published by the Ministry of Defense. Upon collecting relevant documentation, the Commission has found reasonable grounds to believe that undertakings, B2M, Grafo Trade, Trgodunav, Master Clean Express and HI Panonija Pančevo, have set the selling prices and other conditions of trade on the market of public procurement concerned. The investigation procedure ex officio is instituted on May 22, 2017. In order to establish the existence of infringement of competition, the Commission conducted dawn raids on business premises of companies B2M, Grafo Trade, Trgodunav, Cash Flow d.o.o. Beograd, and “Brekpro” d.o.o. Beograd, collected relevant documentation from numerous undertakings, and obtained an evidence adduced by the graphic forensic expert. The Council Decision of November 27, 2017, suspended the proceedings against HI Panonija, while the Council Decision of November 27, 2018, established that the parties to the proceeding have concluded restrictive agreement by setting prices and other conditions of trade, contained in each individual bid. The Decision sets a measure for protection of competition against company B2M, in the amount of 3% of the aggregate annual turnover generated in 2016, amounting to RSD 18,730,440.00, and 2.5% each against the other parties to the proceeding, amounting to RSD 1,728,350.00 (Grafo Trade), RSD 1,842,350.00 (Master Clean Express) and RSD 106,325.00 (Trgodunav).

***

Party/ies to the proceeding : companies Company Auto Čačak d.o.o. Konjevići, Čačak; Ćirinac d.o.o. Beograd; Alpros d.o.o. Beograd; Auto kuća Samardžić d.o.o. Beograd; ABC-Test d.o.o. Valjevo; Auto Centar Cune d.o.o. Zrenjanin; Interauto d.o.o. Čačak; entrepreneur Boris Kuzmanovski – Servis Euro Car, Sremska Mitrovica; d.o.o. AC Intersrem Veternik; GP Motors Auto d.o.o. Lazarevac; Auto Hermes d.o.o. Palić; entrepreneur Lađarac Slobodan – ACL – Autocentar Laćarac, Bačka Palanka; entrepreneur Živica Rusovan – Sole proprietorship Autoservis М&М Novi Sad, Novi Sad; entrepreneur Nenad Radunović - Sole proprietorship Auto-Aca Paraćin; entrepreneur Dragan Trnavac – Trade and services Auto Žoli Požarevac; Marković Auto d.o.o. Aranđelovac; Auto centar Stojanović d.o.o. Beograd; Tomić auto 034 d.o.o.; АKS Drive d.o.o. Šabac; entrepreneur Dragan Marčetić – Zanatska automehaničarska radnja, Pančevo

Type of the infringement of competition : Restrictive agreement – Article 10 of the Law.

Summary of the proceeding and the Commission’s decisions: The Decision of May 31, 2017, enacted by the Commission President, the Commission has initiated proceedings ex officio based on reasonable grounds to believe that companies Auto Čačak, of the one part, and Ćirinac, Euro Car Servis, ABC-Test, Alpros, Interauto, AC Intersrem, AK Samardžić, GP Motors Auto, AC Cune, Auto Hermes, ACL, Autoservis M&M, Auto-Aca, Auto Žoli, Marković

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

auto, AC Stojanović, Tomić auto 034, AKS Drive, and Marčetić Autoservis, of the other part, have set selling prices and other conditions on trade in individual agreements on the public procurement market, that is, public calls (tenders) in the territory of the Republic of Serbia. Upon the completion of procedure, the Commission Council has enacted a decision on September 20, 2018, establishing that the parties to the proceeding have concluded restrictive agreements in 2015 and 2016, setting the resale prices by agreeing on a percentage reduction on the official pricelist when bidding on the public procurement market, that is, public calls (tenders). The failure to act on such ceilings envisaged a financial penalty, but also a financial award for the parties when they reach set ceilings, demonstrate the accuracy of payments and achieve the targets set in the spare part procurement plan.

The Decision sets a measure for protection of competition against Auto Čačak in the amount of 0.22% of the aggregate annual turnover generated in 2016, amounting to RSD 14,885,125.20. The Decision also sets a measure for protection of competition against the other parties to the proceedings in the amount of 0.2% of the aggregate annual turnover generated in 2016, namely: RSD 895,112.00 РСД (Ćirinac), RSD 623,812.00 (AKS Drive), RSD 584,038.00 (ABC-Test), RSD 959,286.00 (Alpros), RSD 651,672.00 (Interauto), RSD 802,420.00 (AC Intersrem), RSD 610,580.00 (AC Stojanović), RSD 385,948.00 (AK Samardžić), RSD 36,132.00 (GP Motors Auto), RSD 357,606.00 (AC Cune), RSD 428,822.00 (Auto Hermes), RSD 15,313.91 (ACL), RSD 58,816.05 (Autoservis M&M), RSD 31,388.00 (Auto-Aca), RSD 28,168.55 (Auto Žoli), RSD 28,132.00 (Marković auto), RSD 186,760.00 (Tomić auto 034), RSD 51,243.69 (Euro Car Servis), and RSD 40,203.26 (Marčetić Autoservis).

***

Party/ies to the proceeding : Distribution System Operator EPS Distribucija d.o.o. Beograd

Type of the infringement of competition: Abuse of dominance – Article 16 of the Law

Summary of the proceeding and the Commission’s decisions : In complying with the Administrative court’s Decision 4 У. 19401/17 of February 23, 2018, in the reopened case before the Commission was established that EPS Distribucija has abused its dominant position on the relevant market of electric power distribution in the territory of the Republic of Serbia, excluding the Autonomous Province of Kosovo and Metohija, by applying dissimilar business conditions to equivalent transactions with respect to variety of undertakings by which individual undertakings are placed in unfavorable position against competitors, and by imposing unfair business conditions. The Commission set a measure for protection of competition against EPS Distribucija in the form of commitment to pay a monetary sum in the amount of 0.75% of the aggregate annual revenue generated in 2015, which amounted to RSD 412,724,767.50, while the deadline for execution of said order was set to six months from the date of receipt of the decision, in addition to a measure for removal of the infringement of competition set against EPS Distribucija, ordering the company to enable all eligible distribution system users to conclude the Electric Distribution System Access Agreements under equal conditions, whether or not they are users that utilize the electric distribution system for further supply of end-users or for their own needs. EPS Distribucija was also ordered that within two-year period from the date of receipt of the decision, to provide newly concluded, as well as annexes to the existing Access Agreements as a proof of the execution of orders relating to the removal of the infringement of competition, and is prohibited to take any further actions that could prevent, restrict or distort competition by abusing dominance.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

***

Party/ies to the proceeding : Sirmiumbus d.o.o. za trgovinu i usluge Sremska Mitrovica

Type of the infringement of competition : Abuse of dominance – Article 16 of the Law

Summary of the proceeding and the Commission’s decision : Based on the Conclusion of September 22, 2017, enacted by the Commission President, the Commission has instituted proceedings ex officio in order to establish the existence of an act of abuse of dominance, effected by charging dissimilar platform ticket prices for international bus lines by the managing controller of the only bus terminus in the City of Sremska Mitrovica. In accordance with the provision of Article 58 of the Law, the party to the proceeding has submitted a request for the suspension of proceedings and the Proposal of commitments that is voluntarily willing to undertake in order to eliminate possible infringements of competition, containing terms and conditions for taking the measure (hereinafter, the Proposal of commitments). In order to remove the potential infringements of competition, company Sirmiumbus has proposed to adopt a new and uniform pricelist of bus station services for all persons, irrespective of whether they are passengers or escorts entering the bus station’s platform areas, thus equating passengers travelling by intercity and international transport, and users traveling with purchased bus tickets at the bus station, on the one hand, and passengers or escorts entering the bus station’s platform areas without purchased bus tickets, on the other hand. The party to the proceeding has also proposed to establish the platform pricing (bus dispatch services) solely depending on the terminal dwell time of busses at the bus station. Company Sirmiumbus undertook to adopt and begin to implement the price list specified within 3 days from the date of delivery of a conclusion on the suspension of proceedings enacted by the Commission, and that the price list specified would continue to be in effect until the bus station costs are considerably increased in cumulative terms, that is, pending the enactment of a rulebook by the competent ministry which would regulate the price ceiling for bus station services. The Commission published on its webpage the Notice on the submission of the Proposal of commitments, inviting all interested parties to submit written remarks, positions and opinions on the proposed commitments no later than 20 days from the date of publication of the notice. Given that no remarks, positions and opinions are presented during the set period, and by assessing that the proposed commitments and deadlines for execution thereof enable the setting up of effective competition on the relevant market, the Commission has adopted the Proposal of commitments and on July 17, 2018, suspended the investigation procedure into the infringement of competition. The Commission monitors the implementation of the commitments taken under a conclusion on the suspension of proceedings, and has ordered company Sirmiumbus to inform the Commission on all amendments/corrigenda to the pricelist of bus station services implemented at the bus station in the City of Sremska Mitrovica, pending the enactment of an act by the Government of the Republic of Serbia based on a proposal made by the ministry in charge of transportation which would regulate the manner of establishing the price ceiling for bus station services.

***

Party/ies to the proceeding: Philip Morris Operations a.d. Niš; Philip Morris Services d.o.o. Beograd; JT International a.d. Senta; British American Tobacco a.d. Vranje; British American

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Tobacco South East Europe d.o.o. Beograd; Imperial Tobacco SCG d.o.o. Beograd; TDR d.o.o. Beograd – in liquidation, and Monus d.o.o. Beograd – Zemun.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceeding and the Commission’s decision: Based on the Conclusion of November 27, 2015, enacted by the Commission President, the Commission has instituted proceedings ex officio in order to investigate the infringement of competition from Article 10 of the Law. The Commission found reasonable grounds to believe that the parties to the proceedings have colluded on changes and amounts of related price changes, the time at which related acts would produce legal effects, that is, when the price changes will be implemented on the market, i.e. have mutually aligned individual behaviors and coordinated their behaviors on the market. In order to determine facts, the Commission has collected, inter alia, extensive documentation from the Tobacco Administration and the parties to the proceedings, and conducted dawn raids on business premises of Philip Morris Services, and British American Tobacco South East Europe. The Commission reviewed the documentation available, data on related market and statements made by all related undertakings, and particularly documents provided by the third parties and state authorities. On the occasion, the Commission assessed the behavior of company Monus in relation to the initiative of individual tobacco industry representatives submitted to state authorities, also aimed at, inter alia, the introduction of regulatory mechanisms as a solution to cigarettes sales at prices lower than the lowest price at the time on the market. In reviewing the case-file documents, and particularly based on the analysis and review of retail prices in the period 2013-2015, the Commission has noted the variation in behavior of company Monus with respect to the behavior of other parties to the proceeding, particularly during and after the “price war”. Accordingly, the Commission found no evidence based on which it would be able to conclude that company Monus had participated in the initiative, and thus the Commission Council has suspended further proceedings on December 3, 2018, based on the assessment that there are no case for further proceedings into the administrative matter concerned against this party to the proceeding.

***

Party/ies to the proceeding : Bar Association of Serbia, Belgrade

Type of the infringement of competition : Restrictive agreement – Article 10 of the Law

Summary of the proceeding and the Commission’s decision : The proceeding ex officio was instituted by the Commission in a conclusion of July 29, 2014, based on the Initiative for the investigation of competition infringement submitted by a natural person, whose identity had been ordered protected in a conclusion on the data protection of August 11, 2014, following a request of the applicant. The Commission established decisive facts in the investigation procedure, based on which it was unable to ascertain the infringement of competition. The Commission closed the proceeding by enacting a decision.

***

Party/ies to the proceeding: Keprom d.o.o. Beograd (Zemun) and 169 other undertakings

Type of the infringement of competition : Restrictive agreement – Article 10 of the Law

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Summary of the proceeding and the Commission’s decision: Based on the Conclusion of August 31, 2018, enacted by the Commission President, the Commission has instituted proceedings ex officio against company Keprom and 170 company’s buyers based on reasonable grounds to believe that the parties to the proceeding have set the selling prices or other conditions of trade given that related agreements contain the provisions establishing the resale prices.

Based on the facts established, the Commission has assessed that the General Purchase and Sale Agreement, filed with Keprom d.o.o. Beograd on August 24, 2015, was concluded with an undertaking with a similar name and identical address as the party to the proceeding. Accordingly, the Commission established that there are no case for further proceedings against Veba farm as a party to the proceedings, and the Commission Council enacted a decision on November 26, 2018, on the closure of proceeding against Pharmacy Veba from Svilajnac.

6.1.2. Pending administrative proceedings – as on December 31, 2018

Party/ies to the proceeding: Serbia Broadband — Srpske kablovske mreže d.o.o. Beograd

Type of the infringement of competition: Abuse of dominance – Article 16 of the Law

Summary of the proceedings to date: Based on the Commission’s merger approval decision subject to conditions, relating to the acquisition of control on the part of company SBB over company Interakivne kablovske objedinjene mreže – I.KOM d.o.o. 2, company SBB has filed the Notification on service price adjustments on January 12, 2018. Based on the notification concerned, company SBB has informed the Commission that as of January 1, 2018, the service fee is increased for 100.00 dinars, that is, to 1,395.00 dinars.

The procurement of new qualitative broadcasting channels offered by the company to its subscribers was mentioned as a reason for the price increase, thus enabling the company to upgrade its programme schedule. It is also stated that the annual inflation rate based on the data provided by the National Bank of Serbia was taken in consideration when enacting the related decision on service price adjustments.

Taking into consideration that based on an in-depth analysis of collected and available data the Commission could not ascertain that the service fee increase for 100 dinars was fully conditioned by the increase in costs, on March 27, 2018, the Commission has instituted proceedings ex officio to investigate the infringement of competition against company SBB in order to determine the existence of an act of abuse of dominance within the meaning of Article 16 of the Law.

During the proceeding, the Commission collected further information which were not in its possession when acting prior to the investigation procedure, and on November 23, 2018, submitted to company SBB the Notification on relevant facts, evidence and other elements on

2 One of the conditions set in the merger approval decision related to the mandatory regular reporting on any changes to the retail price of the basic service package of media distribution services provided by company SBB, as well as on the causes and intensity of said changes, provided during the two-year period from the date of validity of the decision concerned.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

which the decision will be based, with an invitation to make a statement within the given time frame. The statement to the Notification concerned was provided by company SBB on December 24, 2018.

The proceeding before the Commission is pending, available documents are analyzed and procedural steps are taken.

***

Party/ies to the proceeding: Akcionarsko društvo za saobraćajnu delatnost Niš-ekspres Niš

Type of the infringement of competition: Abuse of dominance – Article 16 of the Law

Summary of the proceedings to date: Based on the Conclusion of November 17, 2017, enacted by the Commission President, the Commission has instituted proceedings ex officio in order to establish the existence of an act of abuse of dominance. The Commission found reasonable grounds to believe that the practice of the managing controller of the only bus terminus in the City of Niš, effected by charging dissimilar service prices that disable natural persons (passengers and other persons) to access bus platforms may represent an act of infringement of competition. During the proceedings, the Commission collected documents and statements from the party to the proceedings. The proceeding before the Commission is pending, available documents are analyzed and procedural steps are taken. The party to the proceedings has proposed the suspension of proceeding with a set of commitments that is voluntarily willing to undertake, which were not approved by the Commission Council. The Commission is currently deliberating on the latest proposal for the suspension of proceedings with a proposal of commitments.

***

Party/ies to the proceeding: PUC Gradska toplana Niš

Type of the infringement of competition: Abuse of dominance – Article 16 of the Law

Summary of the proceedings to date: Based on the Report on the audit of financial statements and regularity of operations of the Public utility company Gradska toplana Niš no. 400- 444/2017-06/10 of December 28, 2017, drafted by the State Audit Institution, the Commission found reasonable grounds to believe the existence of competition infringements that as its purpose or effect has or may have a significant restriction, distortion, or prevention of competition, thus has instituted a proceeding on June 5, 2018, by issuing a decision enacted by the Commission President. The fact that the party to the proceeding has set prices of thermal energy supply services in a manner which derogates from the methodology prescribed by the Regulation on the establishment of pricing methodology of the cost of supplying end consumers (Official Gazette of the RS 63/2015) has served as a basis for said presumption, whereas such practice has resulted in an increased amount of the service costs relative to the level that would have resulted from the use of the prescribed methodology, and has established the connection costs to the district heating network in a manner that is not stipulated by the relevant legal framework, and invoiced such costs to end consumers in a manner that could depart from the cost principle. The proceeding before the Commission is pending, available documents collected from a number of undertakings are analyzed and

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

procedural steps are taken. The Commission is currently deliberating on the proposal for the suspension of proceedings with a proposal of commitments.

***

Party/ies to the proceeding: Implek a.d. Beograd, and Kruna-komerc d.o.o. Beograd

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date: The Commission found reasonable grounds to believe that the contractual parties have colluded on commercial and other conditions of trade for the purpose of participating in public procurements, which as its purpose or effect has or may have a significant restriction, distortion, or prevention of competition in the territory of the Republic of Serbia, and has instituted a proceeding against said undertakings.

Namely, the Commission has received an initiative to investigate the infringement of competition, in which was alleged that companies Imlek and Kruna-komerc have infringed the competition from Article 10 of the Law. In order to investigate the merits of claims presented in the initiative, that is, the fulfillment of legal conditions for potential opening of antitrust proceedings ex officio , the Commission has received an agreement on cooperation between said companies and which, inter alia, envisaged the joint analysis of competitive conditions on the public procurement market of milk and dairy products, aimed at setting the price policy and expanding the production portfolio of company Implek and its affiliates, and which, inter alia, has set a mechanism enabling company Kruna-komerc to have a privileged position when making bids in public procurements, and formulated financial incentives as a mechanism that enabled company Kruna-komerc to place more favorable bids against other potential bidders of milk and dairy products of company Imlek and its affiliates.

The proceeding before the Commission is pending, available documents are analyzed and procedural steps are taken.

***

Party/ies to the proceeding: Philip Morris Operations a.d. Niš; Philip Morris Services d.o.o. Beograd; JT International a.d. Senta; British American Tobacco a.d. Vranje; British American Tobacco South East Europe d.o.o. Beograd; Imperial Tobacco SCG d.o.o. Beograd; TDR d.o.o. Beograd – in liquidation, and Monus d.o.o. Beograd – Zemun

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date: Based on the Conclusion of November 27, 2015, enacted by the Commission President, the Commission has instituted proceedings ex officio in order to investigate the infringement of competition from Article 10 of the Law. The Commission found reasonable grounds to believe that the parties to the proceeding have colluded on changes and amounts of related price changes, the time at which related acts would produce legal effects, that is, when the price changes will be implemented on the market, i.e. have mutually aligned individual behaviors and coordinated their behaviors on the market.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

In order to determine facts, the Commission has collected, inter alia, extensive documentation from the Tobacco Administration and the parties to the proceedings, and conducted dawn raids on business premises of Philip Morris Services, and British American Tobacco South East Europe.

The proceeding has been brought before the Commission in 2018, all prerequisite procedural steps are taken for the proper and complete fact-finding, while the Commission has also taken statements from the parties to the proceeding.

On December 3, 2018, the Commission Council enacted a conclusion on the closure of proceedings as regards company Monus. 3

The parties to the proceeding was issued the Notification on relevant facts, evidence and other elements established in the proceeding, with an invitation to make a statement to the Notification within a given time frame.

***

Party/ies to the proceeding: D.o.o. Auto centar Miloš Čačak; Ogi MD Auto centar d.o.o. za proizvodnju trgovinu i usluge; A.d. za prevoz robe i putnika Šumadija transport i održavanje Čačak; D.o.o. za proizvodnju, promet i usluge auto-Jovanović, Konjevići; Bavaria team d.o.o. Čačak; Društvo za usluge tehničkih pregleda Braća Božović 032 d.o.o. Čačak; D.o.o. N&S Auto 032 Čačak; Društvo za proizvodnju usluge i promet autoservis a.d. Čačak; Preduzeće za proizvodnju i promet roba i usluga ANK d.o.o. Preljina; K.d. Ninex-Petrol, Eksport-import Vapa; Društvo auto centar Sviv d.o.o. Čačak.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date: Based on the Conclusion of November 16, 2018, enacted by the Commission President, the Commission has instituted proceedings ex officio in order to investigate the infringement of competition from Article 10 of the Law. The Commission found reasonable grounds to believe that the parties to the proceeding have colluded and fixed prices of roadworthiness tests and vehicle classification services, which may represent an infringement of competition in the form of entering into restrictive agreements from Article 10 of the Law. The proceeding before the Commission is pending, available documents are analyzed and procedural steps are taken.

***

Party/ies to the proceeding: Yuglob d.o.o. privatno preduzeće za spoljnu trgovinu, trgovinu, zastupanje, posredovanje, konsalting i inženjering i usluge, Borča; Samostalna trgovinsko komisiona radnja - Bebi butik Roda Avramović Rade preduzetnik Beograd (Zvezdara); Keprom d.o.o, Beograd (Zemun), Preduzeće za trgovinu i usluge Aksa d.o.o. Beograd; K-Pharma zdravstvena ustanova – apoteka Medicom d.o.o. Šabac; NS Pharm d.o.o. Novi Sad; Zdravstvena ustanova Apoteka Kraljevo; Farmalogist d.o.o. Beograd; Vega d.o.o. Valjevo; Lekovit d.o.o. Šabac.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

3 For more information, see Section 6.1.1.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Summary of the proceedings to date: Based on the Conclusion of April 24, 2018, enacted by the Commission President, the Commission has instituted antitrust proceedings ex officio against Yuglob and Bebi butik Roda, based on reasonable grounds to believe that the parties to the proceeding have agreed on resale price maintenance practices and restricted independent and autonomous business operations related to the price policy. Based on the documentation acquired during the proceeding enabling the Commission to find reasonable grounds to believe on other infringements of competition from Article 10 of the Law, on July 16, 2018, the Commission has instituted four new proceedings ex officio against Yuglob and nine other undertakings. Based on the Conclusion on the joinder of proceedings of September 17, 2018, enacted by the Commission President, all five proceedings are merged into one given their identical legal basis and similar facts. The proceeding before the Commission is pending, available documents are analyzed and procedural steps are taken. One of the acts taken was a dawn raid on business premises of company Yuglob. 4

***

Party/ies to the proceeding: Samostalna trgovinsko komisiona radnja - Bebi butik Roda Avramović Rade preduzetnik Beograd (Zvezdara), Keprom d.o.o. Beograd (Zemun)

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

***

Party/ies to the proceeding: Keprom d.o.o. Beograd (Zemun) and 169 other undertakings

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date: Based on the Conclusion of August 31, 2018, enacted by the Commission President, the Commission has instituted antitrust proceedings ex officio against Keprom and 170 Keprom’s buyers based on reasonable grounds to believe that the parties to the proceeding have colluded on resale prices and other conditions of trade given that the agreements concluded contain the resale price maintenance provisions. Based on the conclusion of November 26, 2018, enacted by the Commission Council, the Commission has closed the proceeding against Pharmacy Veba Pharm Svilajnac. 5 The proceeding against other parties before the Commission is pending, available documents are analyzed and procedural steps are taken.

4 The measure of protection of information from Article 45 of the Law was set in the proceeding. 5 For more information, see Section 6.1.1.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

***

Party/ies to the proceeding: Frozen food industry Frikom d.o.o. Beograd

Type of the infringement of competition: Abuse of dominance – Article 16 of the Law

Summary of the proceedings to date: Following the investigation procedure into competitive conditions on the ice-cream distribution and sales market, analysis of obtained documents and conducted interviews with individual undertakings active on said market, the Commission has obtained knowledge of the facts that company Frikom is taking actions that could be characterized as actions that influence the purchasing behavior of individual buyers. To the best knowledge of the Commission, such actions were particularly directed towards buyers that procure products both from Frikom and other companies that deal with distribution of competitive products – ice-creams, aimed at ensuring the exclusive supply by company Frikom. To the best knowledge of the Commission, the company offers monetary incentives to said buyers in terms of additional rebates and/or monetary payments, particularly since 2014, in order to hinder or interrupt the cooperation with rival producers or ice-cream distributors. The Commission had reasonable grounds to believe that such behavior of company Frikom could have the abusive exclusionary effect towards existing undertakings, that is, could create barriers to entry for new undertakings, based on which the Commission President has instituted proceedings ex officio on May 29, 2017, in order to establish the act of abuse of dominance within the meaning of Article 16 of the Law. In the course of the proceedings conducted so far, the Commission has collected and analyzed information received from the industrial and artisanal ice-cream suppliers, certain number of distributors of said products and selected buyers.

***

Party/ies to the proceeding: GR Sport d.o.o. Sremska Mitrovica; POLANIK Sp. z o.о.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date: Based on the Conclusion of March 28, 2018, enacted by the Commission President, the Commission has instituted antitrust proceedings ex officio against companies GR Sport and Polanik, based on reasonable grounds to believe that the parties to the proceeding have concluded restrictive agreement, previously not notified or exempt from the prohibition in accordance with the Law, and whose notification is considered to be mandatory given the share of related undertakings on the relevant market. The proceeding before the Commission is pending, available documents obtained for a number of undertakings are analyzed and procedural steps are taken.

***

Party/ies to the proceeding: Mobil 3D Cinema d.o.o.; Kulturni centar Inđija

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date: The Commission had reasonable grounds to believe that the parties to the proceeding have infringed the competition, which is an act that as its

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

purpose or effect has or may have a significant restriction, distortion, or prevention of competition, by entering into restrictive agreement that prohibits competitive bidding, and which was not notified or obtained exemption under the antitrust rules by the Commission. Based on the Conclusion of November 8, 2018, enacted by the Commission President, the Commission has instituted antitrust proceedings ex officio , and is currently obtaining documents and information necessary to establish facts in the proceeding.

***

Party/ies to the proceeding: Bora Kečić – specijalni transporti d.o.o.; Union Šped d.o.o.; Bata d.o.o.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date: Based on an initiative, the Commission was informed on alleged infringement of competition on the market of public procurement “Provision of hauling services for the remaining equipment of used excavator and stacker from Germany to Serbia”, published by PE Elektroprivreda Srbije. Based on the Conclusion of November 19, 2018, enacted by the Commission President, the Commission has instituted proceedings ex officio , based on reasonable grounds to believe that the parties to the proceeding, as direct competitors on said public procurement market, have concluded the Joint venture and bidding agreement. The Commission had reasonable grounds to believe that said undertakings, as direct rivals, were able to independently participate in the public procurement procedure, and that therefore existed no reason to conclude the Joint venture and bidding agreement, which suggests that in such manner said undertakings have significantly restricted, distorted, or prevented competition on the relevant market. The proceeding before the Commission is pending, available documents are analyzed and procedural steps are taken.

***

Party/ies to the proceeding: Bora Kečić – vangabaritni transporti d.o.o; Preduzeće za puteve Kragujevac d.o.o; Transportšped d.o.o; „Agrorit d.o.o.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

***

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Party/ies to the proceeding: Preduzeće za promet posredovanje i zastupanje Farmix d.o.o. Beograd; Preduzeće za unutrašnju i spoljnu trgovinu Beohem-3 d.o.o; Beograd (Rakovica); Pharmaswiss d.o.o. preduzeće za proizvodnju, unutrašnju, spoljnu trgovinu i zastupanje Beograd; Makler d.o.o. za obavljanje komercijalnih poslova marketinga i poslova spoljnotrgovinskog prometa Beograd (Vračar)

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date: Based on the Conclusion of March 28, 2018, enacted by the Commission President, the Commission has instituted antitrust proceedings ex officio based on reasonable grounds to believe that the parties to the proceeding have shared the healthcare supply market of Hemophilia medicines within the centralized public procurement system in the period from 2014-2017, which may represent the act of infringement of competition from Article 10 of the Law. As part of this proceeding, the Commission has conducted dawn raids on business premises of all parties to the proceeding. The proceeding before the Commission is pending, available documents are analyzed and procedural steps are taken.

***

Party/ies to the proceeding : Original preduzeće za spoljnu i unutrašnju trgovinu i usluge doo Beograd (Novi Beograd); Mikops doo Export-Import za proizvodnju, trgovinu i usluge Niš; Preduzeće za usluge i trgovinu Birolinija društvo sa ograničenom odgovornošću Beograd (Čukarica); Biro print sistemi d.o.o. Beograd-Savski venac; Preduzeće za trgovinu i usluge Dikti Line d.o.o; Beograd (Vračar), Društvo za spoljašnju i unutrašnju trgovinu Birodeveloping doo Niš; Društvo za proizvodnju, promet i usluge Birotehnika Export-Import doo Jagodina; Konica Minolta poslovna rešenja SE d.o.o. Beograd.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date : Based on the Conclusion of May 28, 2018, enacted by the Commission President, the Commission has instituted antitrust proceedings ex officio. Based on the Conclusion of October 10, 2018, the Commission has instituted antitrust proceedings ex officio against company Konica Minolta poslovna rešenja SE, and the Conclusion on the joinder of proceedings. The Commission had reasonable grounds to believe that the parties have agreed on collusive schemes when bidding in public and other procurements of office equipment and maintenance of said equipment manufactured by Konica Minolta, and in that manner shared the public and other procurement markets. On May 28, 2018, the Commission has conducted dawn raids on business premises of five undertakings. The Commission currently is establishing the decisive facts in this proceeding.

***

Party/ies to the proceeding : MasterCard Incorporated, 2000 Purchase Street, Purchase New York 10577, USA, MasterCard International Incorporated, 2000 Purchase Street, Purchase New York 10577, USA i Mastercard Europe S.p.r.l, Chaussee de Tervuren 198A, V-1410 Waterloo , Белгија.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Summary of the proceedings to date : Based on the conclusion of September 14, 2018, enacted by the Commission President, the Commission has instituted antitrust proceeding ex officio , following an initiative filed by the Association of Bank Clients Efektiva, Belgrade. The Commission had reasonable grounds to believe that Mastercard payment card organization, as a form of associated undertakings, sets the fallback multilateral interchange fees unjustifiably high and, in the absence of bilateral agreements, obligates all Mastercard member banks to apply interchange fees in the set amount by default as fallback to each POS payment card transaction in the Republic of Serbia. By setting the fallback interchange fees for Mastercard payment card transactions unjustifiably high, Mastercard payment organization has exerted an influence on the merchant service charge increase, charged to merchants for accepting a card for payment, since the interchange fee is transferred to merchants via a merchant service charge. The parties have submitted a proposal of commitments that are voluntarily willing to undertake in order to eliminate possible infringements of competition. The Commission is currently deliberating on the proposal of commitments.

***

Party/ies to the proceeding : VISA Incorporated, 900 Metro Centre Boulevard, Foster City, California, USA, VISA International Service Association, 900 Metro Center Boulevard Foster City, CA 94404, USA i VISA CEMEA Holdings Limited, 100 New Bridge Street, London, United Kingdom, EC4V 6JA.

Type of the infringement of competition: Restrictive agreement – Article 10 of the Law

Summary of the proceedings to date : Based on the conclusion of November 2, 2018, enacted by the Commission President, the Commission has instituted antitrust proceeding ex officio , following an analysis of the competitive conditions on the payment card market in the territory of the Republic of Serbia. The Commission had reasonable grounds to believe that Visa payment card organization, as a form of associated undertakings, sets the fallback multilateral interchange fees unjustifiably high and, in the absence of bilateral agreements, obligates all Visa member banks to apply interchange fees in the set amount by default as fallback to each POS payment card transaction in the Republic of Serbia. By setting the fallback interchange fees for Visa payment card transactions unjustifiably high, Visa payment organization has exerted an influence on the merchant service charge increase, charged to merchants for accepting a card for payment, since the interchange fee is transferred to merchants via a merchant service charge. The parties have submitted a proposal of commitments that are voluntarily willing to undertake in order to eliminate possible infringements of competition. The Commission is currently deliberating on the proposal of commitments.

6.1.3. Monitoring of the proper implementation of commitment decisions

Party/ies to the proceeding : Public utility company Infostan tehnologije Beograd

Type of the infringement of competition : Abuse of dominance – Article 16 of the Law

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Description: Based on the Conclusion of August 15, 2016, enacted by the Commission Council, the Commission has suspended the investigation procedure against PUC Infostan. Pursuant to Paragraph 3(1) of the Conclusion, Infostan has committed to include the provision of new commercial services on invoices from the system of consolidated collection of payments, only following the request of users, that is, citizens of the City of Belgrade included in the system of consolidated collection of payments for the provision of utility services, while the activity can be solely done in two possible ways: a) based on a written consent of users, provided by filling out a predesigned form attached to the offer and submitted by the citizens to Infostan; b) by sending an information to users attached to the offer, informing said users that only by executing the payment from the special payment slip, the consent for enlisting particular items into the item list of the Infostan utility invoice shall be provided. Pursuant to Paragraph 3(5) of the Conclusion, Infostan has committed to submit to the Commission every subsequent contract concluded with a third party interested for the use of Infostan’s commercial services (forwarding offers, consolidated collection, etc.), with the request for opinions. The three-year period prior to the date of receipt of the Conclusion is set in relation to this commitment.

Having regard to the above-mentioned Conclusion, PUC Infostan has addressed the Commission with a request for the provision of opinion relating to the model agreements on enlistment of building management and maintenance costs in the system of consolidated collection of payments.

Based on the documents submitted, the Commission has established that entering into agreements based on the models provided does not represent an antitrust concern, which previously caused the opening of antitrust proceedings and suspension of related proceeding based on a commitment decision. According to the Commission, the model agreements would enable residential communities to avail of the rights provided for under the Law on Housing and Building Maintenance, based on their own initiative, to compensate PUC Infostan on monthly basis for the provision of said services which would solely relate to the members of those residential communities.

The Commission retains the right to take measures compatible with competition act in the case of the essential requirement and changes on the relevant market or amendments to the model agreement, and to arrive at different conclusions.

***

Party/ies to the proceeding : Public utility company Infostan tehnologije Beograd

Type of the infringement of competition : Abuse of dominance – Article 16 of the Law

Description: As mentioned previously, based on the Conclusion of August 15, 2016, enacted by the Commission Council, the Commission has suspended investigation procedure against Public utility company Infostan, and adopted a commitment decision.

Having regard to the above-mentioned Conclusion, PUC Infostan has addressed the Commission in 2018 with an additional request for the provision of opinion relating to the model agreements on enlistment of building management and maintenance costs in the system of consolidated collection of payments.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Based on the analysis of submitted documents, the Commission has established that presented model agreements do not fully correspond to the model agreements which were cleared in the previous request, and that entering into such agreements based on the models provided represents an antitrust concern under Article 16 of the Law, causing the Commission to reopen the proceeding that was previously suspended by the Conclusion.

6.2. INDIVIDUAL EXEMPTIONS OF RESTRICTIVE AGREEMENTS FROM PROHIBITION

During 2018, the Commission has received 12 requests for individual exemption of restrictive agreements from prohibition. Based on a total of 23 cases (nine carryover cases from the previous period and 14 new ones), the Commission has enacted 22 decisions, out of which 17 decisions have granted individual exemption of restrictive agreements from prohibition. Based on five decisions, the Commission has suspended proceedings. As on December 31, 2018, the Commission had one pending request for exemption, which could not be closed in 2018 since the requests have been filed towards the year end. No legal actions were taken before the Administrative court based on the Commission’s decisions relating to individual exemptions of restrictive agreements from prohibition.

Table 7: Structure of the acting on requests for individual exemption of restrictive agreements from prohibition

Requests Carryovers DECISIONS for from the Filed in Pending individual previous 2018 Approval Closed Approval cases exemption period granted proceedings rejected 9 14 17 5 0 TOTAL 1 23 22

When comparing the 2018 data with previous year's data, it can be noted that the Commission has further improved its efficiency in bringing proceedings to an end, instituted upon requests of the parties for individual exemption of restrictive agreements from prohibition, with respect to the total number of this kind of proceedings per annum.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 8: Clearance rate

6.2.1. Completed proceedings of individual exemption of restrictive agreements from prohibition, as on December 31, 2018

Parties to the proceeding – applicants : S.C. Michelin Romania S.A. Bucharest; Raj trans d.o.o. Kragujevac; SZR Adam Beograd; Top stop auto d.o.o. Novi Sad; Foka d.o.o. Niš 6

Type of the agreement and brief description : Vertical agreement. The subject-matter of the request relates to retail service agreements which more closely regulate the relationship between Michelin, of the one part, and partners, of the other part, in terms of quality labels, financial incentives, etc.

The Commission’s decision: On February 27, 2018, the Commission Council has enacted four decisions granting the exemptions of restrictive agreements from prohibition, due to expire on December 31, 2022.

***

Parties to the proceeding – applicants : STIHL d.o.o. Beograd; Bojana Mijić PR popravka ostalih ličnih predmeta i predmeta za domaćinstvo Moto Servis BMS Sombor

Type of the agreement and brief description : Vertical agreement. The request for individual exemption of restrictive agreement from prohibition relates to the Annex on accession to the Selective distribution agreement of STIHL and VIKING products of October 21, 2016. The agreement relates to the product portfolio of a subsidiary company of a leading German and global manufacturer of handheld garden, residential lawn and forestry mowers, including chainsaws, trimmers, pressure washers, mowers, etc. under STIHL and VIKING brands (Stihl

6 Four proceedings based on four requests for individual exemption of restrictive agreement from prohibition.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

International GmbH), which places its product portfolio on the market of the Republic of Serbia within the selective distribution system via small trade or craft shops predominately.

The Commission’s decision: The Commission has enacted a decision granting the exemption of restrictive agreement from prohibition, due to expire on December 31, 2018.

***

Parties to the proceeding – applicants : Elixir Prahovo d.o.o. Prahovo, Elixir Fosfati d.o.o. Šabac i Phosphea Danube doo Beograd

Type of the agreement and brief description: Vertical agreement. The parties have requested the individual exemption from prohibition of the Agreement on exclusive supply of food grade phosphoric acids. The Agreement regulates the basic volumes of FGPA supplied by Elixir Prahovo to Elixir Fosfati, that is, the quantities that Elixir Fostafi must purchase from Elixir Prahovo (in terms of minimum and maximum quantities).

The Commission’s decision : Based on the Decision of March 12, 2018, enacted by the Commission Council, the restrictive agreement is exempt from prohibition for a period of up to 18 months from the day of delivery of the decision to the parties to the proceeding, provided that the contractual parties submit reports to the Commission during the exemption period, two (2) in total, which would contain information on the competitive conditions on the production and sales market of food grade phosphoric acids in the territory of the Republic of Serbia, information on the increase/decrease in demand for food grade phosphoric acids, information on the quantities of food grade phosphoric acids purchased by Elixir Fosfati and Phosphea Danube, information on the requests to purchase food grade phosphoric acids from company Eliksir Prahovo in excess of 2,500 tonnes of the solution per reporting period, and information on possible amendments to the regulatory framework governing phosphoric acid market and/or food grade phosphoric acids market.

***

Parties to the proceeding – applicants: Roche d.o.o. Beograd; Adoc d.o.o. Beograd

Type of the agreement and brief description: Vertical agreement. The agreement relates to the distribution of pharmaceuticals, that is, appointment of company Adoc to act as an exclusive distributor of company Roche.

The Commission’s decision: Based on the Decision of July 25, 2018, enacted by the Commission Council, the Commission has approved the exemption subject to conditions for a period of up to two years, provided that the parties submit reports containing information on concluded distribution agreements by Adoc with other wholesale pharmaceutical distributors, information on Adoc and other wholesale pharmaceutical distributors’ share in public procurements of pharmaceuticals from the Agreement, and overview of requests for issuing authorizations for the participation in public procurements of pharmaceuticals, issued by company Roche, with a rationale for each case when such requested authorizations were not granted.

***

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Parties to the proceeding – applicants: Roche d.o.o. Beograd; Phoenix Pharmа d.o.o. Beograd

Type of the agreement and brief description: Vertical distribution agreement for pharmaceutical products. The goal of the agreement is setting up of an exclusive distribution for certain pharmaceutical products manufactured by Roche, as defined by the agreement, while Phoenix Pharm is appointed as exclusive distributor. The exemption is requested in the duration of three years.

The Commission’s decision: Based on the Decision of February 19, 2018, the Commission has granted the exemption for a period of up to two years, from the date of adoption of the Decision.

***

Parties to the proceeding – applicants: Novo Nordisk Pharma d.o.o. Beograd and Phoenix Pharma d.o.o. Beograd

Type of the agreement and brief description: Vertical distribution agreement for pharmaceutical products, where company Novo Nordisk Pharma appoints Phoеnix Pharma to be exclusive distributor of pharmaceutical products under the agreement.

The Commission’s decision: Based on the Decision of June 18, 2018, the Commission has granted the exemption for a period of up to 12 months, from the date of delivery of the Decision.

***

Parties to the proceeding – applicants: Public media institution Radio television of Serbia; Telecommunication company Telekom Srbija a.d. Beograd

Type of the agreement and brief description: Vertical agreement on exclusive distribution with elements, to a lesser degree, of horizontal agreement. The Television Programming Distribution Agreement envisages the transfer of rights from RTS to Telekom Srbija to conclude commercial agreements with other operators for retransmission of RTS channels under the Agreement (commercial distribution) and the assignment of rights to Telekom Srbija to retransmit or distribute programs under the Agreement. The Commission has defined two relevant product markets for the decision-making purposes: - wholesale market of commercial distribution of media content, and - retail market of media content distribution within the meaning of regulations governing electronic communications.

The Commission’s decision: Based on the Decision of October 22, 2018, enacted by the Commission Council, the Commission has granted the exemption for a period of up to three years, due to expire on October 1, 2021.

***

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Parties to the proceeding – applicants : British American Tobacco a.d. Vranje; British American Tobacco South East Europe d.o.o. Beograd; and, Centrosinergija d.o.o. Beograd

Type of the agreement and brief description: Vertical agreement. The request for exemption from prohibition related to the Distribution agreement concluded between the parties. The subject-matter of the agreement is the continuation of exclusive distribution of cigarettes and other tobacco and nicotine products in the territory of the Republic of Serbia.

The Commission’s decision : Based on the Decision of December 3, 2018, enacted by the Commission Council, the Commission has granted the exemption for a period of up to three years, from the date of adoption of the Decision.

***

Parties to the proceeding – applicants: A.d. industrija mleka Implek Beograd; Megglе Srbija d.o.o. Kragujevac

Type of the agreement and brief description: The agreement has characteristics of both horizontal and vertical agreements since its subject-matter relates to contract manufacturing services. Due to the damage to Imlek production facilities caused by a fire, the parties have entered into the agreement to regulate terms of contract manufacturing services provided by Meggle for products defined by the agreement under the Imlek brand name.

The Commission’s decision: The Commission has granted the exemption for a period of up to six months, due to expire on April 16, 2019.

***

Parties to the proceeding – applicants: Dunav osiguranje a.d.o. Beograd; Generali osiguranje Srbija a.d.o. Beograd; DDOR a.d.o. Novi Sad

Type of the agreement and brief description: Horizonal coinsurance agreement. The request for exemption from prohibition related to the Consortium agreement on joint bid in public procurement of insurance services, published by PE Elektroprivreda Srbije, for the following types of insurance: worker’s compensation insurance, motor vehicle insurance, property insurance against fire and allied perils, other property insurance, motor third party liability insurance and general liability insurance, and earthquake insurance.

The Commission’s decision: Based on the Decision of October 5, 2018, the Commission has granted the exemption for a period of up to two years, from the date of start of the coverage period. ***

Parties to the proceeding – applicants: Delta DMD d.o.o. Beograd; Diageо brands B.V. Amsterdam, the Netherlands

Type of the agreement and brief description: Vertical agreement on distribution of imported spirits. The agreement appoints Delta DMD as exclusive distributor of whiskey, vodka, gin, rum and liquors produced by Diageo.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The Commission’s decision: The Commission has granted the exemption of restrictive agreement from prohibition, due to expire on June 30, 2021.

***

Parties to the proceeding – applicants: Telenor d.o.o. Beograd, and Serbia Broadband - Srpske kablovske mreže d.o.o. Beograd

Type of the agreement and brief description: Horizontal agreement on business cooperation, with vertical features. The subject-matter of agreement is cooperation between the parties that enable natural persons, users of both Telenor and SBB, to benefit from the use of fixed telephony and mobile services, and internet access and media content distribution services. The Commission has previously, in 2016, granted the exemption of agreement between identical parties, whereas the parties are now requesting the extension of duration of individual exemption.

The Commission’s decision: Based on the Decision of June 4, 2018, the Commission has granted the extension of duration of individual exemption for a period of up to two years.

***

Parties to the proceeding – applicants: A.d. Galenika Beograd; Phoenix Pharma d.o.o. Beograd

Type of the agreement and brief description: Vertical distribution agreement, where Phoenix Pharm is appointed as exclusive distributor of one drug manufactured by Galenika.

The Commission’s decision: Based on a decision, the Commission has granted the exemption of restrictive agreement due to expire on December 31, 2018, provided that the parties inform the Commission on any request or letter of intent of undertakings to procure related drug, on terms and conditions of sale of the drug concerned by Phoenix Pharma, and that Galenika informs the Commission on any request or letter of intent of undertakings to issue an authorization for participation in public procurements, in addition to the list of issued authorizations for participation in public procurements of the drug concerned.

***

Parties to the proceeding – applicants: Merck Sharp & Dohme, the Netherlands; Phoenix Pharma d.o.o. Beograd

Type of the agreement and brief description: Vertical agreement on distribution of pharmaceuticals, appointing company Phoenix Pharma as exclusive distributor of pharmaceuticals manufactured by Merck Sharp & Dohme. Commission has previously, in 2014, granted the exemption of agreement between identical parties, and the extension of duration of individual exemption in 2017. The new request related to the additional extension of individual exemption for a period of two years.

The Commission’s decision: Based on a decision, the Commission has granted the extension of duration of exemption, due to expire on February 26, 2020, provided that the parties submit to

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

the Commission regular reports on concluded agreements on distribution of products by Phoenix Pharma, defined under the Agreement with other wholesale drug distributors; reports on Phoenix Pharma and other wholesale drug distributors’ participation in public procurements of pharmaceuticals under the Agreement; overview of requests for authorization for participation in public procurements of products under the Agreement, issued by company Merck Sharp & Dohme, with a rationale for each case when such requested authorization is not issued, and notification in the case that Merck Sharp & Dohme d.o.o. becomes an authorized wholesaler, immediately upon receipt of relevant permits.

***

Parties to the proceeding – applicants: Dunav osiguranje a.d.o. Beograd; Wiener Stadtische osiguranje a.d.o. Beograd

Type of the agreement and brief description: Horizontal coinsurance agreement – consortium agreement, on joint participation in public procurement of insurance services for the ordering party PUC Vodovod Pančevo, for the following types of insurance: property insurance, liability insurance, motor vehicle insurance and worker’s compensation insurance.

The Commission’s decision: Based on a conclusion, the Commission has closed the procedure based on the assessment that related agreement is not restrictive. The contracting parties could not independently fulfil additional requirements of the public procurement, while are able to qualify if acting in a consortium. ***

Parties to the proceeding – applicants: Wiener Stadtische осигурање a.d.o. Beograd; Uniqa neživotno osiguranje a.d.o. Beograd

Type of the agreement and brief description: Horizontal coinsurance agreement - agreement between a group of bidders on joint participation in public procurement of insurance services for the ordering party - Joint Services Office of the City of Novi Sad, for the following types of insurance: property insurance, motor vehicle insurance and worker’s compensation insurance.

***

Parties to the proceeding – applicants: Wiener Stadtische osiguranje a.d.o. Beograd; Triglav osiguranje a.d.o. Beograd

The Commission’s decision: Based on a conclusion, the Commission has closed the procedure based on the assessment that related agreement is not restrictive. The contracting parties

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

could not independently fulfil additional requirements of the public procurement, while are able to qualify if acting in a consortium.

***

Parties to the proceeding – applicants: Wiener Stadtische osiguranje a.d.o. Beograd; Uniqa neživotno osiguranje a.d.o. Beograd

Type of the agreement and brief description: Horizontal coinsurance agreement – agreement between a group of bidders on joint participation in public procurement of insurance services for the ordering party – Secretariat for Education and Children’s Welfare of the City of Belgrade, for the property insurance of preschool facilities, elementary and high schools, and children’s recreational and residential and convalescent home service facilities.

The Commission’s decision: The Commission has closed the procedure due to abandonment of the parties. ***

Parties to the proceeding – applicants : Hemofarm a.d. Vršac; Goodwil Pharma d.o.o. Subotica

Type of the agreement and brief description : Vertical agreement. The parties have requested the exemption of restrictive agreement from prohibition – Agreement of sale of January 12, 2018, concluded between the applicants. The subject-matter of the agreement is the exclusive sale of ten pharmaceutical products manufactured by Hemofarm, for resale to buyers – pharmacies and hospitals.

The Commission’s decision: The Commission has closed the procedure since the agreement concerned fulfills conditions under the Regulation on agreements between undertakings operating at the different level of production or distribution chain exempted from prohibition (Official Gazette of the RS 11/2010), that is, can be categorized under the group of agreements subject to the provision of Article 13(2) of the Law.

6.2.2. Pending procedures of individual exemption – as on December 31, 2018

Parties to the proceeding – applicants : British American Tobacco a.d. Vranje, British American Tobacco South East Europe d.o.o. Beograd, Štampa sistem d.o.o. Beograd, and Futura Plus a.d. Beograd

Type of agreement filed for exemption: The parties have requested the Commission to exempt the Agreement on point-of-sale merchandising of tobacco products of May 23, 2018. The Agreement has horizontal features, while its subject-matter is regulation of mutual rights and obligations of the parties to the agreement in terms of point-of-sale merchandising of cigarettes and other tobacco or nicotine products of companies British American Tobacco и British American Tobacco South East Europe, at points of sale in the Republic of Serbia managed by companies Štampa sistem and Futura Plus.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

6.3. ANTITRUST INITIATIVES AND OTHER MEANS OF IDENTIFYING INFRINGEMENTS

In order for the Commission to institute proceedings ex officio for purposes of establishing the existence of infringement of competition, the Law stipulates the need to have reasonable grounds to believe that the infringement has occurred. Any person can submit an initiative to institute proceedings ex officio , which is often the case, while the Commission reviews the merits of such initiatives, as in cases when it otherwise obtains knowledge of potential infringement of competition.

In 2018, the Commission has reviewed the merits of antitrust initiatives in 109 cases. Based on conclusions enacted by the Commission President, the Commission has instituted 19 proceedings ex officio in order to establish the existence of infringement of competition. As on December 31, 2018, the Commission had 11 pending cases opened on initiatives, while one case was based on the Commission’s acting on its own initiative.

Table 8: Merits of antitrust initiatives and otherwise obtained knowledge

Carryovers Administered and completed from the In 2018 Pending previous without opening with opening of period of proceedings proceedings

12 97 86 11 TOTAL 12 109 97

When comparing the 2018 data against data from the previous period, the Commission notes significant increase in the total number of cases in which the authority was establishing reasonable grounds to believe that the infringement has occurred, as well as a number of administrated cases in which no such grounds was established.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 9: Overview of the Commission’s activities to establish reasonable grounds to believe the infringement of competition, 2013-2018

6.3.1. Processed initiatives and ex officio actions – instituted proceedings ex officio

During the reporting period, six processed initiatives have resulted in the opening of antitrust proceedings ex officio . In addition to the aforementioned, based on its own initiatives in 5 cases the Commission has conducted activities to establish reasonable grounds to believe the infringement of competition, which resulted in the opening of proceedings ex officio . The initiatives in four cases were submitted by legal entities and in one case the initiative was submitted by a natural person, while one applicant remained anonymous. Based on actions taken in 8 cases, the Commission found reasonable grounds to believe the infringements from Article 10 of the Law – restrictive agreements, while in 3 cases had reasonable grounds to believe the infringements from Article 16 of the Law – abuse of dominance.7

6.3.2. Processed initiatives and ex officio actions – closed without instituted proceedings ex officio

During the reporting period, the Commission has processed a total of 82 initiative based on which no antitrust proceedings ex officio were opened. In addition to said initiatives, in four cases the Commission has looked into the reasonable grounds to believe the infringement of competition based on information and other available data, which have not resulted in the opening of proceedings. 8

7 For more information see section 6.1.2. of the Report. Note that several proceedings can result from one case. 8 The numbers set forth cover processed cases in which the Commission undertook activities to establish reasonable grounds to believe the infringement of competition based on initiatives submitted by applicants and on its own initiatives.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Pursuant to Article 35 of the Law, the Commission institutes antitrust proceedings ex officio when based on submitted initiatives, information and other available data, reasonably assumes the existence of competition infringement, as well as in the case of merger control within the meaning of Article 62 of the Law.

Given that the Commission could not find reasonable grounds to believe the infringements of competition following the processing of initiatives alleging said violations, all non-anonymous applicants have been informed that the legal requirements for the opening of proceedings ex officio have not been met.

Out of total of 97 cases in which the Commission has conducted activities to establish reasonable grounds to believe the infringement of competition, 62 antitrust cases related to alleged infringements under Article 10 of the Law, that is, restrictive agreements, 30 antitrust cases related to alleged infringements under Article 16 of the Law, that is, abuse of dominance, while 5 antitrust cases related to alleged infringements under Articles 10 and 16 of the Law, met cumulatively.

Chart 10: Structure of cases in which the Commission undertook activities to establish reasonable grounds to believe the infringement of competition Potential restrictive agreements

Alleged abuses of dominance

Alleged restrictive agreements and abuses of dominance, met cumulatively

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 11: Structure of alleged infringements of competition indicated in initiatives

The number of natural persons and legal entities submitting the initiatives is nearly equal, and prevalent relative to the number of anonymously submitted initiatives. Namely, legal entities have submitted 46 initiatives, natural persons have submitted 43, while only 12 initiatives have been submitted anonymously.

Chart 12: Structure of initiatives presented to the Commission in order to investigate the existence of infringements of competition

Legal entities

Natural persons

Anonymous applicants

Alleged restrictive agreements Alleged abuses of dominance Alleged restrictive agreements and abuses of dominance, met cumulatively

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 13: Structure of the applicants of initiatives presented to the Commission in order to investigate the existence of infringements of competition

Alleged restrictive Alleged abuses of Alleged restrictive dominance agreements agreements and abuses of dominance, met cumulatively

Natural persons Natural persons Natural persons

Legal entities Legal entities Legal entities

Anonymous applicants Anonymous applicants

The Commission’s acting not resulting in the opening of proceedings ex officio has related, in most cases (36), to public procurements in which the Commission’s powers could relate to restricted agreements between bidders and/or interested parties known as “rigged bids”. In no cases of potential collusion between the ordering parties and specific bidders or setting of award criteria in discriminatory manner and favoring individual bidder(s), the Commission could find reasonable grounds to believe the infringement of competition, that is, could act within the scope of its respective competences.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 14: Representation of public procurement markets in cases closed with no instituted proceedings ex officio

Alleged infringements of competition on the public procurement markets, restrictive agreements Alleged infringements of competition on other markets

Among other product markets in respect of which the Commission undertook activities to establish reasonable grounds to believe the infringement of competition, several can be distinguished, namely, insurance service market, energy, telecommunications, passenger transport, motor vehicle registration service market, wholesale of hygiene products, etc.

6.3.3. Pending initiatives as on December 31, 2018

At the end of the reporting period, as on December 31, 2018, the Commission had a total of 12 pending antitrust initiatives, representing a carryover into the following reporting period.

Out of total number of pending initiatives, two relate to alleged infringements of competition from Article 10 of the Law – restrictive agreements, six relate to alleged infringements of competition from Article 16 of the Law – abuses of dominance, while four relate to alleged infringements of competition from Articles 10 and 16 of the Law, met cumulatively.

One pending initiative relates to alleged infringements in public procurements, while others relate to product markets from the energy, telecommunications, transport, media content distribution, collective protection of copyrights and other sectors.

Legal entities have submitted seven initiatives that are still being reviewed, four initiatives have been submitted by natural persons, while one pending case is based on the Commission’s own initiative. Legal entities have submitted two initiatives relating to alleged infringements from Article 10 of the Law – restrictive agreements, three initiatives have related to alleged infringements from Article 16 of the Law – abuses of dominance, while two initiatives have related to alleged infringements from Article 10 and 16 of the Law, met cumulatively. Natural persons have submitted three initiatives alleging the existence of abuse of dominance, while one initiative has related to alleged infringements of competition from Article 10 and 16 of the Law, met cumulatively.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Table 9: Summary overview of the Commission’s work in the segment of establishing the infringement of competition

Type of the Carryovers from the Opened in Number of Pending as on proceedings previous period 2018 decisions December 31, 2018

Abuses of 3 1 3 4 dominance

Restrictive 8 19 9 14 agreements

Individual exemptions of restrictive 9 14 22 1 agreements from prohibition

Activities undertaken to establish reasonable grounds to believe 12 97 97 12 the infringement of competition based on initiatives and findings

32 131 31 9 131 TOTAL 163

9 The value does not represent a difference between the number of cases and number of decisions given that several decisions can be enacted in one case, that is, one decision can relate to several cases previously joined into one.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

6.4. DECISIONS OF THE COMMISSION ON REQUESTS FOR REPETITION OF PROCEEDINGS

On April 27, 2018, the Commission Council has enacted 14 decisions on the refusal of requests for repetition of proceedings of individual exemption of restrictive agreements from prohibition concluded between TV B92 and K::CN, and TV Prva and K::CN, respectively. The requests for the repetition of proceedings have been submitted by the Cable Operators Association of Serbia – PUKOS, JOTEL d.o.o. Niš. Citadela komunikacije d.o.o. Beograd, Limes telekomunikacije d.o.o. Despotovac, J.M. Oskar d.o.o. Kuršumlija, Pogled telekomunikacije d.o.o. Niš, Pogled blue d.o.o. Niš, Association of Cable Operators for Broadband Services – UKOŠ, Avcom d.o.o. Beograd, Media KDS d.o.o. Sombor, Gimel net d.o.o. Banatsko Karađorđevo, Masko d.o.o. Beograd, Radijus vektor d.o.o. Beograd, and Kablovska BK d.o.o. Banatski Karlovac.

6.5. DECISIONS OF THE ADMINISTRATIVE COURT AND THE HIGH COURT OF CASSATION

6.5.1. Decisions of the Administrative Court in 2018

1. The Administrative Court’s judgment of December 29, 2017 (the judgment was served to the Commission on January 30, 2018), dismissed the action brought by company „Prointer IT Solution and Services“ d.o.o. Beograd, for the annulment of the Commission’s Decision of July 12, 2017, establishing the merger implementation without prior approval of the authority.

2. The Administrative Court’s judgment of February 23, 2018, in the implementation of the High Court of Cassation’s judgment, upheld the action brought by Distribution System Operator “EPS Distribucija” d.o.o. Beograd, and annulled the Commission’s Decision of December 23, 2016, establishing the infringement of competition (abuse of dominance).

3. The Administrative Court’s judgment of March 1, 2018, dismissed the action brought by Bar Association of Serbia for the annulment of the Commission’s Decision of September 29, 2018, rejecting the request for the suspension of proceedings.

4. The Administrative Court’s judgment of March 22, 2018, dismissed the actions brought by company “N SPORT” and company “UNIVERES CO” for the annulment of the Commission’s Decision of December 1, 2017, establishing the infringement of competition by entering into restrictive agreement.

5. The Administrative Court’s judgment of July 20, 2018, dismissed the action brought by company “MASKO” from Belgrade, for the annulment of the Commission’s Decision of April 27, 2018, rejecting the request of the party for the revision of proceedings and application for the declaration of invalidity. The revision of proceedings and declaration of invalidity relate to the Commission’s Decisions on the exemption of restrictive agreements from prohibition, concluded between TV B92 and K::CN, and TV Prva and K::CN.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

6. The Administrative Court’s judgment of September 13, 2018, upheld the action brought by company “RADIJUS VEKTOR” from Belgrade, and annulled the Commission’s Decision of April 27, 2018, rejecting the request of the party for the revision of proceedings and application for the declaration of invalidity, and has referred back the case to the Commission for the re-examination. The revision of proceedings and declaration of invalidity relate to the Commission’s Decisions on the exemption of restrictive agreements from prohibition, concluded between TV B92 and K::CN, and TV Prva and K::CN.

7. The Administrative Court’s judgment of July 6, 2018, upheld the action brought by companies “Inter-mehanika” d.o.o. Smederevo, “MIP-RŠV” d.o.o. Ćuprija, and “Tatravagonka bratstvo” d.o.o. Subotica, and annulled the Commission’s Decision of December 12, 2017, and has referred back the case to the Commission for the reexamination (“Tent” case, restrictive agreement – “rigged bid”).

6.5.2. Decisions of the High Court of Cassation in 2018

1. The High Court of Cassation’s judgment of April 26, 2018, upheld the request of company АММ IMMOVABLES and set aside the Administrative Court’s judgment of October 19, 2017, rejecting the action brought by АММ IMMOVABLES for administrative silence concerning the request for enactment of a decision on the closure of proceedings (“BETECO” case).

2. The High Court of Cassation’s judgment of July 5, 2018, dismissed the request for judicial review – the Administrative Court’s judgment of March 1, 2018, rejecting the action brought by the Bar Association of Serbia for the annulment of the Commission’s Decision of September 29, 2018, rejecting the request for the suspension of proceedings

3. The High Court of Cassation’s judgment of July 11, 2018, dismissed the request of company “Prointer IT Solution and Services” d.o.o. Beograd, for judicial review of the Administrative Court’s judgment of December 29, 2017 (the action was brought for the annulment of the Commission’s Decision of July 12, 2017, establishing the merger implementation without prior approval of the authority).

6.5.3. Pending cases before the Constitutional Court as on December 31, 2018

1. Company Beteco d.o.o. Beograd has brought an administrative-law action for administrative silence (Beteco, Sagoja, AMM Immovables case – “rigged bid”). The Commission has provided the Statement of defence and case files to the Administrative Court. The Administrative Court has subsequently entered the case in the register Ui – enforcement of the Administrative Court’s judgements. The Administrative Court decision is pending.

2. The High Court of Cassation’s judgment of April 26, 2018, has set aside the Administrative Court’s judgment of October 19, 2017 (“Betco” case – action brought by AMM Immovables for administrative silence), and referred back the case to the Administrative Court for re-

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

examination. The Administrative Court action is pending, relating to the action brought by AMM Immovables for administrative silence.

3. Distribution System Operator “EPS Distribucija” d.o.o. Beograd has brought an administrative-law action for the annulment of the Commission’s Decision of June 18, 2018, establishing the infringement of competition in reexamination proceedings (abuse of dominance). The Commission has provided the Statement of defence and case files to the Administrative Court. The Administrative Court decision is pending.

4. The National Coalition for Decentralization from Niš has brought an administrative-law action for the annulment of the Commission’s Decision of June 11, 2018, approving the merger between undertakings created by acquisition of control on the part of company “VINCI Airports Serbia” d.o.o. Beograd over business operations of company “AD AERODROM NIKOLA TESLA”. The Commission has provided the Statement of defence and case files to the Administrative Court. The Administrative Court decision is pending.

5. Company Serbia Broadband – Srpske kablovske mreže d.o.o. Beograd has brought an administrative-law action for the annulment of the Commission’s Decision of October 22, 2018, approving the merger between undertakings created by acquisition of control on the part of company Telekom Srbija a.d. Beograd over business operations of company Kopernikus Technology d.o.o. Beograd. The Commission has provided the Statement of defence and case files to the Administrative Court. The Administrative Court decision is pending.

6. Company “MIMO” d.o.o. Beograd has brought an administrative-law action for the annulment of the Commission’s Decision of September 13, 2018, setting the procedural penalty measure against the party for failure to act on orders of the Commission for the provision of information in antitrust proceedings in “Frikom” case (abuse of dominance). The Commission has provided the Statement of defence and case files to the Administrative Court. The Administrative Court decision is pending.

7. Company “Interauto” d.o.o. Čačak has brought an administrative-law action for the annulment of the Commission’s Decision of September 20, 2018, establishing the infringement of competition (“Auto Čačak” case – restrictive agreement). The Commission has provided the Statement of defence and case files to the Administrative Court. The Administrative Court decision is pending.

6.6. DECISIONS OF THE CONSITUTIONAL COURT IN 2018

The Constitutional Court’s decision Už-9026/2016 of February 28, 2018, rejected the constitutional complaint of the Commission brought against the High Court of Cassation’s judgement Uzp. 197/16 of October 28, 2016 (Beteco, Sagoja, AMM Immovables case – “rigged bid”).

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

7. MERGER INVESTIGATIONS

The Commission decides on the permissibility of concentrations, i.e. mergers in administrative procedures and addresses the rights and obligations of merger participants.

The Law regulates the concept of concentration, i.e. merger and stipulates conditions regarding the obligation of the merger parties to notify the Commission on the transaction, regulates the obligation of the merger parties to interrupt the implementation of related transaction pending the Commission’s decision, in addition to the Commission’s acting on merger notifications. The Law also stipulates the type of decisions that can be enacted by the Commission in merger investigation procedures, decision-makers, deadlines for adopting related decisions, as well as a manner for calculating such deadlines. If the Commission fails to adopt a decision in merger investigation procedure within the statutory period, it shall be considered that the concentration is approved, meaning that there is a rebuttable positive presumption indicating that the “administrative silence” equates to the merger clearance. Despite a constant increase in the number of merger cases every year and short deadlines for deciding on merger notifications, the Commission has not recorded this kind of outcome of merger investigation procedures in its previous practice.

The merger investigation procedure is based on an ex ante merger control. The Commission determines the permissibility of concentration against the criteria laid down in Article 19 of the Law, and accordingly enacts an appropriate decision.

Where, in proceedings instituted on merger notification, the Commission can find reasonable grounds to believe that the merger concerned fulfils the conditions of permissibility in accordance with Article 19 of the Law, it can enact a decision on the approval of concentration in summary procedure. The merger investigation procedures ex officio are regulated under Article 62 of the Law, which more closely regulates the circumstances under which the Commission can conduct such merger investigations. The approval of mergers with conditions is regulated under Article 66 of the Law, stipulating that the Commission can enact a decision on merger clearance and set special conditions, deadlines for execution thereof and control modalities of the implementation of imposed conditions, if based on a statement of the applicant evaluates that the proposed special conditions which the party concerned is willing to accept are suitable for the promotion of favorable conditions of permissibility of concentration from Article 19 of the Law.

In addition to the Law, the normative framework governing merger investigation procedures consists of two regulations, namely the Regulation on the content and manner of submitting merger notifications, and the Regulation on the criteria for definition of the relevant market, as well as the Tariff on the level of compensation for activities within the competence of the Commission for Protection of Competition. Also, rules governing general administrative procedure are implemented in proceedings before the Commission, unless otherwise prescribed by the Law. On its website, the Commission provides instructions on the manner of computing the aggregate turnover of merger participants in cases when the control is acquired over a part of another undertaking, and instructions on the manner of computing the aggregate annual turnovers of affiliated undertakings, in addition to the forms for standard and simplified merger notifications.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The Regulation on the content and manner of submitting merger notifications, enacted in 2016, has significantly streamlined and facilitated the process of filing merger notifications, since it enables undertakings to file a simplified merger notification before the Commission, under certain conditions, and thus to present significantly less data and documentation. In addition to the cost reduction for undertakings, the benefits of this practice also enable the Commission to cut its costs given the increased rational use of its resources. The positive impacts of this regulation have continued to confirm in practice, also evidenced by facts that the majority of investigations in summary procedures in 2018 have been instituted by filing simplified merger notifications – 91.81% of the total number of notifications.

Pursuant to the SAA which stipulates a commitment of proper and effective implementation and enforcement of rights in conformity with the EU acquis, which also means the interpretation of national law in conformity with the EU acquis, the Commission uses the possibility to implement EU rules in said manner when investigating the permissibility of concentrations, which can be seen in a number of its decisions enacted in view of criteria set by EU law (for instance, in terms of criteria governing permissibility, definition of relevant markets or in terms of merger clearances with conditions).

The Commission implements criteria applicable in EU law, particularly under the Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, Official Journal L. no. 24/2004, Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, Official Journal no. C. 95/2008, Commission Notice on restrictions directly related and necessary to concentrations, Official Journal no. C. 56/2005), Commission Notice on the definition of the relevant market for the purposes of Community competition law, Official Journal no. C. 372/1997, and Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, Official Journal no. C. 31/2004). At the same time, the Commission also continuously reviews and considers the European Commission’s decisions and EU case law in terms of implementation of merger control rules.

All decisions on the permissibility of concentrations are publicly available on the Commission’s website, which contributes to increased transparency of the Commission’s work. The Commission publishes redacted versions of decisions, pursuant to the Decision on the manner of publishing decisions and acts, and replacing and/or omitting data (redaction) in decisions and acts of the Commission for Protection of Competition of February 7, 2017, if the protection of information is approved in the case concerned pursuant to Article 45 of the Law.

During 2018, the Commission has received a total of three initiatives, namely: for the investigation of infringement of competition caused by the implementation of a merger, for the investigation of infringement of competition ex officio relating to the merger implementation in breach of the obligation to interrupt said implementation, and for the reexamination of a merger control procedure. The activities on the grounds of submitted initiatives are pending.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

MERGER INVESTIGATION PROCEDURES IN 2018

Number of Type of the procedure proceedings

Mergers approved in summary procedure (type of 158 the act – decision)

Mergers investigated in ex officio procedure (type of the act – decision), out of which: ••• approved with conditions 1 ••• approved without conditions ••• - pending - ••• violation of the law - Closure of merger control procedure due to the abandonment of concentration by the party 1 (type of the act – conclusion)

Refusal to examine merger notifications due to failure to meet revenue thresholds 6 (type of the act – conclusion)

CLOSED PROCEEDINGS, TOTAL 166

CARRYOVERS, 2019 19

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 15: Structure of decisions on the closure of merger control procedures

During 2018, the Commission has received a record number of merger notifications, 171 in total, which represents an increase of 24% relative to the previous reporting period (2017), with a total of 138 merger notifications. The majority of notifications (157, that is 91.81%) is submitted in simplified form, pursuant to Article 3 of the Regulation on the content and manner of submitting merger notifications. Out of the total number of summited notifications in 2018 (171), 131 merger notifications (76.61%) are submitted by foreign legal entities, while 40 merger notifications (23.39%) are submitted by domestic legal entities, that is companies – undertakings registered and operating on the market of the Republic of Serbia. Taking into account this criterion, the structure of merger applicants in 2018 has remained unchanged relative to the previous years.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 16: Structure of merger applicants

Based on the number of submitted merger notifications by the country of origin criterion, the companies from the following countries can be identified: Germany (24), USA (16), the Netherlands (14), Luxembourg (12), and Cyprus (10). Six merger notifications each have been submitted by companies registered in France, Austria, and Croatia, four notifications are filed by Italian companies, while three notifications each are filed by companies from the UK, Slovenia, and Bosnia and Herzegovina, and two each by companies from Montenegro, Korea, China, and Ireland. Companies from thirteen countries have submitted one merger notification each (Bulgaria, Russia, Belarus, Mauritius, Israel, Japan, United Arab Emirates, Australia, Poland, Hungary, Canada, Switzerland, and Ukraine).

Chart 17: Country of origin of merger applicants

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Based on the business activity criterion as an indicator of the most frequent type of notifications, the Commission notes the telecommunications and IT sector with 31 merger notifications, pharmaceutical and food industry with 12 merger notifications each, and chemical industry with 8 notifications. In addition, a significant number of notifications related to the banking sector, real-estate and property management sector, metalworking industry, waste management, business logistics, etc.

Chart 18: Structure of business activities subject to merger notifications

The number of submitted merger notifications in 2018 (171), as well as mergers implemented based on clearances granted by the Commission during the reporting period, indicate the continuation of a potential upward trend in interest of foreign investors to invest in the Serbian economy. During 2018, a change in ownership over certain number of domestic legal entities has occurred, which enabled foreign companies to become, directly or indirectly, their new owners and corporate controllers.

Article 17 of the Law defines cases in which a concentration of undertakings occurs. If we classify the total number of issued decisions on approved concentrations in summary procedure (158) based on this legal criterion, it could be noticed that the biggest number of issued decisions, as in previous years, relates to those cases in which one or several undertakings acquire direct or indirect control over other undertaking or its part (124 decisions, or 78.48%). In the case of joint venture of two or more undertakings in order to establish a new undertaking or to acquire joint control over an existing undertaking that operates on a long-term basis and has all functions of an independent undertaking, a total of 34 decisions are issued (21.52%). Unlike in previous years, the Commission has not decided on any merger in 2018 created pursuant to statutory or other changes in which a merger between undertakings occurs within the meaning of law governing status of companies.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 19: Legal basis of cleared mergers in summary procedure

7.1. MERGERS APPROVED IN SUMMARY PROCEDURE

7.1.1. Mergers created by acquisition of direct or indirect control by one or more undertakings over another or more undertakings or over part or parts of other undertakings (Article 17(1/2) of the Law):

1. Acquisition of direct control on the part of company Knauf International GmbH , FR Germany, over business operations consisting of the production and sale of modular suspended ceilings owned by company Armstrong World Industries , Pennsylvania, which also include operations of its controlled companies in Europe, Africa, as well as in the Middle East and Pacific regions. 2. Acquisition of direct control on the part of Public enterprise “Jugoimport-SDPR”, Republic of Serbia, over Limited liability company “Utva – Avio industrija” Pančevo , Republic of Serbia. 3. Acquisition of individual control on the part of company “OMV Refining & Marketing” GmbH Austria, over an oil terminal located in Lobau, Austria, owned by company “Shell Austria Gesellschaft“ m.B.H. , Austria. 4. Acquisition of individual control on the part of company MOL Serbia d.o.o., Belgrade, over oil terminal facilities currently owned by company Dunav Oil Term d.o.o. from Sremski Karlovci, as well as over a newly founded special-purpose company which will acquire the River port facilities in the Harbor zone in Sremski Karlovci, currently owned by company Naftachem d.o.o., Sremska Kamenica. 5. Acquisition of control on the part of company “TEHNOPAPIR“ d.o.o., Belgrade, over company “ TEHNOPAPIR SERVIS” d.o.o., Novi Sad. 6. Acquisition of individual control on the part of company “ Drakkar Group“ S.A., Belgium, over company “ Nutriad Holding“ B.V., the Netherlands.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

7. Acquisition of individual control on the part of company Sоlford Trading Limited , Cyprus, over target business operations of „Over-the-top” media services platform under registered trademark „ BHOTT TV”, solely owned by company GROHS H&G d.o.o., Bosnia and Herzegovina. 8. Acquisition of control on the part of company „AIK BANKA“ a.d. Beograd , Republic of Serbia, over company “ Gorenjska Banka” d.d. , Slovenia, by purchasing shares. 9. Acquisition of individual control on the part of company Pozavarovalnica Sava d.d. , Slovenia, over company NLB nov penziski fond a.d.. Skopje, N. Macedonia. 10. Acquisition of individual control on the part of company The Walt Disney Company , United States of America, over company Twenty-First Century Fox Inc. United States of America. 11. Acquisition of control on the part of company Naftna industrija Srbije a.d. Novi Sad , over the following petrol stations: 1. Petrol station “Ćele kula”, Niš, and 2. Petrol station “Crveni krst”, Niš. 12. Acquisition of direct control on the part of company Privredno društvo za proizvodnju hleba i peciva Don Don d.o.o. Beograd , over production facilities in Velika Plana owned by Akcionarsko društvo Napredak Beograd – in bankruptcy . 13. Acquisition of individual control on the part of company “ Fabric (BC)” S.r.l. , Italy, over company “ Fedrigoni” S.p.A ., Italy, and its subsidiaries. 14. Acquisition of individual control on the part of company Sоlford Trading Limited , Cyprus, over target business operations of “Over-the-top” media services platform under registered trademark “ IPTV ILIRIA”, solely owned by company Dalex Media Group S.A., Republic of Panama. 15. Acquisition of control on the part of company Laboratoire HRA-Pharma SAS , France, over the global property rights to brand LYSODREN of company Bristol-Myers Squibb Company, USA. 16. Acquisition of indirect control on the part of company KKR & Co. L.P. , United States of America, over the following companies: 1. Unilever BCS Holdings B.V. , the Netherlands, 2. Unilever BCS IP Deutschland GmbH & Co OHG , Germany, 3. Unilever BCS Deutschland Immobilien Leasing GmbH & Co OHG, Germany, and 4. Elanthi S.A., Greece. 17. Acquisition of control on the part of company “ Ferrero International” S.A. , Luxembourg, over business operations of company “ Nestlé USA”, Inc. , United States of America, relating to the production and sale of confectionery products in the United States. 18. Acquisition of direct individual control on the part of company Neregelia Trading Limited , Cyprus, over company Nelo Energy d.о.о. Dobanovci , Republic of Serbia. 19. Acquisition of individual control on the part of company LyondellBasell Industries N.V. the Netherlands, over company A.Schulman Inc. , USA. 20. Acquisition of individual control on the part of company “ VLET Holdings” S.à.r.l. , Luxembourg, over company “ Velvet Care” sp. z. o.o. , Poland, and its subsidiary company “ Velvet Care Professional” sp. z. o.o. , Poland. 21. Acquisition of direct control on the part of company Plastiche S.A. , Luxembourg, over company Bamberger Polymers Corp. , United States of America. 22. Acquisition of direct control on the part of company Privredno društvo za proizvodnju hleba i peciva Don Don d.o.o. Beograd , Republic of Serbia, over a part of company Pekarsko d.o.o. Izvor Paraćin, Republic of Serbia, which may represent an independent business unit.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

23. Acquisition of individual control on the part of company United Media S.à.r.l. , Luxembourg, over the assets of TV channel Srpska naučna televizija , Republic of Serbia. 24. Acquisition of indirect control on the part of company “ JT International Holding B.V.”, the Netherlands, over joint stock companies “Donskoy Tabak”, Russian Federation, and “ Pereslavl Tabak”, Russian Federation. 25. Acquisition of individual control on the part of company Compagnie Générale des Établissements Michelin SCA, France, over company Fenner PLC, United Kingdom of Great Britain and Northern Ireland. 26. Acquisition of individual control on the part of company Daimler AG , FR Germany, over company Inteliligent Apps GmbH , FR Germany. 27. Acquisition of indirect control on the part of company PPF Group N.V. , the Netherlands, via its subsidiary company PPF TMT Bidco 1 B.V. , the Netherlands, over the following companies: 1. Telenor d.o.o. Beograd , and its subsidiary companies and a foundation, 2. Telenor d.o.o. Podgorica and its foundation, 3. Telenor Magyarország Zrt , Hungary, 4. Telenor Real Estate Hungary Zrt , Hungary, 5. Telenor Common Operation Zrt , Hungary, and its branches, 6. Теленор България ЕАД , Bulgaria. 28. Acquisition of control on the part of company Siemens AG , Germany, over newly established company Siemens Alstom S.A., created by merging the mobility business of company Siemens AG comprised of rail traction drives and related service activities and company Alstom S.A., France. 29. Acquisition of control on the part of company “ VINCI Airports Serbia” d.o.o ., Republic of Serbia, over business operations of company “ AD AERODROM NIKOLA TESLA”, relating to management operations at Airport “Nikola Tesla” in Belgrade, Republic of Serbia. 30. Acquisition of direct control on the part of company Унитарное предприятие по оказанию услуг „Велком” , Republic of Belarus, over company Открытое акционерное общество „Витебский областной техно-торговый центр Гарант“ , Republic of Belarus. 31. Acquisition of individual control on the part of company KKR & Co. L.P. , USA, over company Petainer Topco Limited , London. 32. Acquisition of direct control on the part of company BASF SE , Germany, over business operations relating to the production and distribution of vegetable seeds of company Bayer AG , Germany. 33. Acquisition of direct control on the part of company Quinag Acquisition (FDI) Ltd , Mauritius, over company Healthium Medtech Private Limited , India. 34. Acquisition of control on the part of company “ Teva Pharmaceutical Industries Limited”, Israel, over a part of business operations of company “ PGT Healthcare” LLP , United States of America, relating to the production and sales of over-the-counter drugs. 35. Acquisition of direct control on the part of company Elektroprivreda Crne Gore AD – Nikšić, Montenegro, over company Rudnik uglja AD – Pljevlja, Montenegro. 36. Acquisition of control on the part of company The Procter & Gamble Company , United States of America, over the following companies: 1. Merck Selbstmedikation GmbH , Germany, 2. Merck Consumer Health Care Ltd. , England and Wales, 3. Merck Médication Familiale S.A.S. , France, 4. Merck Consumer Health GmbH , Germany, 5. Merck Consumer Health N.V/S.A. , Belgium, and its seven subsidiaries, as well as over global business operations concerning dietetic products and medicaments. 37. Acquisition of direct control on the part of company Ferrero Trading Lux S.A ., Luxembourg, over company Stelliferi & Itavex S.R.L. , Italy.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

38. Acquisition of individual control on the part of company LG Electronics Inc. , Republic of Korea, over company ZKW Holding GmbH , Austria, and over company Mommert Gewerbeimmobilien Verwaltungs GmbH , Austria. 39. Acquisition of control on the part of company “ Triglav INT holdinška družba”, d.d ., Slovenia, over company “ Raiffeisen mirovinsko osiguravajuće društvo” d.d. , Croatia. 40. Acquisition of direct control on the part of company Cheil Germany GmbH , Germany, over company Centrade Integrated S.R.L. , Romania. 41. Acquisition of direct control on the part of company Akcionarsko društvo fabrika konditorskih proizvoda Paraćinka Paraćin , Paraćin, over a part of assets owned by company Nestle Adriatic S d.o.o. Beograd-Surčin , relating to the production of “Cipiripi” brand products, as well as over the intellectual property rights relating to this brand. 42. Acquisition of indirect control on the part of company Assicurazioni Generali S.p.A. , Italy, via its subsidiary companies Generali CEE Holding B.V. , Amsterdam, and Generali Życie Towarzystwo Ubezpiecze ń S.A. , Poland, over companies Concordia Polska Towarzystwo Ubezpiecze ń Wzajemnych , Poland, and Wielkopolskie Towarzystwo Ubezpiecze ń Życiowych i Rentowych Concordia Capital S.A. , Poland. 43. Acquisition of direct control on the part of company Orbico d.o.o. , Croatia, over a part of business operations of company Бьюти-Лайн о.о.о. , Belarus, relating to the wholesale trade of cosmetic products for hair and beauty salons. 44. Acquisition of direct control on the part of company “Mtel” a.d. Banja Luka, Bosnia and Herzegovina, over company Telrad Net d.o.o. Bijeljina, Bosnia and Herzegovina. 45. Acquisition of control on the part of company “ Тelekom Srbija“ a.d.., over company “GO4YU” d.o.o. , Beograd. 46. Acquisition of individual control on the part of company Fabrika stočne hrane De Heus d.o.o. Šabac, over movable and immovable property owned by company HZŽ Komponenta d.o.o. Ćuprija . 47. Acquisition of individual control on the part of company “ Bain Capital Investors” LLC, United States of America, over company “ Gruppo Cordenons” S.p.A. , Italy. 48. Acquisition of direct control on the part of company S&T AG , Austria, over the following companies: 1. Kapsch EOOD , Bulgaria, 2. Foreign Trade Unitary Enterprise Kapsch , Belarus, 3. Kapsch CarrierCom d.o.o. , Croatia, 4. Kapsch DOOEL Skopje , N. Macedonia, 5. Kapsch d.o.o. Beograd , Serbia, 6. Kapsch trgovina d.o.o. , Slovenia. 49. Acquisition of control on the part of company “ Robert Bosch” GmbH , Germany, over company “ KSK Diagnostics” GmbH , Germany. 50. Acquisition of control on the part of company “ Worldline” S.A ., France, over the following companies: 1) “SIX Payment Services” AG , Switzerland; 2) “SIX Payment Services (Luxembourg)” SA , Luxembourg, 3) “SIX Payment Services (Europe)” SA , Luxembourg, and 4) “SIX Austria Holding” GmbH , Austria. 51. Acquisition of direct control on the part of company EKO Serbia a. d. Beograd (Novi Beograd) , over a petrol station owned by Agricultural holding Miloš Simonović, located in Belgrade. 52. Acquisition of individual control on the part of company United Media S.à.r.l. , Luxembourg, over company Direct Media d.o.o. Beograd, including companies Pink M Company d.o.o. Podgorica , Montenegro, and Pink BH Company d.o.o. Sarajevo , BiH. 53. Acquisition of indirect control on the part of company Assicurazioni Generali S.p.A. , Italy, via its subsidiary company Generali СЕЕ Holding B.V. , Amsterdam, over company Adriatic Slovenica Zavarovalna družba d.d. , Slovenia.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

54. Acquisition of direct control on the part of company SKS 365 Group d.o.o. Beograd , Republic of Serbia, over company IBET 365 d.o.o. Beograd, Republic of Serbia. 55. Acquisition of individual control on the part of company AL Sirona (Luxembourg) Acquisition S.à r.l. , Luxembourg, over company group Zentiva grupa društava. 56. Acquisition of individual control on the part of company United Media S.à.r.l., Luxembourg, over company Media Point d.o.o. Beograd . 57. Acquisition of individual control on the part of company “Sidel Participations” S.A.S ., France, over company ” P.E.T. Engineering” S.r.l. , Italy. 58. Acquisition of control on the part of company Baumit GmbH , Germany, over the following companies: Krusemark Edelputz GmbH & Co. KG , Germany, Krusemark Schaefer Verwaltungs GmbH , Germany, Schaefer Krusemark GmbH & Co. KG , Germany, Schaefer Krusemark Vertriebs GmbH , Germany, and K+S Handelsgesellschaft fu ̈r Maler- und Putzerbedarf mbH , Germany. 59. Acquisition of control on the part of company “Hisense Group Co.” Ltd. , China, over company “ Gorenje gospodinjski aparati” d.d. , Slovenia. 60. Acquisition of individual control on the part of company Direct Media d.o.o. Beograd, over companies Pink M Company d.o.o. Podgorica , Montenegro, and Pink BH Company d.o.o. Sarajevo . 61. Acquisition of indirect control on the part of company PPF Group N.V. , the Netherlands, via its subsidiary company PPF Financial Holdings B.V. , the Netherlands, over company Telenor Banka a.d. Beograd, Republic of Serbia. 62. Acquisition of direct control on the part of company Ina-Industrija Nafte d.d., Croatia, over company Eni Croatia B.V., the Netherlands. 63. Acquisition of individual control on the part of company Buderus Heiztechnik AG , Switzerland, over company Walter Fischer Feuerungs–Service GmbH, Switzerland. 64. Acquisition of control on the part of company Advent International Corporation , United States of America, over the “Electric power distribution operations” of company General Electric Company , comprised of companies GE Distributed Power Inc., United States of America, General Electric Austria GmbH , Austria, and Jenbacher International BV. , the Netherlands. 65. Acquisition of direct control on the part of company Croatia Osiguranje d.d. , Croatia, over company Testing Centar d.o.o. , Bosnia and Herzegovina. 66. Acquisition of direct control on the part of company Croatia Osiguranje d.d. , Croatia, over company Central osiguranje d.d ., Bosnia and Herzegovina. 67. Acquisition of individual control on the part of company Ravago S.A ., Grand Duchy of Luxembourg, via newly incorporated special-purpose companies, over target business operations of company The Dow Chemical Company from the United States of America, comprising of assets relating to the production, distribution and sale of XPS foam. 68. Acquisition of direct individual control on the part of company AsterFarm d.o.o. Beograd-Novi Beograd , Republic of Serbia, over Zdravstvena ustanova apoteka “Leko- Vita” Mladenovac , Republic of Serbia. 69. Acquisition of control on the part of company “ Bain Capital Investors” LLC , United States of America, over company “ Italmatch Chemicals” S.p.A. , Italy. 70. Acquisition of control on the part of company Beo Impera d.o.o. , Republic of Serbia, over company Batig d.o.o ., Republic of Serbia. 71. Acquisition of control on the part of company “ Bain Capital Investors” LLC , United States of America, over companies “ Gist-Brocades International” B.V. , the Netherlands, and “ DSM Sinochem Pharmaceuticals Pte” Ltd. , Singapore.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

72. Acquisition of indirect control on the part of company CVC Capital Partners SICA V-FIS S.A. , Luxembourg, via newly established subsidiary company Rossini Luxembourg S.a.r.l. , Luxembourg, over company Fimei S.p.A. , Italy, and its subsidiary group Recordati Industria Chimica e farmaceutica S.p.A. , Italy. 73. Acquisition of individual control on the part of investment fund EQT VIII SCSp , Luxembourg, managed by company EQT Fund Management S.à.r.l. , Luxembourg, via subsidiary company Akita BidCo S.á.r.l. , Luxembourg, over company Antelope Topco S.C.A. , Luxembourg. 74. Acquisition of individual control on the part of company “ Balkans Real Estate” B.V ., the Netherlands, over companies “ BreAtt” B.V. , the Netherlands, and “SCIV Holding” B.V ., the Netherlands. 75. Acquisition of control on the part of company Sony Corporation of America , USA, over company DH Publishing L.P. , Cayman Islands. 76. Acquisition of control on the part of company “ Atos” SE , France, over company “ Syntel” Inc. , United States of America. 77. Acquisition of direct control on the part of company Limited Liability Company “METINVEST-SMC”, Ukraine, over company “ UNISTEEL” Limited Liability Company , Ukraine. 78. Acquisition of direct control on the part of company Gimli Parent Corporation , United States of America, over company Shamrock RB Holdings , Inc. , United States of America. 79. Acquisition of individual control on the part of company Compagnie Generale des Etablissements Michelin , France, via its subsidiary special-purpose company Canada Inc , Canada, over company Camso Inc , Canada, and its subsidiaries. 80. Acquisition of individual and direct control on the part of company Kappa Star Limited , Cyprus, over company Heta Leasing d.o.o. Beograd , Belgrade-New Belgrade. 81. Acquisition of individual control on the part of company Maven Bidco Limited , United Kingdom, over company Genius Sports Group Limited , England. 82. Acquisition of indirect individual control on the part of company “ JT International Holding B.V.”, the Netherlands, via its fully owned subsidiary company Japan Tobacco International (Bangladesh) Limited , Bangladesh, over company United Dhaka Tobacco Company Limited , Bangladesh. 83. Acquisition of direct individual control on the part of company Novelis Inc. , Canada, over company Aleris Corporation, United States of America. 84. Acquisition of individual direct control on the part of company L’Oréal Deutschland GmbH, Germany, over companies Logokos Naturkosmetic AG , and Logo-Bau GmbH&Co Grundstücksverwaltungs KG , Germany. 85. Acquisition of individual control on the part of company “ Stada Arzneimittel” AG , Germany, over company “ Bioceuticals Arzneimittel” AG , Germany. 86. Acquisition of direct individual control on the part of joint stock company Banka DSK EAD , Bulgaria, over companies Societe Generale Expressbank , Bulgaria, and Sogelife Bulgaria IJSC , Bulgaria. 87. Acquisition of direct individual control on the part of joint stock company OTP Bank Nyrt , Hungary, over company Banka Societe Generale Albania Sh.a. , Albania. 88. Acquisition of indirect control on the part of company Assicurazioni Generali S.p.A. , Italy, via its subsidiary company Generali Finance Sp. z o.o. , Poland, over company Bezpieczny.pl Sp. z o.o. , Poland.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

89. Acquisition of control on the part of company Telekom Srbija a.d., Republic of Serbia, over company for production, trade and engineering Kopernikus Technology d.o.o. , Republic of Serbia. 90. Acquisition of individual control on the part of company Amcor Limited , Australia, over company Bemis Company INC., USA. 91. Acquisition of control on the part of company KKR & Co. Inc. , United States of America, via subsidiary company KKR Credit Advisors (US) LLC , United States of America, over company Gibson Brands, Inc. , United States of America. 92. Acquisition of direct individual control on the part of company Empiret d.o.o., Serbia, over company GTC Business Park d.o.o. Beograd , Serbia. 93. Acquisition of direct individual control on the part of company CEE-BIG B.V. , the Netherlands, over company Klupko d.o.o. Pančevo , Serbia. 94. Acquisition of control on the part of company Benu d.o.o. , Republic of Serbia, over Zdravstvena ustanova apoteka Krsmanović , Republic of Serbia. 95. Acquisition of individual control on the part of company Delta Agrar d.o.o. , Belgrade (New Belgrade), over company Fabrika ulja Dunavka d.o.o. Beograd – in bankruptcy, Belgrade-Zemun. 96. Acquisition of individual control on the part of company Zijin Mining Group Co. Ltd. , PR China, over company Rudarsko-topioničarski basen RTB Bor d.o.o., Republic of Serbia. 97. Acquisition of control on the part of company АD Medela Vrbas , Republic of Serbia, over Fabrika konditorksih proizvoda Ravanica d.o.o. , Republic of Serbia. 98. Acquisition of individual control on the part of company MHP SE , Cyprus, over company Perutnina Ptuj d.d. , Slovenia. 99. Acquisition of direct individual control on the part of company Invej a.d. Beograd- Zemun , Serbia, over company Sunce Fabrika Ulja i Biljnih Masti d.o.o. Sombor , Serbia. 100. Acquisition of direct individual control on the part of company Ravago Chemicals S.A. , Grand Duchy of Luxembourg, over companies KH Chemicals B.V ., the Netherlands, and KH Chemicals International B.V. , the Netherlands. 101. Acquisition of indirect control on the part of company Assicurazioni Generali S.p.A. , Italy, via its subsidiary company Generali Investments Holding S.p.A. , Italy, over company Sycomore Factory SAS , France. 102. Acquisition of individual control on the part of company OMV Aktiengesellschaft, Austria, over company Sapura Upstream Sdn. Bhd. , Malesia. 103. Acquisition of individual control on the part of company “ AL DAHRA AGRICULTURE” LLC , United Arab Emirates, over assets of company “POLJOPRIVREDNA KORPORACIJA BEOGRAD AD”, Padinska Skela, and its subsidiary companies as follows: 1) “EKO–LAB DRUŠTVO SA OGRANIČENOM ODGOVORNOŠĆU ZA UPRAVLJANJE KVALITETOM”, Belgrade, 2) “PKB AGROEKONOMIK DRUŠTVO SA OGRANIČENOM ODGOVORNOŠĆU – INSTITUT ZA NAUČNOISTRAŽIVAČKI RAD I TRANSFER TEHNOLOGIJE U POLJOPRIVREDI”, Padinska Skela, and 3) “VETERINARSKA STANICA PKB” d..o.o. , Padinska Skela. 104. Acquisition of individual control on the part of company „Mondo Inc“ d.o.o. , Republic of Serbia, over company “ Adria Media Group” d.o.o. , Republic of Serbia, and over its subsidiary companies as follows: 1) “Adria Media Magazine” d.o.o. , Belgrade, Republic of Serbia, 2) “Adria Media Invest” d.o.o., Belgrade, Republic of Serbia 3) “Adria Media Zagreb” d.o.o. , Croatia, as well as over company “ ADMATIC MEDIA” d..o.o. , Belgrade, Republic of Serbia.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

105. Acquisition of direct individual control on the part of company “ Mtel” a.d. Banja Luka , Bosnia and Hercegovina, over company “ Blicnet” d.o.o. Banja Luka , Bosnia and Herzegovina. 106. Acquisition of control on the part of Privredno društvo za međunarodnu i unutrašnju špediciju i javna skladišta Transportšped doo Beograd , over Društvo za trgovinu i usluge Euroelite doo Beograd . 107. Acquisition of individual control on the part of company Neregelia Trading Limited , Cyprus, over company All Balcans Corporation sh.a. , Albania. 108. Acquisition of indirect control on the part of company Smurfit Kappa Group plc , Ireland, via its subsidiary company Smurfit Kappa Europe B.V ., the Netherlands, over companies Fabrika hartije Beograd d.о.о. , Republic of Serbia, and Аvala Аda d.о.о. Beograd , Republic of Serbia. 109. Acquisition of direct control on the part of company Telekom Srbija a.d. , Republic of Serbia, over company Radijus Vektor d.o.o. , Republic of Serbia. 110. Acquisition of control on the part of company T elekom Srbija a.d. , Republic of Serbia, over Preduzeće za audio i video komunikaicje AVCOM d.o.o., Republic of Serbia. 111. Acquisition of individual control on the part of company Mayr-Melnhof Packaging International GmbH , Austria, over company Eurasia Invest Holding AG , Austria. 112. Acquisition of indirect control on the part of company Assicurazioni Generali S.p.A. , Italy, via its subsidiary company Generali СЕЕ Holding B.V. , the Netherlands, over company Union Investment Towarzystwo Funduszy Inwestycyjnych S.A. , Poland. 113. Acquisition of control on the part of company KKR & Co. Inc., United States of America, via subsidiary company CK Holdings Co., Ltd. , Japan, over companies Magneti Marelli S.p.A , Italy, and Magneti Marelli Holding USA LLC , United States of America, and over their subsidiaries. 114. Acquisition of individual control on the part of company CADM Holdings Limited , Cyprus, over company CADM Automotive Sp. z o.o. , Poland. 115. Acquisition of direct individual control on the part of company A1 Telekom Austria AG , Austria, over business operations of company Unify GmbH , Austria, relating to the provision of private telephone exchanges and related services in Austria, including installed equipment which represents an independent business entity. 116. Acquisition of control on the part of company “ GO4YU” d.o.o., Belgrade, over company “ LINK2YU Network” GmbH , Austria. 117. Acquisition of individual control on the part of company Evonik Industries AG , Germany, over the entire business operations of company PeroxyChem , by purchasing shares in the following companies: (i) PeroxyChem Holding Company LLC , Cayman Islands, (ii) PeroxyChem Holdings LLC , USA, and (iii) PeroxyChem Cooperatief U.A. , the Netherlands, including their subsidiaries. 118. Acquisition of direct individual control on the part of company Harveast Holding Limited , Cyprus, over company Agrotime Invest Limited , Cyprus, and indirect control over company Agrotime Holding MC , Ukraine, and its subsidiaries. 119. Acquisition of indirect individual control on the part of company Rastoder d.o.o. , Slovenia, over company Gorenje Surovina d.o.o. , Slovenia. 120. Acquisition of direct control on the part of company Telekom Srbija a.d., Republic of Serbia, over company MASKO d.o.o., Republic of Serbia. 121. Acquisition of direct control on the part of company Petrol društvo za trgovinu naftom i naftnim derivatima d.o.o. Beograd (Rakovica) , Belgrade, over a petrol station

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

owned by company “ NES PETROL TRADE” d.o.o. Banja Luka , Bosnia and Herzegovina, located in the territory of the City of Novi Sad. 122. Acquisition of individual and direct control on the part of company Triglav Skladi družba za upravljanje, d.o.o. Ljubljana , Slovenia, over company ALTA Skladi, družba za upravljanje, d.d. Ljubljana , Slovenia. 123. Acquisition of individual control on the part of company Schaeffler AG , Germany, via subsidiary company Schaeffler Technologies AG & Co. KG , Germany, over company ELMOTEC STATOMAT Holding GmbH , Germany. 124. Acquisition of individual control on the part of company “ KOPERNIKUS CORPORATION (CYPRUS)” LTD , Cyprus, over companies “ Antenna Serbia” BV , the Netherlands, and “ Antenna Montenegro” BV , the Netherlands, and over their subsidiaries.

7.1.2. Mergers created in cases of joint venture or acquisition of joint control (Article 17(1/3 of the Law):

1. Joint venture entered into by company Adient US LLC , USA, and company The Boeing Company , USA, by setting up a limited liability company incorporated under the legislation of the State of Delaware, USA, with 50.01% and 49.99% ownership interest of Adient and Boeing, respectively, in the joint venture. 2. Acquisition of joint control on the part of companies “ Mino Investments Limited”, Guernsey, “MediCap Health Group” S.à r.l. , Luxembourg, and “ Klinika Miloš” B.V. , the Netherlands, over company that should be incorporated and which will execute control over companies “ MediGroup SEE” d.o.o. , Republic of Serbia, and “ Personal Vision” d.o.o., Republic of Serbia. 3. Acquisition of joint control on the part of company Neregelia Trading Limited , Cyprus, and natural person Šabi Dermaku, citizen of the Republic of Serbia, over company All Balcans Corporation sh.a. , Albania. 4. Acquisition of joint control on the part of company General Electric Company , United States of America, via its business unit GE Aviation , USA, Mrs. Simonе Segredo, citizen of the United States of America, and Mr. Raul Segredo, citizen of the United States of America, over company Avionica, LLC , United States of America. 5. Acquisition of joint control on the part of company Sberbank of Russia , Russia, and company Yandex N.V. , the Netherlands, over company Yandex.Market B.V. , the Netherlands. 6. Joint venture entered into by company GE Oil & Gas Panafricana Holding I B.V. , the Netherlands, and company Sibintek o.о.о ., Russian Federation, by setting up two companies in the Russian Federation which will operate on a long-term basis and have all functions of an independent undertaking. 7. Acquisition of joint control on the part of companies Telenor Pakistan B.V. , the Netherlands, and Alipay (Hong Kong) Holding Limited , Hong Kong, over company Telenor Microfinance Bank Limited , Pakistan. 8. Acquisition of joint control on the part of company “ BSH Hausgeräte” GmbH , Germany, and company “ PUIG International” S.A. , Switzerland, over company “ Noustique Perfumes” S.L. , Spain, in which each applicant will hold 50% of shares and execute joint control over the target company. 9. Joint venture entered into by companies Bayerische Motoren Werke Aktiengesellschaft , FR Germany, and Daimler AG , FR Germany, in order to set up six joint venture companies to which will transmit their current business operations concerning

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

mobility services in the following business service segments: CarSharing, Ride- Hailing, Parking, Charging, Multimodality and other “on-demand” mobility offering, whereby they will operate on a long-term basis and hold all functions of an independent undertaking. 10. Acquisition of joint control on the part of companies Mitsui & Co. Ltd. , Japan, and Kansai Paint Co. Ltd ., Japan, over company Kansai Helios Coatings GmbH , Austria. 11. Acquisition of joint control on the part of company “ Telekom Srbija ” a.d. , Republic of Serbia, over company “ GO4YU” d.o.o. , Republic of Serbia, which will be executed with other shareholder, company “ DIMEDIA GROUP LIMITED”, Hong Kong. 12. Acquisition of joint control over company Merkur Gaming Slots d.o.o. , Republic of Serbia, which will be executed by company adp Gauselmann GmbH , Germany and Aleksandar Jojić. 13. Joint venture entered into by companies Тhyssenkrupp Technologies Beteiligungen GmbH , Germany, and Orchid Netherlands (No. 1) B.V. , the Netherlands, created by integrating the flat carbon steel operations of ThyssenKrupp Group and Tata Steel Group, including the steel mill operations of ThyssenKrupp Group, into company ThyssenKrupp Netherlands Project B.V ., the Netherlands, which will conduct its future operations under business name ThyssenKrupp Tata Steel B.V .. 14. Acquisition of indirect joint control on the part of companies Ina-Industrija Nafte d.d. , Croatia, and Prvo Plinarsko Društvo d.o.o. , Croatia, via subsidiary company Terra Mineralna Gnojiva d.o.o , Croatia, over company Petrokemija d.d. , Croatia. 15. Acquisition of indirect joint control on the part of companies Messer Group GmbH, Germany, and CVC Capital Partners SICAV-FIS S.A. , Luxembourg, via subsidiary company MG Industries GmbH , Germany, over certain subsidiary companies and assets in the North and South America, and companies Linde Aktiengesellschaft , Germany, and Praxair, Inc , Connecticut. 16. Acquisition of joint control on the part of company NEPT Holdings S.à.r.l. , Luxembourg, foundation Luski Foundation , Mr. Mirio Troi , Italy, Mr. Enrico Accettola , Italy, Mr. Dominik Sliwowski , Poland, and company 365 Giorni s. r. l., Italy, over company IТР S.A ., Poland. 17. Acquisition of joint control on the part of company MET Renewables AG , Switzerland, over company NIS Energowind d.o.o. Beograd (Palilula) , to be executed with other shareholder, company O Zone AD Beograd . 18. Acquisition of joint control on the part of company Tymarsia Holdings Limited , Cyprus, and company Restrampello Holdings Limited , Cyprus, over company Neregelia Trading Limited , Cyprus. 19. Acquisition of joint control, by changing the form of control from individual into joint, executed company Adient Global Holdings Ltd , USA, and company Yanfeng Automotive Interior Sistems Kft , Hungary, over company Adient Interiors d.o.o. Kragujevac , Republic of Serbia. 20. Joint venture entered into by companies Dr. Ing. h.c. F. Porsche Aktiengesellschaft , Germany, and Schuler Aktiengesellschaft , Germany, in order to set up a new undertaking which will operate on a long-term basis and have all functions of an independent undertaking, and whose goal is to provide metal parts manufacturing services to the third parties. 21. Acquisition of indirect joint control on the part of companies Budamar Logistics, a. s. , Slovakia, and Optifin Invest s.r.o. , Slovakia, over the total assets of company WBN Zwischenholding GmbН, Germany, in bankruptcy procedure and which includes the

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

property and manufacturing facilities and plants for the production of freight cars, tram vehicle bodies and rail components. 22. Acquisition of joint indirect control on the part of companies Daimler AG, FR Germany, and Volkswagen Financial Services AG , FR Germany, over company Mobility Trader Holding GmbH , FR Germany. 23. Change of the number of members executing the joint control over company NDM Asset Ressolution d.o.o. Beograd , by acquiring joint control over said company on the part of natural persons Nebojša Šaranović from Belgrade, Nebojša Janković from Belgrade, Dejan Dragojević from Belgrade, and Martin Kammermeier domiciled in Vienna, Republic of Austria, and acquisition of indirect joint control via this company over company Heta Asset Resolution d.o.o. Beograd , and its subsidiaries. 24. Acquisition of joint control on the part of company ZF Friedrichshafen AG , Germany, via subsidiary company Zukunft Ventures GmbH , Germany, over company ASAP Holding GmbH , Germany, which will be executed with companies MINE Beteiligungs GmbH , Germany, and GS Group GmbH , Germany, previous executors of joint two-party control. 25. Acquisition of joint control on the part of company Bosch Thermotechnik GmbH , Germany, and company ads-tec GmbH , Germany, over company ads-tec Energy GmbH , Germany. 26. Acquisition of indirect joint control on the part of companies Axel Springer SE , Germany, Purplebricks Group plc , United Kingdom, and Project A Ventures II GmbH & Co. KG , Germany, over company Homeday GmbH , Germany, whereby a subsequent change of said three-party control into two-party control may occur, to be executed by companies Axel Springer SE and Purplebricks Group plc. 27. Acquisition of joint control on the part of natural persons Nebojša Šaranović , Belgrade, Nebojša Janković , Belgrade, and Vladan Živulović , Belgrade, and company Thrax Invest еood , Bulgaria, over company “ Crest Development” d.о.о. , Belgrade. 28. Joint venture entered into by companies LG Electronics Inc. , South Korea, and Lufthansa Technik AG , Germany, in order to create new undertakings that will be primarily engaged in the following: the first company will be devoted to developing aircraft and in-cabin management systems; the second company will market new technology for aircraft cabin entertainment systems; while the third newly established company will manage sales, marketing and provision of services to first- class passengers, whereas all companies will operate on a long term basis and have all functions of independent undertakings. 29. Acquisition of joint control on the part of companies Fresenius Medical Care Beteilligungsgesellschaft mbh , Germany, a wholly owned subsidiary of company Fresenius Medical Care AG & KGaA , Germany, and KR² GmbH , Germany, over company D.Med Consulting GmbH , Germany. 30. Acquisition of joint control on the part of companies Budamar Logistics, a. s. , Slovakia, and Optifin Invest s.r.o. , Slovakia, over company ELH Waggonbau Niesky GmbH , Germany, which will be continued to be executed following the merger of this company with companies ELH Eisenbahnlaufwerke Halle GmbH & Co. KG , Germany, and ELH Eisenbahnlaufwerke Halle Verwaltungs GmbH , Germany, and which will continue to operate following said merger as company ELH Waggonbau Niesky GmbH . 31. Joint venture entered into by companies Banca Generali S.p.A. , Italy, and Saxo Bank А/S , Denmark, created by setting up a joint stock company BG Saxo Societa Di

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

lntermediazione Mobiliare S.Р.А. , Italy, which will operate on a long-term basis and have all functions of an independent undertaking. 32. Acquisition of joint control on the part of the European Bank for Reconstruction and Development, United Kingdom of Great Britain and Northern Ireland, over company PREDUZEĆE ZA PROIZVODNJU I PROMET NAMEŠTAJA FORMA IDEALE DOO , to be executed with other shareholders of said company, natural persons Vladimir Lazarević, Kragujevac, and Nikola Lazarević, Kragujevac. 33. Acquisition of joint control on the part of company WOHO Holdings Limited , Cyprus, and natural person Dariusz Bakowski, citizen of Poland, over company WDX S.A. , Poland. 34. Acquisition of joint control on the part of companies Budamar Logistics, a. s. , Slovakia, and Optifin Invest s.r.o. , Slovakia, over company TATRAVAGÓNKA a. s., Slovakia.

7.2. NOTIFIED MERGERS REVIEWED IN EX OFFICIO PROCEEDINGS

Compagnie des Levures Lesaffre S.A. – Alltech PC Fermentaciona industrija doo Senta

On February 2, 2018, following an investigation procedure the Commission has approved merger between undertakings, subject to conditions, created by acquisition of control on the part of company Compagnie des Levures Lesaffre S.A., France, by purchasing 100% shares in company Alltech PC Fermentaciona industrija doo Senta, Republic of Serbia.

In the investigation procedure, the Commission has assessed effects of said merger on the following relevant product markets in the Republic of Serbia:

• baker’s yeast production and sale market, and • yeast extract production and sale market.

Based on all facts determined during the investigation procedure, the Commission has established that company Compagnie des Levures Lesaffre S.A. will strengthen its current dominant position on the relevant market of baker’s yeast production and sale in the Republic of Serbia. Namely, prior to the merger transaction, said company held by far the highest market share on this relevant market (/60-70/%), which can be only increased following the transaction given that target company owns the only production facility in the Republic of Serbia. The increase could also occur if Lesaffre cancels the provision of contract manufacturing services to company PIP d.o.o. Novi Sad. The Commission has also established that the acquirer of control will acquire a dominant position on the yeast extract market in the Republic of Serbia, foremost on the production, and consequently on the sale market. Accordingly, the commission has set special conditions and deadlines for execution thereof, namely:

• Reporting obligation on the rate of capacity utilization of company Alltech Serbia d.o.o. Senta, • Reporting obligation on the yeast extract production of company Alltech Serbia d.o.o. Senta • Reporting obligation on the baker’s yeast production of company Alltech Serbia d.o.о. Senta, and • Reporting obligation on the causes for terminating contract on the service production of compressed baker’s yeast for company PIP d.o.o. Novi Sad

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

On session held on February 2, 2018, the Commission Council has enacted a decision approving this merger, subject to conditions.

7.3. MONITORING OF THE PROPER IMPLEMENTATION OF CLEARED MERGERS SUBJECT TO CONDITIONS

During 2018, the Commission has continued to monitor the proper implementation and administration of conditions formalized and ordered in the Commission’s decisions, relating to the obligation of specific undertakings in all individual cases of cleared mergers subject to accepted remedies, whose validity period extended to the reporting period as well. Based on the pre-defined time intervals formalized in each individual administrative act in which was decided on the approval of mergers subject to conditions, the Commission has monitored, by reviewing submitted reporting materials, the manner in which said undertakings, to which related conditions apply, implement accepted remedies. Individual undertakings which are obligated to comply with conditions laid down in merger decisions, submit to the Commission periodical reports in which they inform the authority on the manner, degree and dynamics of implementation of ordered conditions. The Commission acquaints itself with this kind of reports, reviews them and informs related undertakings on its position.

Conduct of the undertaking/company: Agrokor d.d., in respect of structural and behavioral measures ordered by the Commission in the Decision of December 25, 2013

On December 25, 2013, the Commission Council has enacted a decision on the approval of concentration between undertakings, created by acquisition of control on the part of company Agrokor over company Poslovni sistem Mercator d.d., subject to conditions to implement behavioral measures and stipulated structural measures.

On June 27, 2014, following the implementation of the purchase and sale of shares of company Mercator, Agrokor became the owner of 53.12 percent of shares in this company. Accordingly, deadlines established for the implementation of measures set in the Commission’s decision were put into effect as on Jun 27, 2014 (‘Kickoff day’). Company Agrokor implemented ordered structural measures in early 2016, on which the Commission reported in the 2016 Activity Report.

In Paragraph III of the Commission’s decision, towards implementing the behavioral measures, is regulated that within 15 days from the Kickoff day, followed by an identical deadline of 15 days from each Kickoff day’s yearly observance, up to and including the fifth yearly observance (meaning that the deadline for the submission of the final annual report of this kind is early July 2019), company Agrokor submits to the Commission a report containing the following elements: • Template of the primary purchase and sale agreement which company IDEA, that is, Mercator-S, concludes with its suppliers; • Copy of currently effective purchase and sale agreements for goods (with all annexes and addendums) which company IDEA and Mercator-S have concluded with the top five suppliers from each of the following categories: ketchup, mayonnaise,

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

margarine, ice-cream, frozen fish, frozen vegetables, frozen pastry goods, sunflower oil and water; • Information on suppliers classified by size (small and medium-sized enterprises), containing evidence on changes in business relations with said suppliers (start of cooperation, termination of cooperation, product-line expansion and reduction, and explanation of related changes).

By submitting said documentation and information as laid down in Items 3.1 and 3.2. of Paragraph III of the Commission’s decision, Agrokor has fulfilled the 2018 reporting commitment, and in that manner fully met the commitments ordered by the Commission in the form of behavioral measures. Company Agrokor is obliged to submit the following, final report to the Commission no later than mid-July 2019.

Conduct of the undertaking/company: Sunoko doo Novi Sad, in respect of structural and behavioral measures ordered by the Commission in the Decision of August 11, 2016

On Aug 11, 2016, the Commission Council has enacted a decision on the approval of concentration between undertakings, created by acquisition of control on the part of company Sunoko over company Star Šećer doo Senta, and in that manner over company Fabrika šećera TE-TO Senta AD, subject to conditions.

The Commission’s decision contains orders issued to company Sunoko, set out in the form of behavioral measures and mandatory regular reporting before the Commission, in order to preserve the market structure and keep all production capacities, including the sugar refinery TE-TO Senta on the market, enable transparent monitoring of potential sugar price changes on the market, and improve transparency of the sugar trade policy and business relations with buyers, as well as to ensure full information of the Commission on the level and type of investments to be implemented in the sugar refinery TE-TO Senta towards increasing the manufacturing system efficiency.

On March 1, 2018, company Sunoko has submitted to the Commission the Report on on the implementation of behavioral measures set out in the Commission’s decision, containing information on the processed sugar beets quantities in manufacturing facilities of company Sunoko, information on public announcements on the sale of factory in the case of liquidation or enacted decision of a legal entity resulting in permanent closing of individual sugar refineries under their management, information on sugar prices, information on the sugar trade policy in relation to domestic buyers, information on potential amendments to the concluded agreements between company TE-TO and buyers and explanations for related amendments, and information on measures and acts taken towards maintaining business operations of company TE-TO.

The Commission’s decision also stipulates the reporting commitment in the case of sugar price changes, particularly on the market of the Republic Serbia, EU, CEFTA and potentially third markets, under the CIP terms of delivery of sugar refineries, VAT free, with submitted rationale on the causes and intensity of incurred changes. As part of the Report concerned, company Sunoko has also submitted a report on the sugar price trends, and thus has fully complied with the obligation relating to the behavioral measures stipulated in the Commission’s decision.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

By providing the above-mentioned information and documents, company Sunoko has in timely and complete manner fulfilled stipulated commitments set in the form of behavioral measures for the year 2018.

Having regard to the fact that the Commercial Court in Subotica has enacted a decision on opening of bankruptcy proceedings over company A.D. Fabrika šećera TE-TO Senta on May 25, 2017, due to the permanent cessation of payments, and that the bankruptcy procedure is pending, in addition to the fact that the Commercial Court in Subotica has enacted a decision on the implementation of bankruptcy over A.D. Fabrika šećera TE-TO Senta on September 20, 2017, by liquidation of assets of the bankruptcy debtor, pursuant to the legal provisions and related standards, the bankruptcy trustee has opened a process of evaluation and sale of the entire property of the bankruptcy debtor. At the session of the Board of trustees held on February 12, 2018, with the agreement of all members of the Board of trustees, the bankruptcy trustee has enacted a decision on the selection of most favorable bidder for the valuation of assets of the bankruptcy debtor.

The finalization of the valuation of assets of the bankruptcy debtor is set for the end of November 2018, followed by the creation of several sale units due to various locations of the assets concerned. It is envisaged that the sale, implemented in a public call for bids, will be published by December 15, 2018. Pursuant to the legal provisions and standards governing sale of assets, it is expected that the bidding will be scheduled for the second half of January 2019. The bankruptcy trustee will inform the Commission in timely manner on the outcome of the published tender (on the bidders in the public call and selected buyer(s) of assets of the bankruptcy debtor).

Conduct of the SBB doo Beograd, in respect of structural and undertaking/company: behavioral measures ordered by the Commission in the Decision of March 13, 2017

On March 13, 2017, the Commission Council has enacted a decision on the approval of concentration between undertakings, created by acquisition of control on the part of company SBB over company Interaktivne kablovske objedinjene mreže - I.KOM doo Beograd, subject to conditions.

In order to implement commitments taken under the Commission’s decision, company SBB has informed the Commission that on October 11, 2018, the Divestiture trustee has forwarded a bid with specification of facilities, submitted by an interested buyer, company BEOTELNET- ISP DOO (hereinafter BEOTELNET-ISP), for the purchase of the Infrastructure in 653 facilities in the territory of the City of Belgrade. Company SBB has accepted the offer and signed the Agreement for sale and purchase of parallel secondary cable infrastructure in the buildings with overlaps between SBB and I.KOM, with company BEOTELNET-ISP, on October 12, 2018, (hereinafter, the Agreement), and delivered the infrastructure concerned. Together with the Report, company SBB has provided a copy of the Agreement concerned.

By providing the above-mentioned Report with the supporting documentation, company SBB has in timely and complete manner fulfilled stipulated commitments set in the form of structural measures which relate to the commitment of divesting the parallel secondary network infrastructure in the buildings with overlaps between the undertakings. With

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

reference to the ordered behavioral measures, company SBB is obligated that until April 13, 2019, in the case of any price change, to submit to the Commission for Protection of Competition, in written and e-form, a report containing information on the retail price change of media content distribution services via basic package, with a rationale of the cause of related price change, within 15 (fifteen) calendar days from the day of retail price change of media content services provided via basic media content package. Compagnie des Levures Lesaffre S.A. , in respect Conduct of the of behavioral measures ordered by the undertaking/company: Commission in the Decision February 2, 2018 On February 2, 2018, the Commission Council has enacted a decision on the approval of concentration between undertakings, created by acquisition of control on the part of company Compagnie des Levures Lesaffre S.A. over company Alltech Serbia d.o.o. Senta, subject to conditions.

In order to implement commitments taken under the Commission’s decision, on April 2, 2018, company Compagnie des Levures Lesaffre S.A. has submitted a written notification with mandatory elements, pursuant to the Commission’s decision and within the period stipulated. The Commission was provided with information relating to the capacity utilization rate, volume and value of yeast extract production, as well as volume and value of baker’s yeast production and sale (individually for liquid, viscous paste and dried powder forms) of company Alltech Serbia d.o.o. Senta in 2017. With this submission, the Commission was also informed on the change of business name of company Alltech Serbia d.o.o. Senta into Biospringer RS d.o.o. Senta.

By providing the above-mentioned information as defined in the Commission’s decision, company Compagnie des Levures Lesaffre S.A. has complied with the reporting commitment for the year 2017, thus fulfilling the stipulated commitments ordered by the Commission in timely and complete manner. In the coming year, the Commission will continue to monitor the behavior of this company.

7.4. INVESTIGATION OF MERGERS COMPLETED WITHOUT CLEARANCE

Suspension of proceedings ex officio : East Media – Politika novine i magazini (PNM)

Based on the Decision of March 25, 2015, enacted by the Commission Council, the Commission has suspended proceedings ex officio , due to the existence of a preliminary issue. The proceeding was previously instituted by the Decision of November 27, 2014, enacted by the Commission President, against Russian company East Media, in order to investigate a merger completed without clearance in accordance with the Law. The merger concerned was created by purchasing 50% of shares in company PNM by said Russian company from Austrian company Ost holding GmbH, an affiliated legal entity of company WAZ Medienbeteiligungsgesellschaft Balkan GmbH (WAZ), from the City of Essen, Germany.

The suspension of the proceedings concerned will be in effect until the State Attorney’s Office of the Republic of Serbia resolves the preliminary issue, due to the lack of competence of the Commission to act in this matter. The preliminary legal issue relates to the validity – potential invalidity of the Purchase and sale agreement concluded between companies East Media and Ost holding, which constitutes a legal ground for the concentration concerned. The issue

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

occurred from the established possibility that the seller, Ost holding, failed to act in accordance with the incorporation charter document of PNM when selling 50% of shares to East Media, thus withholding the associated and clearly defined priority rights of the other PNM shareholder, company Politika ad, majority owned by the Republic of Serbia.

Pursuant to Article 2(2) of the Law on Prosecutor’s Office (Official Gazette of the RS 55/2014) it is established that the State Attorney’s Office of the Republic of Serbia is authorized and bound to undertake legal actions in order to protect ownership rights and interests of the Republic of Serbia. 8. OPINIONS

In 2018, the Commission has issued 70 opinions, most of which are delivered pursuant to the provisions of the Law on Bankruptcy (24), followed by opinions on the implementation of the provisions of the Law relating to mergers (19) and infringements of competition (15). Eight opinions are provided with reference to draft and current regulations with impact on the state of competition, while four opinions are provided with reference to reports of regulatory bodies.

Chart 20: Structure of delivered opinions

Opinions pursuant to Article 157 of the Law on Bankruptcy Opinions on the implementation of the provisions of the Law on Protection of Competition relating to mergers Opinions on the implementation of the provisions of the Law on Protection of Competition relating to infringements of competition Opinions delivered on draft and current regulations with impact on the state of competition Opinions delivered on reports of regulatory bodies

8.1. OPINIONS ON DRAFT AND CURRENT REGULATIONS WITH IMPACT ON THE MARKET COMPETITION

During 2018, the Commission has delivered opinions to line authorities to drafts or proposals of regulations with impact on the competition, namely:

• Opinion on the Draft Law on Amendments to the Law on Trademarks; • Opinion on the Draft Law on Amendments to the Law on Road Passenger Transport; • Opinion on the Draft Law on Amendments to the Law on Free Access to Information of Public Importance (within a public debate); • Opinion on the Proposal of the Conclusion of the Government of the Republic of Serbia on adopting the Negotiating position of the Republic of Serbia for Negotiation

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chapter 14 – Transport Policy, with rationale, summary and text of the Negotiating position; • Opinion on the Proposal of the Regulation on the Methodology of Public Policy Management, Policy and Regulatory Impact Assessment, and Content of Individual Public Policy Documents; • Opinion on the Draft Law on Agency Employment; • Opinion on the Draft Law on Amendments to the Law on Free Access to Information of Public Importance (on request of the Ministry of State Administration and Local Self- Government); • Opinion on the Draft Law on Health Care;

Opinion on the Draft Law on Amendments to the Law on Trademarks

The Ministry of Education, Science and Technological Development has submitted to the Commission for Protection of Competition, with a request for its opinion, the Draft Law on Amendments to the Law on Trademarks

In its opinion, the Commission has established that the proposed Draft Law on Amendments to the Law on Trademarks should also relate to Article 40 of the Law on Trademarks (Official Gazette of the RS 104/2009 and 10/2013). As regards this consideration, the Commission has indicated that the current legal solution envisages the principle of national exhaustion of trademark rights, instead of the generally accepted concept of international exhaustion of trademark rights. Pursuant to the said provision, a trademark does not entitle its holder to bar its use in connection with goods marked with such trademark when placed into circulation for the first time in the Republic of Serbia by the holder of the trademark or other person authorized by the holder.

From the provision mentioned follows the argumentum a contrario , that the holder of the trademark (importer) has a right to oppose further placement into circulation of goods marked with such trademark by third parties if they have placed such goods into circulation in the Republic of Serbia without knowledge or consent of the trademark proprietor (prohibition of parallel imports).

In order to address the effects caused by the current legal solution affecting the market of the Republic of Serbia, it is proposed to amend Article 40(1) by replacing “in the Republic of Serbia” by “anywhere in the world”.

In the opinion is indicated that the extension of exclusive rights directed at the prohibition of parallel imports in a manner as defined in the specific case, by the Law on Trademarks, can truly exert a significant influence on competition and free movement of goods on the market, and in that regard can restrict the price and qualitative competition of identical products.

Namely, parallel imports imply the imports and sales of goods by independent traders operating outside a selective distribution system, and without supplier’s prior consent. Parallel importers purchase related goods in one country (neighboring or in the EU) at a relatively lower price, which they later sell in another country at prices lower than those currently offered in that country of destination (where the product prices are significantly higher). Traders that sell

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

identical products in such manner create the mutual price competition (the so-called, Intra brand competition).

Although the most common excuse for the introduction of this prohibition is the existence of unfair competition (defined by the Law on Trade), parallel imports as such serve exclusively for the restoration of balance in price disparities within a certain market, that is, for the market equilibrium purposes between neighboring countries. For that reason, it is necessary to distinguish between unfair competition originating from the black market (trade of identical products procured in a manner not regulated by positive law – such as the sales on open markets, in unregistered stores, via Internet, etc.), and importers of identical products cleared through all relevant procedures (by customs and other inspection authorities) which are prerequisite for the placement into circulation of such products.

Finally, and most importantly, in addition to instigating healthy competition, parallel imports also instigate and develop the well-being of consumers given that imports from countries offering lower prices of goods create a pressure on existing merchants in the country of destination to reduce prices.

Opinion on the Draft Law on Amendments to the Law on Road Passenger Transport

The Ministry of Construction, Transportation and Infrastructure has submitted to the Commission for Protection of Competition, with a request for its opinion, the Draft Law on Amendments to the Law on Road Passenger Transport.

The opinion delivered by the Commission has covered the conditions for the exercise of the taxi transport service, as well as conditions for the exercise of the limousine services.

The Commission has suggested to delete the conditions for the exercise of the taxi transport service relating to the registered seat requirement, that is, requirement that a company or entrepreneur need to be registered and with domicile of at least 12 months within the territory of a local self-government unit issuing related permits. This is based on the reasoning that the introduction of this requirement would limit undertakings to exercise the taxi transport service within the territory of a single local self-government unit only, that is, within the administrative boundaries where the permit is issued. This practically means that a taxi operator holding the City of Belgrade Permit could not be granted a taxi permit for any other city. By removing the above-mentioned requirement, local markets would experience the opening because taxi operators would be able to exercise this profession within all administrative boundaries upon fulfilling the necessary requirements and take part in a competitive race within related territories.

Furthermore, the registered seat requirement is set differently with respect to a variety of undertakings. Namely, in the case of entrepreneurs, in contrast to companies, is envisaged an additional restriction, perceived as unjustified by the Commission, relating to the domicile of at least 12 months within the territory of a local self-government unit, stipulated as an additional

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

requirement in conjunction with the registered seat requirement. In such way, individual undertakings are put at a particular disadvantage, thereby creating inequality of opportunity, that is, favoring one legal form over another.

These conditions impede the ability of business entities to pursue their professional activities and in particular create barriers to entry for prospective competitors, without providing reasons in the Rationale of the Draft for allowing this kind of restriction to be stipulated.

The Commission has suggested to delete the condition indicating that entrepreneurs may provide taxi services by using only one taxi vehicle. It is also suggested to remove the restriction that a company (carrier) may provide taxi services with multiple taxi vehicles, where only one driver per vehicle is allowed. This solution envisaged by the legislator could impact the business methods of undertakings and disable them to independently make own business decisions and implement different business models that could potentially increase the cost-effectiveness and efficiency of their operations, in a way where a vehicle could be utilized by several drivers (for instance, a vehicle could be used by two drivers working in two shifts, or other drivers fulfilling the compulsory taxi permit requirements in the event of absence due to illness of a driver). Furthermore, the draft stipulates that a taxi operator is obligated to charge for services rendered in the amount indicated by the taximeter at the end of the journey or in the amount as indicated on the receipt issued at the locations of special interest for a local self- government unit.

The legislator’s intent here presented is clear, aimed at protecting users from paying higher prices for services rendered than those regulated by a price-list. However, the provision formulated in this manner restricts taxi operators to potentially reduce prices by providing discounts (on various grounds, such as booking, group/long distance journeys, various loyalty programs/frequency rewards, etc.). Having regard to the fact that price competition is one of the forms of market competition, the competitive ability of undertakings is in this manner restricted, to the detriment of service users.

With regard to the aforementioned, the Commission has proposed to add “at most” after the wording “charge for services rendered” in Article 91b(4).

The adoption of the proposed amendment is of paramount importance since it would alleviate adverse effects arising from the implementation of the provision authorizing local self- government units that in their decisions specify and harmonize the taxi fares within a given territory.

Also, by imposing an obligation to charge for services rendered in the amount indicated by the taximeter, operators are disabled from using other technologies for the calculation of fares, thus restricting the market and technological development and innovations to the detriment of service users.

The Commission has suggested to remove the provision stipulating that a local self- government unit determines the optimal number of taxi vehicles.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

One of the fundamental principles of competition law and policy is the free access to markets granted to every undertaking fulfilling the requirements necessary for the exercise of a profession, provided so that undertakings could compete with the price and quality offered, in the interest of consumers/users. In that regard, the Commission has underlined that the limitation of the number of taxi vehicles represents a form of unfair restriction of competition and has proposed to delete these provisions.

The identical article also stipulates that a local self-government unit in its decision specifies and harmonizes the mandatory taxi fares applicable within its territory. This provision stipulates the price-list of taxi transport services, specifying the prices of taxi services per km of journey, start, waiting hour, pick-up service, and transport of luggage per piece, as well as fixed price of journey from the location of special interest for a local self-government unit. In such way, the applicable fares for all service providers within a given territory are set, thus eliminating the price competition between them, which is considered to be one of the more prominent forms of competitive ability.

In the market observed, a certain form of price control can be justified on the grounds of objective reasons for providing protection to users against exorbitant prices, particularly to users deprived of access to full information on taxi services (for example, foreigners) or those restricted in transportation options (for example, persons with disabilities). Such an objective can be achieved in a less restrictive manner, by setting the maximum applicable fares for taxi services.

Furthermore, the Commission has proposed that all local self-government units use identical price components when setting the base fare for taxi services. Noting the specificities of local self-government units, which potentially could justify differences in fares between various municipalities, the legislator is advised to set corrective factors (based on, for instance, the level of taxation or personal income of citizens) relating to specific local self-government units, implemented to adjust the base price. This is proposed in order to avoid a situation where various local self-government units would be able to set different prices for particular segments of taxi services (for example, start price) without any cost-based or some other kind of objective rationale.

With reference to the provisions of the Draft regulating the conditions for the exercise of the limousine services, in its opinion the Commission has underlined that to the greatest extent, in matters of legislation relating to the regulation and imposition of conditions for the exercise of any kind of profession, competition rules are not impaired, but that the state of competition can be disrupted by imposing unfair restrictions.

In the opinion is stated that the Draft envisages numerous new requirements for the exercise of this profession (for example, technical requirements of vehicles, hiring for tourism purposes only, duration of journey of minimum three hours, entrepreneur or driver qualification requirements, cash payment only, etc.), which may significantly restrict competition on this market to the detriment of the limousine service users primarily.

In the rationale to the Draft is stated: “The provisions presented in the Draft law will have a positive influence on domestic carriers providing public road passenger transport services since it will foremost maintain the current, that is, established volume of transport services given that the share of gray economy manifested in illegal taxi and limousine services will be

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

considerably reduced”. This implies that the objective of the amendments is to protect the current undertakings operating on the taxi service market, and that the intent is to maintain the status quo , thus establishing the administrative barriers to entry in this market, thereby considerably preventing, restricting, and distorting competition.

By failing to create conditions for the opening of markets to alternative types of passenger transport, undertakings already active on said markets do not have incentives to further advance their services, while users are faced with reduced number of options and less qualitative services provided at higher prices.

With regard to the transitional and final provisions, the Commission has underlined the following:

In Articles 36 and 37 is stipulated that taxi drivers and vehicles operating on the date of entering into force of the Law fulfil all requirements for the exercise of the taxi profession. In such manner, all undertakings not operating at the time of entering into force of the Law are placed in a less favorable position since they must fulfil all legally stipulated requirements for the exercise of the taxi profession, while the fulfilment of conditions by the current taxi operators is recognized, without verification. The current (existing) state of affairs is in this manner maintained, while hindering the entry of new undertakings on the market. Also, the Draft fails to stipulate a criterium (manner and order) of granting permits for the exercise of the taxi transport service in the case when is necessary to reach the optimal number of vehicles.

In line with existing technical and technological developments, as well as considering the existence of various needs of passengers (such as, for example, pre-booking services, door-to- door services, prepaid services, time slot booking, etc.), it is proposed to the legislator to consider the option of stipulating non-discriminatory conditions for the exercise of this kind of profession as well, offering different passenger transport services in passenger vehicles tailored to the specific needs of different service users. In this way, the opening of markets and competitive ability of all undertakings would be enabled for the benefit of consumers.

Opinions on the Draft Law on Amendments to the Law on Free Access to Information of Public Importance

As part of the public debate on the Draft Law on Amendments to the Law on Free Access to Information of Public Importance, the Commission has delivered its opinion the published regulation.

It is proposed that, foremost, with a view to removing obstacles to the conduct of the work of the Commission and the Commissioner for Information of Public Importance and Personal Data Protection (hereinafter, the Commissioner), in a segment of this law that regulates the restriction of free access to information of public importance, to add a new paragraph to read: „It shall be considered that there is no overriding public interest in disclosure if a particular measure of protection of sources or specific information (protected information) is set in accordance with regulations governing competition policy.”

The acceptance of the amendment as presented above would address the competence concerns between the Commission and the Commissioner, and ensure the reliability and stability of the

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

legal system that clearly specifies and ensures the compliance with legally established competences of authorities deciding on their rights, obligations and interests.

The proposed amendment eliminates the possibility for the commissioner to access the business sensitive information in the possession of the Commission, previously protected at the request of a party by the Commission’s conclusion, and which do not have the status of information of public importance pursuant to Article 45(4) of the Law on Protection of Competition. In such manner, the work of the Commission as an autonomous and independent organization performing public competences in accordance with the Law would be jeopardized, in addition to compromising legal safety and rights of undertakings given that they would no longer undeniably know if their information would be protected and thus exempt from the free access.

However, the increasing number of proceedings conducted by the Commission (as well as other competition authorities in comparative practice) increases the possibility of disclosing business and other sensitive information by the Commission, which were made available during the proceedings. That calls for a caution among undertakings and a need to be aware of rules governing protection of information in proceedings conducted before the Commission in order to keep their trade secrets and prevent their disclosure, while the Law on Protection of Competition, in that sense, is enabling them to file a request for protection of information. In line with the generally accepted comparative practice, the protection may be requested for two types of information: for information representing a trade secret and for other sensitive information.

Accordingly, the Commission has pointed to serious consequences with regard to legal certainty of undertakings, that is, parties in the proceedings conducted before the Commission for Protection of Competition.

In the opinion is further indicated that the significance of protection of information in competition law is high, since it advances the work of competition authorities and their credibility, while it builds up the trust that undertakings must have in these authorities which would otherwise be undermined if the protected information would be disclosed. The protection of information also prevents the exchange of information between undertakings (when such exchange may represent the core of cartel conducts) and related occurrence of competition infringements, in addition to securing effective implementation of the Leniency program introduced in the competition law, but also prevents the consultation of data potentially significant for the economy, that is, economic interests of the Republic of Serbia. Any subsequent disclosure of such information would impede both the proceedings and the competition policy as a policy system introduced in the Republic of Serbia, while the Commission would be faced with the action for damages arising from disclosure of trade secrets and confidential information.

The Commission has reiterated its policy to assess the facts and evidence justifying the requests for protection of information in each individual case and the possibility to withhold access to the requested information, while such possible action is never pre-established.

It is also proposed to align the legislation with the Regulation (EC) no 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Parliament, Council and Commission documents, where the authority would be able to refuse or restrict the access to information of public importance where such disclosure would undermine the protection of commercial interests of natural or legal persons.

Opinion on the Proposal of the Conclusion of the Government of the Republic of Serbia on adopting the Negotiating position of the Republic of Serbia for Negotiation Chapter 14 – Transport Policy, with rationale, summary and text of the Negotiating position

The Ministry of Construction, Transportation and Infrastructure has submitted to the Commission for Protection of Competition, with a request for its opinion, the Proposal of the Conclusion of the Government of the Republic of Serbia on adopting the Negotiating position of the Republic of Serbia for Negotiation Chapter 14 – Transport Policy, with rationale, summary and text of the Negotiating position, in Serbian and English

Upon considering the Proposal of the Conclusion of the Government of the Republic of Serbia on adopting the Negotiating position of the Republic of Serbia for Negotiation Chapter 14 – Transport Policy, with rationale, summary and text of the Negotiating position, from the aspect of competences entrusted to the Commission for Protection of Competition, the Commission Council has delivered its opinion with no objections to the content of the documents submitted.

Opinion on the Proposal of the Regulation on the Methodology of Public Policy Management, Policy and Regulatory Impact Assessment, and Content of Individual Public Policy Documents

The Public Policy Secretariat of the Republic of Serbia has submitted to the Commission for Protection of Competition, with a request for its opinion, the Proposal of the Regulation on the Methodology of Public Policy Management, Policy and Regulatory Impact Assessment, and Content of Individual Public Policy Documents.

Upon considering the material submitted, the Commission Council has delivered its opinion from the aspect of competences entrusted to the Commission.

The Proposal of the Regulation on the Methodology of Public Policy Management, Policy and Regulatory Impact Assessment, and Content of Individual Public Policy Documents, in Article 8 contained therein regulates the scope of an ex-ante impact analysis, that is, the conditions under which proposers should conduct in-depth impact analyses. In this regard is envisaged that the in-depth analysis should be conducted if it is assessed that a particular measure envisaged by a certain public policy document or regulatory solution will cause considerable impact on natural persons, legal persons, budget, the environment or public authorities.

In Article 8(4/5) is regulated that the term ‘considerable impact’ also means the impact on market and market competition.

In this regard, the Commission has underlined that for the purposes of providing a more precise definition, uniform terminology, as well as improved proposer’s assessment when opting to implement an in-depth analysis, it is necessary to revise Article 8(4/5) so as to read: “5) the impact on market and market conditions (for instance, introduction of barriers to

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

entry and/or exit; restriction of competition; creation of preconditions for achieving more favorable position of individual business groups or other legal entities; impact on productivity or innovations; price maintenance or output restrictions; impact on quality, volume or availability of particular products and services, etc.)”

If the proposer of a public policy or regulation evaluates that is necessary to conduct an in- depth impact analysis, such review needs to be conducted by using the analytical techniques stipulated in Section III of the Regulation.

However, the provisions stipulated therein lack the elaboration of Article 8(4/5), that is, no individual analysis addresses the regulatory impact analysis on markets and competition. In this regard, the Commission has underlined that the proposer who has assessed that a measure or solution may impact the market and competition and for that reason implements the in- depth analysis, also needs to consider the effects of proposed solutions on competitive conditions when performing the economic impact analysis, and has proposed to amend Article 27(1) of the Proposal of the Regulation so that after the words “on the economy in general” be added “and competitive conditions”, and after the words “competitiveness” be added “of the economy”.

If accepted, then is also needed to amend Article 37(3/6), second indent, so that after the words “and especially on” the following words be added: “competitive conditions”, and also after the word “competitiveness” the following words be added “of the economy”.

In view of the need for greater specificity of proposed revisions, it is necessary to add a new question after Q2 in Annex 6 of the Proposal of the Regulation, Key Considerations for the Economic Impact Analysis: “3) Whether or not the options considered affect competitive conditions, and if so, in what manner?”

In the opinion is concluded that the passing of the Proposal of the Regulation that stipulates the commitment to conduct an in-depth policy and regulatory impact assessment on market and competition as well, is of paramount importance in securing equal business conditions and free market access, in addition to preventing potential restrictions or distortions of competition through administrative channels.

Opinion on the Draft Law on Agency Employment The Ministry of Labor, Employment, Veteran and Social Affairs has submitted to the Commission for Protection of Competition, with a request for its opinion, the Draft Law on Agency Employment, with supporting material. In line with its competences, the Commission Council has delivered its opinion to the Draft Law on Agency Employment, with no objections to the content of the documents submitted from the perspective of the implementation of the Law on Protection of Competition.

Upon considering the provisions of the Drat, the Council has established that this regulation governs the rights and obligations of employees, that is, employment relationship between employers and employees, which preclude its implementation pursuant to Article 4 of the Law on Protection of Competition.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Opinion on the Draft Law on Amendments to the Law on Free Access to Information of Public Importance

Independently of the opinion provided by the Commission in a public debate, the Ministry of State Administration and Local Self-Government has submitted to the Commission for Protection of Competition, with a request for its opinion, the Draft Law on Amendments to the Law on Free Access to Information of Public Importance. Considering the legal solution envisaged by the Draft regulating that decisions issued by individual authorities are entitled to the judicial protection alone, the Commission has proposed that the Commission’s decisions, which are final in administrative procedure, be also included in said legal regime. Article 10 of the Draft stipulates that in addition to the previously defined institutions against whose decisions is not permitted to take action, the decisions issued by the National Bank of Serbia be also included in this cluster. The reasons presented in the Rationale to the Draft with respect to this solution relate to the independence and autonomy of the NBS, responsibility for its work before the National Assembly, as well as the definite nature of its decisions in administrative procedure, fully coincide with the reasons that would enable the Commission to deprive the Commissioner from the right to take action with respect of its decisions. In that regard, the Commission has proposed that the following words be added: “of the Commission for Protection of Competition” after the words: “of the National Bank of Serbia”.

Opinion on the Draft Law on Health Care

The Ministry of Health has submitted to the Commission for Protection of Competition, with a request for its opinion, the Draft Law on Health Insurance, with supporting material. Upon considering the Draft Law on Health Insurance, the Commission Council has delivered its opinion with no objections to the content of the documents submitted from the perspective of the implementation of the Law on Protection of Competition

In its opinion, the Commission has also established that the introduction of the Registry of health institutions and the Single records of health entities, maintained by the Business Registers Agency, will be of paramount importance, which will enable the creation of a database that might prove highly beneficial and useful for the work of the Commission for Protection of Competition, particularly when examining the structure and state of competition on individual markets.

8.2. OPINIONS ON THE IMPLEMENTATION OF THE LEGAL PROVISIONS GOVERNING MERGERS

Acting on requests of interested parties, the Commission has issued 19 opinions in 2018 regarding the implementation of the provisions of the Law governing mergers, and in that way has exercise one of its legal competences. The requests for the provision of opinions have been mostly submitted for two main reasons: in order to establish the nature of a transaction and assess the existence of a merger created by implementing such transactions, and in order to assess the fulfillment of requirements for merger notifications relating to annual revenue thresholds of undertakings stipulated by the Law.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The Commission establishes that the delivery of opinions from the domain of merger investigations was in all cases provided in the shortest possible, reasonable time limit (whereby the deadline for the provision of opinions is not stipulated by the Law), and that it has replied to all received requests for the delivery of opinions. The opinions are solely given on information provided by applicants, thus the Commission does not preclude the possibility of issuing different opinions in cases of amendments/corrigenda to the reasons and circumstances indicated.

In 2018, the Commission has received a total of 23 requests for the provision of opinions from the domain of merger investigations, whereas two requests have been referred to the competence of the Legal division following additional clarification of related requests, and later closed in the form of opinions on the sale of a bankruptcy debtor. The Commission had no cases in which the parties have withdrawn their requests, while it was decided to carryover one request for the provision of opinion into the following year.

Provided below is a brief overview of issued opinions in relation to frequently asked questions of undertakings, submitted for the Commission’s interpretation.

Brief description of the request: The parties have requested the Commission to assess the fulfillment of requirements for merger notifications relating to annual revenue thresholds of merger participants. The Commission was assessing whether the merger participants concerned (directly or via affiliated undertakings, within the meaning of the Law) generate revenues laid down in Article 61 of the Law, based on which was assessing the requirement for compulsory merger notification. Issued opinions : The Commission has issued two opinions in which has concluded on the absence of compulsory merger notification due to the failure to meet any of alternative requirements for merger notification laid down in Article 61(1) of the Law.

***

Brief description of the request: The parties have requested the Commission to assess the fulfillment of requirements for merger notifications relating to annual revenue thresholds of merger participants when the control is acquired over a bankruptcy debtor or over the assets of bankruptcy debtor which may represent an independent business entity.

Issued opinions : In all related cases, the Commission has reiterated that the purchase of bankruptcy debtor as a legal person or assets of a bankruptcy debtor which may represent an independent business entity creates a concentration. In 2018, the Commission has issued four opinions in which has concluded on the absence of compulsory merger notification due to the failure to meet any of alternative requirements for merger notification laid down in Article 61(1) of the Law.

***

Brief description of the request: The parties have requested the Commission to issue an opinion in relation to the fulfillment of requirements for merger notifications when the related merger is created by purchase of assets of a company in the privatization process.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Issued opinions : The Commission has issued five opinions in which has assessed that the transactions described represent mergers within the meaning of Article 17 of the Law. Based on information on revenues of merger participants, the Commission has accordingly, in all cases, concluded on the absence of compulsory merger notification due to the failure to meet any of alternative requirements for merger notification laid down in Article 61(1) of the Law given that merger participants have not generated revenues stipulated in Article 61 of the Law.

***

Brief description of the request: The parties have requested the Commission to issue an opinion in relation to the fulfillment of requirements for merger notification when the related merger is created by leasing business premises in which the company that owns said premises has established certain retail trade activities (retail store), or by leasing a manufacturing site.

Issued opinion : Based on the above-presented circumstances and in line with the information provided in requests for the provision of opinions, the Commission has issued two opinions and concluded that the parties are obligated to notify the Commission on these mergers given that pursuant to Article 17(1/2) of the Law, said undertakings acquire control over parts of another undertakings which may represent independent business entities, and that the requirements laid down in Article 61(1) of the Law for merger notifications are fulfilled.

***

Brief description of the request: The parties have requested the Commission to issue an opinion on transactions relating to transfer/acquisition of shares between affiliated entities. Issued opinion: The Commission has issued two opinions indicating that such transactions do not represent a concentration because they are considered to be internal reorganization within a group of companies, since they are implemented between affiliated undertakings within the meaning of Article 5 of the Law on Protection of Competition.

***

Brief description of the request: The party has requested the Commission to issue an opinion in relation to the fulfillment of requirements for merger notifications when the related merger is created by temporary acquisition of shares in a target company in order to implement the phase one of planned winding-up proceedings of said company.

Issued opinion : The Commission has issued an opinion that planned transaction does not represent a concentration within the meaning of Article 17(1) of the Law, foremost considering that based on the data submitted, this transaction will not create change in the joint control of founders of the target company.

***

Brief description of the request: The party has requested the Commission to issue an opinion in relation to the fulfillment of requirements for merger notifications in the case when two companies are incorporating a joint venture company (50% share each), which will not operate on a long-term basis and not have all functions of an independent undertaking, and which will be used to acquire joint control over another undertaking.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Issued opinion : The Commission has issued an opinion that incorporating a joint venture company that will not operate on a long-term basis and not have all functions of an independent undertaking is not a concentration, within the meaning of Article 17(1) of the Law, but that acquisition of joint control via said joint venture company over another undertaking does represent a merger. Accordingly, the parties are obligated to notify the Commission on such transaction created by acquisition of joint control via a joint venture company.

***

Brief description of the request: The party has requested the Commission to issue an opinion in relation to the fulfillment of requirements for merger notifications in the case of potential acquisition of a portfolio of non-performing loans approved to legal entities and entrepreneurs, sold by a bank to a company solely for the recovery of individual claims.

Issued opinion : The Commission has issued an opinion that the case concerned is not a concentration between undertakings within the meaning of Article 17 of the Law on Protection of Competition, since it could not assume that the company which buys-in the portfolio of non-performing loans approved to legal entities and entrepreneurs will acquire control over an undertaking and/or its part within the meaning of the Law.

***

Brief description of the request: The party has requested the Commission to issue an opinion in relation to the fulfillment of requirements for merger notifications in the case of a transaction where the party acquires additional share (9%) in a company where it already owns 51% of shares and where the party executes individual control.

Issued opinion: The Commission has issued an opinion that the party is not obligated to notify the Commission on the transaction given that the case does not create a merger between undertakings within the meaning of the Law. The concentration between undertakings implies the acquisition or change of a form of control, thus cannot be not created without the change of a form of control and only with the acquisition of additional shares in a company where the party already executes individual control.

***

8.3. OPINIONS ON THE IMPLEMENTATION OF THE LEGAL PROVISIONS GOVERNING INFRINGEMENTS OF COMPETITION

Brief description of the request : AD Aerodrom Nikola Tesla Beograd has submitted a request for the provision of opinion on the implementation of the Law, that is, its part relating to individual exemption of restrictive agreements from prohibition, in relation to the binding draft Agreement for the financing, development through the construction and reconstruction, maintenance and management of the infrastructure of AD Aerodrom Nikola Tesla Beograd and the performance of the activity of airport operator.

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Issued opinion: The Commission has indicated that the party has assessed the transaction concerned, that is, said concession as a concentration whose inherent part is the Agreement concerned, thus the Agreement or its individual provisions will not be reviewed individually but as part of the assessment of the entire transaction.

***

Brief description of the request : Opinion on the obligation to submit a request for individual exemption of restrictive agreement from prohibition due to the change to the provisions of agreements subject to individual exemption of restrictive agreement from prohibition, relating to the change of individual commercial terms and conditions. During November and December 2018, the Commission has received a total of eleven requests for the provision of opinion, on which the authority has acted in a uniform manner, relating to the planned changes of agreements, namely seven Retail management agreements, two Reseller partner agreement, and two Advanced purchase agreements. All listed agreements relate to the pneumatics market in the territory of the Republic of Serbia.

Issued opinion: In line with the recent practice of the Commission, it is recognized that the request contains questions relating to the change in regulations governing the concrete business activity, and in that regard the request is directed at obtaining legal assistance and cannot be reviewed from the aspect of provision of opinions, but may represent the subject- matter of proceedings conducted before the Commission pursuant to Article 12 and Article 60 of the Law.

Based on the content of the submission and the manner in which it is formulated, it is assessed that the Commission is requested to provide an opinion on the contract modifications, specifically whether certain changes are restrictive and whether they have an impact on the potential restrictive nature of exempt agreements. Based on the Commission’s assessment, such request would represent the so-called ‘negative clearance’ request, whereas the Commission underlines that it does not provide opinions or assessments on whether some acts or agreements which individual undertaking is planning to take or conclude is not contrary to the Law, or whether such planned changes represent a restriction within the meaning of Article 10 of the Law. The parties are instructed, if they believe that said provisions represent restrictions which are not exempt from the prohibition in a proceeding conducted before the Commission, to submit to the Commission a request for individual exemption within the meaning of Article 12 of the Law and in accordance with the Regulation on the content of request for individual exemption of restrictive agreements from prohibition (Official Gazette of the RS 107/2009), given that the Commission is solely competent to assess whether agreements or their individual provisions fulfill the conditions for individual exemption from prohibition based on requests filed by undertakings.

***

Brief description of the request : The Association of Serbian Insurers has contacted the Commission by filing the Draft code of conduct governing mandatory insurance operations, with a request for its opinion.

Issued opinion : The Commission has reviewed the Draft code of conduct in terms of its compliance with competition rules and has determined the following:

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

In view of the fact that from the perspective of regulatory framework, a significant degree of restriction on insurance companies to independently enact business decisions is established (uniformity of agreements, insurance premium system and minimum tariff approved by the NBS, maximal commission, etc.), the Commission has noted that little space is left for insurance companies to actually compete; the circumstance indicating that this kind of insurance holds a 45% market share in non-life insurances and 35% in the total earned insurance premium in the territory of the Republic of Serbia in 2017, is viewed as essential, based on which the Commission has primarily based its commentaries and suggestions on circumstances which could enable consumers to have increased choices, regarding the creation of a level playing field, insurance market access for new players, and on possibilities for the exchange of business sensitive information; given that the Draft code of conduct stipulates that the Association collects and processes data necessary for the conclusion of compulsory insurance agreements, that is, regulates the collection, processing, retention and provision of data to the National Bank of Serbia and the Association by insurance companies, the Commission has indicated on the lack of a ‘permit’ granted by means of group exemption for ‘cooperation’ between insurance companies, particularly emphasizing that Regulation (EC) 267/2010, no longer in force as of March 2017, has not envisaged the collection of data for car insurance purposes; In terms of a model designed to monitor the sale of car insurance policies in respect of which the Association can temporarily block the sale of car insurances and inform the NBS when it identifies an ‘unusual trend’ in the sale of related insurance policies, the Commission has underlined that this kind of approach may place smaller insurance companies at a particular disadvantage; When providing its opinion, the Commission has regarded that the respective regulatory framework significantly restricts competition in this insurance sector, and for that reason the question arises whether there are any tools left for undertakings to be able to actively compete with established undertakings on said market, highlighting that this circumstance is also of paramount importance for new undertakings who are planning to enter the market in the Republic of Serbia, as well as for those already present in Serbia but in different insurance sectors; The Commission has underlined that it understands and welcomes the need expressed by the Association that “through the proposed procedure and by using the IT center capacities can prevent possible violations of car insurance regulations”, but has recommended that the implementation of this code of conduct stays within the scope of the Law on Compulsory Traffic Insurance, and expressed its concern that the code of conduct concerned may cause the so-called ‘freezing’ of the status quo on the market, with the preservation of the current market share distribution, that is, may additionally restrict the use of the remaining competitive tools, in the context of ex ante regulation, which may cause an inert atmosphere between rivals causing a stagnation in market activities.

***

Brief description of the request : Pursuant to Article 47 of the Law and decisions of the Commission Council, the Commission continuously implements a sector inquiry into the oil derivatives wholesale and retail market. In a letter to the Ministry of Mining and Energy, the Commission has presented its view on the current state of affairs on the markets of oil derivatives quality monitoring and labeling (marking) of oil derivatives , which are directly or indirectly connected with the oil derivatives wholesale and retail market. The importance of regulatory framework in this sector is particularly indicated, as well as its impact on the free competition, that is, on the significance of cooperation between the

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Commission and other line institutions towards the creation of a legal and business environment which will improve the free market competition. In that regard, the Commission has indicated to the Ministry on certain facts which affect the free market competition in a non-positive manner.

Issued opinion : Based on the established facts on the markets of oil derivatives quality monitoring and labeling (marking) of oil derivatives, the Commission has recommended the following to the Ministry:

• not to extend the agreement concluded with the consortium that was awarded a public tender in 2013; • enable competition in a public bid procedure, separately for the oil derivatives and biofuel quality monitoring services and for the labeling (marking) of oil derivatives; • promptly approach to the elaboration of amendments to the legal framework in order to regulate the selection process in such a way as to envisage clear award rules and protection of all bidders, and shortening of the total period of contracts.

The Government of the Republic of Serbia was informed on the issued opinion.

***

Brief description of the request : The Commission has received a submission titled “Request for the Administrative and Professional Service of the Commission to deliver a basic/preliminary opinion on whether the passing of the Law on Real Estate Valuers (Official Gazette of the RS 108/2016) has distorted/infringed competition” in relation to appointed expert witnesses holding adequate decisions on the appointment of expert witness of certain profession, in the area of real estate valuations, issued by the Ministry of Justice.

In the letter is also stated that the implementation of said regulation disables appointed expert witnesses in the area of real estate valuations to work, and that expert witnesses have already presented their objections during the drafting procedure. It is underlined that the adoption of this law has created a monopoly position of persons holding certificates issued abroad, in addition to the issue of the legal framework regulating examinations for expert witnesses and obtaining licenses.

The Commission’s acting: In relation to the request concerned, the Commission has informed the party that opinions on draft regulations are only issued to line authorities.

8.4. OPINIONS ON REPORTS OF REGULATORY BODIES

The Commission has issued four opinions based on requests of regulatory bodies, whose brief description and content is presented below.

Brief description of the request : The Commission has received a request of the Regulatory Agency for Electronic Communications and Postal Services (RATEL) for the provision of opinion on the Report on the market review: Wholesale local access to the public telephone network provided at a fixed location.

100

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Issued opinions : When providing an opinion on the request concerned, the Commission has indicated, inter alia, that the Report is based on principles compliant with regulations governing competition, while is necessary to align certain findings and conclusions presented therein and amend them with related information on demand, indicators on market dynamics in a three-year period and potential competition on the market concerned.

***

Brief description of the request : The Commission has received a request of the Regulatory Agency for Electronic Communications and Postal Services (RATEL) for the provision of opinion on the Report on the market review: Wholesale market for high-quality access provided at a fixed location.

***

Brief description of the request : The Commission has received a request of the Regulatory Agency for Electronic Communications and Postal Services (RATEL) for the provision of opinion on the Report on the market review: Wholesale central access provided at a fixed location for mass-market products.

Issued opinion : The Commission has provided an opinion that the Report is drafted in line with the principles of competition, while is necessary to clarify certain findings and conclusions presented therein and amend them with related information, foremost on the size and structure of the wholesale market. Namely, in addition to technical characteristics the wholesale market analyzed should contain indicators of the market size, dynamics, number and capacity of leased lines at the wholesale level per operators and technologies used by operators for the provision of the service concerned in wholesale. Also, the Commission believes that the analysis should present individual shares of each operator active in the wholesale, that is, the number of leased lines for own company (self-supply) and number of leased lines to other operators (external provision of leased line capacities to third parties). In addition to said differentiation, it would be beneficial if the analysis would contain information on the intended purpose of leased lines, that is, on the number of leased lines used for the connection of own network and for the connection with networks of other operators, and/or for the provision of retail services, both to own company and other operators.

***

Brief description of the request : The Commission has received a request of the Regulatory Agency for Electronic Communications and Postal Services (RATEL) for the provision of

101

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

opinion on the Draft decision on the definition of relevant markets susceptible to ex ante regulation.

Issued opinion : The Commission has provided an opinion that the Draft decision on the definition of relevant markets susceptible to ex ante regulation is drafted based on inquiries into the e-communications market, conducted in line with the principles of competition. The Commission has indicated that it retains the right to potentially infer differently in respect of conclusions presented in the Reports on the market review, in line with regulations governing competition, and in particular in terms of the definition of relevant markets, both in production and geographic dimension, whereas is possible to have discrepancies between specific definition and definitions adopted for the need of the Reports on the market review.

8.5. OPINIONS ON THE PROVISIONS OF THE LAW ON BANKRUPTCY

In 2018, the Commission has received a total of 24 requests for the provision of opinions in bankruptcy procedures. Thirteen requests have related to the reorganization plans of bankruptcy debtors, and nine on the sale of the bankruptcy debtor as a legal entity. Out of the total number of received requests, two are received in the Commission as requests for the provisions of opinion on the fulfillment of requirements for merger notifications, which are decided by issuing opinions on the sale of the bankruptcy debtor as a legal entity.

Out of the total number of requests relating to the reorganization plans (13), the parties in nine requests have asked for the provision of opinion on revised reorganization plans (amendments to the plan, corrigendum to the plan, consolidated version of the plan), while the Commission has acted on these kind of requests by submitting notifications to the parties concerned as addenda to the opinions issued.

In addition to formally filed requests, the Commission has in several instances received emails containing requests for interpretation or instruction relating to obligation to obtain opinions on the harmonization of reorganization plans, that is, on the sale of the bankruptcy debtor or its estate, with regulations governing competition.

The Law on Amendments to the Law on Bankruptcy (Official Gazette of the RS 113/2017), published on December 17, 2017, and entered into force on December 25, 2017, amended the provisions of the Law on Bankruptcy (Official Gazette of the RS 104/2009, 99/2011-as amended, 71/2012-CC decision and 83/2014), relating to the competence of the Commission to provide opinions in procedures relating to the sale of all or part of the property of the bankruptcy debtor's estate (Article 132(10)), as well as to the sale of bankruptcy debtor as a legal entity (Article 135(3)), and in procedures relating to the implementation of measures stipulated in reorganization plans of bankruptcy debtors (Article 157(5)).

Based on the above-mentioned legal amendments, the provisions of the Law on Bankruptcy regulating the obligation to obtain the Commission’s opinion in the mentioned cases are deleted or amended.

In such manner, as of Dec 25, 2017, when the law concerned has entered into force, legal grounds for issuing opinions of the Commission under the provisions of the Law on Bankruptcy ceased to exist, except in bankruptcy cases not closed by the date on which this

102

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

regulation has entered into force, and which will be closed in accordance with regulations in force until the date of entering into force of the amended law.

The information relating to 2018 concern those bankruptcy procedures which were instituted prior to, and remained open by December 25, 2017.

Regardless of amendments to the Law on Bankruptcy as presented here, buyer of the bankruptcy debtor that acquires control and ownership interest in the bankruptcy debtor by way of executed purchase is obligated to investigate the fulfilment of conditions pertaining to the notifiability of concentrations within the meaning of Article 61 of the Law.

103

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

9. SECTOR INQUIRIES

9.1. ROLE AND RELEVANCE OF CASEWORK-RELATED ECONOMIC INQUIRIES

During 2018, the Division for Economic Analyses took an active role in handling competition cases, given that some have implied an in-depth analysis by applying sophisticated economic/econometric techniques. The implementation of such techniques was aimed at obtaining results, which in conjunction will other facts and evidence, have constituted the basis for objective and impartial decision-making and identification of anticompetitive behaviors of undertakings.

For the purposes of matters falling within the scope of the Restrictive Practices Division and the Merger Investigation Division, the following markets are analyzed during the period referred:

1. cigarettes market; 2. wholesale and retail market of media (TV) content distribution; 3. thermal energy supply market of consumers in the City of Niš; 4. bus station service market; 5. mobile cinema market; 6. payment cards market; 7. unrecoverable claims market; 8. ice-cream production and sales market; 9. athletic equipment and props market; 10. pharmaceuticals market in a concrete public procurement ; 11. milk and dairy market in a concrete public procurement, and 12. sunflower repurchase market.

9.2. SECTOR INQUIRIES AND INQUIRIES INTO COMPETITIVE CONDITIONS

In accordance with its legal powers and towards identifying circumstances which may have anticompetitive effects, the Commission has completed three sector inquiries and two inquiries into competitive conditions in 2018, namely:

1. Sector inquiry into the oil derivatives retail market; 2. Sector inquiry into the baby equipment wholesale and retail market; 3. Retail sector inquiry into the sale in nonspecialized stores with food, beverages and tobacco predominating; 4. Inquiry into competitive conditions on the tire market; 5. Inquiry into competitive conditions on the cement market.

104

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Chart 21: Overview of the number of sector inquiries and inquiries into competitive conditions on individual markets, 2013-2018

5 5 num ber 4 of inqui 4 ries 3 3

2 2

број анализа 2

1 1

0 2013. 2014. 2015. 2016. 2017. 2018. годинаyear

9.2.1. Sector inquiry into the oil derivatives retail market

Pursuant to Article 47 of the Law, the Commission has conducted a sector inquiry into the oil derivatives retail market for 2017.

The main objective of the preparation of the report was to analyze the competitive conditions prevailing on the oil production and processing market and on the oil derivatives retail market in order to identify potential market weaknesses, that is, the existence of anticompetitive conditions. Additionally, the objective of this inquiry was to obtain a clearer picture of the manner and mechanisms for the functioning of this market, obtained through a comparative analysis and identification of particular tendencies and trends in relation of individual economic categories.

The subject of the sector inquiry was to establish relations between main competitors in the predefined market segments, assessed through the prism of their market shares and achieved operating results.

In line with the defined objective and subject, the Commission has conducted an inquiry into competitive conditions in the following market segments, defined for the purpose of this sector inquiry solely and exclusively:

• oil and oil derivatives production and processing market; • gasoline retail market; • diesel retail market;

105

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

• liquid petroleum gas retail market.

The Commission had contacted line state authorities and business entities operating on said markets with requests for the provision of information. The research is conducted using desk research and survey methods. The use of a combination of qualitative and quantitative research methods when processing collected data was rendered necessary by the subject and the objective of the inquiry, thus the methods used when preparing the sector inquiry were the descriptive research method, method comparison and statistical method. The correlation and regression analyses were used in the analysis of oil and oil derivatives price fluctuations.

An integral part of the report are conclusions based on which, inter alia, tendencies prevailing on the oil production and processing market can be perceived, as well as on the oil derivatives retail market, in addition to the structure and retail price trends of selected oil derivatives.

The Commission has particularly valued the degree of implementation of recommendations provided in the previous report and has noted a partial progress in keeping statistical records on oil and oil derivatives. In that regard, the Ministry of Trade, Tourism and Telecommunications has created the Public database on petrol stations in late 2017, and obligated undertakings to provide information on energy facilities used for the performance of the energy activity. Furthermore, the Ministry of Mining and Energy has stated that a database was created in 2018, which will allow for monitoring and processing of data provided by energy entities, in relation to the trade in oil derivatives. In that regard, aggregate data on the trade in oil and oil derivatives would be available to the Commission as of 2018, which will constitute a significant data source for the future inquiries into this market.

The Commission has reiterated the significance of keeping precise statistical records on oil and oil derivatives, keeping in mind the obligation of energy entities operating in the oil and oil derivatives production and trade sector stipulated under the Law on Energy. Also, the Commission has emphasized the importance of cooperation with other competent authorities towards creating the legal and business environment that would enable fair and free market competition for all undertakings.

The full report on the sector inquiry, with conclusions and adopted recommendations, is published on the Commission’s webpage in the section “Sector inquiries”, while duly observing of the requirements of undertakings of confidentiality of certain data.

In addition to publishing on its webpage, the Commission has forwarded the Report to the competent state authorities: Ministry of Trade, Tourism and Telecommunications, Ministry of Mining and Energy, Committee on the Economy, Regional Development, Trade, Tourism and Energy of the National Assembly of the Republic of Serbia, and the Chamber of Commerce and Industry of Serbia.

9.2.2. Sector inquiry into the baby equipment wholesale and retail market

Pursuant to Article 47 of the Law, the Commission has conducted a sector inquiry into the baby equipment wholesale and retail market.

106

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The objective of the sector inquiry was to assess the size and volume of the defined market and identify major undertakings. In addition to the market structure, it was also necessary to conduct a correlation analysis of distribution channels. Also, an additional objective of the inquiry was to detect particular tendencies and trends through a comparative analysis of turnover indicators for observed product categories and to draw concrete conclusions on market mechanisms.

For the inquiry related purposes, eight narrower market segments are identified within the broader baby equipment market. They relate to products considered essential upon the childbirth, such as infant formula products, diapers, strollers and prams, cribs, car seats, and highchairs. These products are subject to the national VAT refund policy, while as on July 1, 2018, when the Law on Financial Support to Families with Children enters into force, parents/caretakers are entitled to a lump sum of 5.000 dinars for baby equipment procurement. In addition to said categories, the inquiry also included two more product categories – baby clothing and footwear (0-36 months of age).

When estimating the size of individual markets, data on the value of imports and wholesale revenues generated by the largest importers and/or wholesalers are taken into consideration, as well as data on retail sales of seven specialty baby chain stores, ten retail chains for sale in non-specialized stores and two drugstores. The inquiry has shown that all covered product categories are mainly or entirely imported. In the case of particular product categories where data on imports were not available or have offered a limited use value, the analysis was focused on retail market as the final link in a chain of supply to final consumers.

When preparing the sector inquiry, the Commission has collected agreements concluded between undertakings, after which it was determined that some agreements contain resale price maintenance clauses, representing grounds for opening several antitrust proceedings pursuant to Article 10 of the Law on Protection of Competition.

The full report on the sector inquiry, with conclusions and adopted recommendation, is published on the Commission’s webpage in the section “Sector inquiries”, while duly observing of the requirements of undertakings of confidentiality of certain data.

9.2.3. Retail sector inquiry into the sale in nonspecialized stores with food, beverages and tobacco predominating

Pursuant to Article 47 of the Law, the Commission has conducted a sector inquiry into the sale in nonspecialized stores with food, beverages and tobacco predominating, relating to a three- year period (2014-2016).

The exceptional value of this trade segment for the overall national economic activity, measured with the relevant macroeconomic indicators, in addition to significant number of changes and acquisitions of control in the previous period and relatively small number of initiatives have represented some of the main factors necessitating the inquiry into this market.

The subject-matter of this research was to establish relations between competitors on the market in terms of assessing their market share and relative power, but also to conduct an

107

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

analysis of the relations between suppliers and trade chains, possible effects of those relations on the state of market competition, as well as to analyze the role and importance of private label products in product portfolios of selected undertakings.

The goal of this research was to perform a comprehensive economic and regulatory analysis of the dynamics of competition on the market concerned, which included the identification of potential market weaknesses and, in conformity with related findings, provision of adequate recommendations directed at advancing the legal and fair business conduct of all undertakings. Also, indirectly, the research goal was the promotion of competition on the market identified as the subject of this inquiry

The research was conducted using a combination of desk and field research methods (inventory and survey methods). All collected data (primary and secondary) were processed using qualitative and quantitative techniques and presented in graphs with numeric values or in a tabular form.

One of the main goals of this sector inquiry was to create a database on trade companies which may represent a good starting point for the future research. The integral part of the report relates to concluding observations and recommendations. Namely, the Commission has indicated on the importance and need to establish a public registry of trade companies, which would significantly facilitate the monitoring of this trade segment in the future. Furthermore, the Commission has indicated on the importance of cooperation with competent state authorities in terms of submission of all relevant laws and regulations for the delivery of its opinions.

9.2.4. Inquiry into competitive conditions on the tire market

Pursuant to the provisions of Article 21(1/6) of the Law, the Commission has conducted an inquiry into competitive conditions on the tire market in order to ensure a more qualitative and comprehensive approach in the handing of competition cases, aimed at establishing the market structure, scope of the market, relations between main competitors and their respective market shares. The Commission has separately viewed the tire market by category of motor vehicles, namely for motor vehicles, buses and trucks, motorcycles and bicycles, agricultural vehicles and machinery, and construction and industrial vehicles and machinery. Each individual market is separately analyzed and reviewed by all phases – from the imports and production, via sales to the exports of the products concerned.

The full report on the inquiry into competitive conditions on the tire market is published on the Commission’s webpage in the section “Sector inquiries”, while duly observing of the requirements of undertakings of confidentiality of certain data.

108

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

9.2.5. Inquiry into competitive conditions on the cement market

Pursuant to the provisions of Article 21(1/6) of the Law, the Commission has conducted an inquiry into competitive conditions on the cement production and sales market in the territory of the Republic of Serbia for the period 2014-2017.

The primary objective of the inquiry was to examine the structure and dynamics of competition on the market concerned. For the inquiry-related purposes, the Gray (Portland) cement market is identified as the relevant product market. Within the Gray (Portland) cement market, the Commission has specifically analyzed the production, import, export, and wholesale segments. For the inquiry-related purposes, the market of the Republic of Serbia is identified as the relevant geographic market, with the wholesale market also observed at the regional level, that is, (selected) municipalities and cities.

In order to conduct the inquiry, the Commission has used the data provided by the Ministry of Finance-Customs Administration on the cement imports and exports, publicly available data of the Statistical Office of the Republic of Serbia on the production and sales of the gray cement, as well as data supplied by undertakings on the Commission’s request, cement manufacturers and importers, namely: CRH (Srbija) d.o.o. from Popovac, Lafarge beočinska fabrika cementa d.o.o. from Beočin, „TITAN“ d.o.o. from Kosjerić, CEMEX SRB DOO from Niš, and NEXE BETON DOO NOVI SAD from Veternik.

The analysis has demonstrated that the cement production in Serbia in the period observed has recorded an upward trend at the average annual rate of 6%, making the 2017 production output 19% higher than in 2014. The production increase during the observed four-year period by 19% was followed by a 5% decrease in the average selling price, while the market structure and market shares have remained relatively stable.

The analysis has also demonstrated that the cement of foreign origin was increasingly more represented on the domestic market in 2017, accounting for 15 percent of the total sales. The total cement exports during the observed period have also shown an upward trend, growing by 80% in 2017 against the export levels in 2014.

The full report on the inquiry into competitive conditions on the cement market is published on the Commission’s webpage in the section “Sector inquiries”, while duly observing of the requirements of undertakings of confidentiality of certain data.

109

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

10. COOPERATION WITH REGULATORY BODIES, STATE AUTHORITIES AND ORGANIZATIONS, FACULTIES AND THE CIVIL SECTOR

10.1. AGREEMENTS AND COOPERATION WITH REGULATORY BODIES AND STATE AUTHORITIES AND ORGANIZATIONS

The Commission recognizes that a qualitative information exchange system established with all relevant institutions, organizations and bodies whose founder is the Republic of Serbia is an important prerequisite for its more efficient work. In that regard, permanent exchange of information and data in daily operations is also of the essence, in addition to reaching a consensus on issues of common interest and joint participation in activities contributing to the promotion of respective policies and qualitative system for the exchange of information with all competent authorities in the Republic of Serbia, whose work can in any form prove beneficial for the development of market competition.

Cooperation with institutions with whom the Commission has signed protocols on cooperation in the previous years has proved highly valuable, foremost in terms of exchange of information, but also in the context of exchange of views on all current issues or proceedings conducted before the Commission or other bodies and institutions.

During previous years, the Commission has signed protocols on cooperation with the National Bank of Serbia, Ministry of Interior, Energy Agency, Regulatory Agency for Electronic Communications and Postal Services – RATEL, Business Register Agency, Serbian Chamber of Commerce and Industry, Anti-Corruption Agency, and the Republic Commission for Protection of Rights in Public Procurement Procedures.

In 2018, the Commission and the Regulatory Authority of Electronic Media - REM have signed the Agreement on Cooperation, whose implementation will enable more substantive cooperation between the Commission, an independent and autonomous organization that performs public competencies in accordance with the Law, and the REM, an independent and autonomous regulatory organization that performs public competencies in accordance with the provisions of the Law on Electronic Media, aimed at protecting the public interest and strengthening the integrity of these authorities. The Agreement stipulates continuous exchange of information and data, as well as reaching a consensus on issues of common interest, in addition to shared activities that contribute to the affirmation of policies implemented by the Commission and REM.

The President of the Commission, Dr Miloje Obradović, and the Director of the Customs Administration, Miloš Tomić, have signed the Agreement on Cooperation between the Commission and the Ministry of Finance - Customs Administration in late 2018. The purpose of this document is the advancement of cooperation towards ensuring more efficient implementation of legal competences of both institutions. The Agreement envisages continuous exchange of information and data between the two institutions, cooperation on advancing know-hows and reaching a consensus on issues of common interest.

110

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Moreover, all signed agreements are a result of activities undertaken by the Commission in the previous years, aimed at expanding the cooperation with regulators since it was assessed that there is still room for advancement of that cooperation.

In the previous period, the Commission has also opened talks on closer cooperation with the Tax Administration of the Republic of Serbia and other institutions whose activities are compatible with those entrusted to the Commission. Information at disposal to different bodies and organizations may prove valuable in proceedings conducted before the Commission, and are often necessary for its work, both from the standpoint of their structure and the speed of their provision.

Starting from the notion of importance of public procurements for the well-being of the society as a whole, during the previous year the Commission has paid particular attention to this specific area, that is, to the detection and prevention of collusion between bidders (the so- called “rigged” or “cover or fictitious” bidding), as well as in term of ensuring that as many bidders as possible can take part in public procurements. The cooperation and coordination with the Public Procurement Administration were considerably improved during the period.

At the same time, the Commission has continued to cooperate with the Republic Commission for Protection of Rights in Public Procurement Procedures, and the Anti-Corruption Agency, particularly in the context of the fight against corruption in public procurements. The need for cooperation was induced by the necessity to detect rigged bids, whereas is also possible to detect links between ordering parties and bidders which may indicate corruption.

The Commission has intensified cooperation with the Public Policy Secretariat of the Republic of Serbia, directed at modifying regulatory procedures so as to ensure that draft regulations do not restrict efficient market competition.

A traditionally good relationship maintained between the Commission and Serbian Chamber of Commerce and Industry has been reconfirmed this year also in the form of cooperation through the activities of the Working group for drafting the Law on Protection of Competition. Such cooperation has opened room for the Commission to include positions of businessmen regarding new legal solutions governing competition, and in that manner has reaffirmed the Commission’s position as a stable and predictable partner to the overall business sector in the Republic of Serbia, active in advancing the national business environment.

10.2. PROTOCOLS ON COOPERATION WITH THE FACULTIES IN THE REPUBLIC OF SERBIA AND THEIR IMPLEMENTATION

Memoranda of cooperation signed by the Commission with the faculties in the Republic of Serbia have ensured the establishment of expert cooperation in the field of competition policy, particularly through the organization of seminars, lecture tours of the Commission’s experts, joint thematic workshops, design of student internship programs, joint publishing activities on competition topics, etc. The motive for setting up such kind of cooperation can be found in the fact that the introduction of market economy must indispensably be followed by the creation of the appropriate body of knowledge on competition policy and law as the main drivers of the free market, as well as comprehensive education of economists and lawyers on related drafting

111

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

and implementation. The signed documents enable the Commission and the academia to work together on the promotion of competition policy and raising awareness of its importance, as well as to introduce the competition policy as an elective course study for Masters level students.

In mid-2018, President of the Commission Dr Miloje Obradović and Dean of the Faculty of Economics, Finances and Administration – FEFA, Prof. Dr. Nebojša Savić, have signed the Memorandum of Cooperation between the Commission for Protection of Competition and FEFA. The Memorandum of Cooperation with FEFA is the fifth such agreement of the Commission signed with the representatives of academia.

Previously, the Commission has signed memoranda of cooperation with the Faculty of Economics, University of Belgrade, Faculty of Economics, University of Niš, Faculty of Economics, University of Kragujevac, and Faculty of Law, University of Belgrade.

The signed documents will enable the parties to implement common activities directed at promoting competition policy and raising the level of knowledge in the area of competition law, in addition to improved education of students towards achieving the set goals.

The practice of the Commission to regularly invite students from all the faculties with whom it has signed memoranda of cooperation to attend its seminars and conferences clearly testifies, inter alia, on the importance of practice to sign memoranda of cooperation as a framework for the implementation of joint and coordinated activities with partner institutions and the need to further promote it in the Commission’s work.

The Commission also plans to continue with the implementation of the student internship program with the faculty partners. Accordingly, the internship program envisages a series of lectures and workshops that will enable students to find out more about the Commission’s competences and work, acquire basic knowledge on the methods of detecting anticompetitive behaviors, learn about merger investigation methodologies and drafting of economic inquiries, in addition to other aspects of the Commission’s work, such as the cooperation with other competition authorities, international and national organizations, as well as tools used by the Commission in its competition advocacy efforts.

It is expected that the Commission’s student internship program will contribute to raising the level of theoretical knowledge of students on competition policy and practical implementation of related regulations, as well as promotion of competition policy in the academic community.

10.3. PARTICIPATION OF THE COMMISSION REPRESENTATIVES IN THE WORK OF THE COMMISSION FOR STATE AID CONTROL

Under the provisions of Article 6(2) of the Law on State Aid Control (Official Gazette of the RS 51/09), a representative of the Commission is appointed as the Deputy Chairman of the Commission for State Aid Control. During the previous year, appointed representative of the Commission has taken an active role in the work of the Commission for State Aid Control by offering concrete suggestions for amending draft decisions (decisions and conclusions), in addition to opinions concerning the implementation of the Law on Control of State Aid, based on individual requests of the ministries, government agencies, the Provincial Secretariats of the AP Vojvodina, local self-government units etc., as well as opinions in relation to the

112

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018 submitted plans of reorganization of bankruptcy debtors in accordance with Article 157 of the Law on Bankruptcy. In addition to the aforesaid, the Commission’s representative in the Commission for State Aid Control has also attended various locally organized meetings dedicated to the topic of state aid control in the Republic of Serbia and corresponding regulations. Considering that the competition chapter is one of the most challenging and most complex in the EU negotiating process and that for this reason the European Commission will pay particular attention to this chapter, it is necessary to even further improve cooperation between the two Commissions, particularly in the view of the EC assessment concerning the state aid control under competition policy segment where is indicated the need to further intensify activities in order to overcome detected inadequacies.

10.4. PARTICIPATION OF THE COMMISSION REPRESENTATIVES AT CONFERENCES, SEMINARS AND ROUND TABLES IN THE COUNTRY

The Commission representatives has taken an active role during the First Public Procurement Forum held in 2018, dedicated to enhancing the professionalization and competition in public procurements. Dr Miloje Obradović, President of the Commission for Protection of Competition has opened the event with his keynote address, while Čedomir Radojčić, member of the Commission Council, was one of the panelists.

Dr Miloje Obradović, President of the Commission for Protection of Competition, has participated at the 2018 Kopaonik Business Forum – panel discussion “Antitrust compliance: Where companies go wrong and how to prevent them from doing so?”. The competition panel was attended by a great number of the Business Forum participants, representatives of the academia and expert public, in addition to representatives of associations of undertakings.

Having been invited by the Chamber of Commerce and Industry of Serbia, the Commission representatives have attended all meetings and seminars dedicated to furthering business climate in Serbia, particularly to creating a level playing field.

Representatives of the Commission for Protection of Competition have participated at the event organized by NALED - the Working group session of the National Convention on the EU, which monitors the negotiations on Chapter 8 – Competition policy. The occasion served as an opportunity to present the role and current practice of the Commission, as well as to draw attention to challenges arising from the implementation of competition policy in the process of accession of Serbia to the European Union, and to gather in one place designated representatives of the Commission, Commission for State Aid Control, Ministry of Trade, Tourism and Telecommunications, and the civil society.

During the Working group’s session, the participants have concluded on the necessity to continue with monitoring activities concerning the competition policy. The importance of similar meetings and mutual information and coordinated acting was particularly mentioned, towards more qualitative fulfillment of agreed issues and forthwith opening of the Chapter 8, since the National Convention on the EU is a permanent body for thematically structured debate on Serbian accession into the European Union, between representatives of the governmental bodies, political parties, NGOs, experts, syndicates and representatives of professional organizations.

113

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The Commission has participated at the international conference “Implementation of competition law in Serbia – status and perspectives”, held in Belgrade and organized by CMS Group. The conference was focused on various experiences in the implementation of competition law, by using national and EU practical examples. In addition to Dr Obradović, President of the Commission, members of the Commission council, Čedomir Radojčić and Dr Veljko Milutinović have participated at panels. One of the panels covered the issues of detection of anticompetitive behaviors, leniency program and dawn raids, while the other related to the private law enforcement and the possibility of making the action for damages a real probability in Serbia. The general conclusion of all Conference participants is that Serbia has experienced a major breakthrough in the field of competition policy, particularly in terms of case-related efficiency and increased level of awareness on the importance of antitrust law.

By participating at the inaugural meeting, the Commission has supported the start of operations of the Corporate Compliance Association. The Association gathers companies from various industries opened to further advance their related know-hows and more efficiently harmonize respective business operations against the current regulatory framework. The Commission has underlined its interest to advocate and promote harmonization of business operations of undertakings against competition rules, since such conduct correspondingly reduces the risk of infringing competition which occurs, inter alia, also due to the fact that companies lack practices harmonized against competition rules and regulations. Within the framework of the Association’s inaugural meeting, panel discussion titled “Why is corporate compliance important for each of us?” was held with the active participation of the Commission representatives.

Dr Miloje Obradović, President of the Commission, gave a keynote address at the “Competition and Personal Data Protection” conference, traditionally held by the Law Firm Karanović & Partners and the German Friedrich Naumann Foundation for Freedom. This year’s conference was focused on the experiences in competition law enforcement in the context of interplay between the competition law enforcement and economics, as seen through the prism of Serbian and EU experiences, state aid control, as well as on the implementation of new legal solutions governing personal data protection. One of the conference’s panelists was Marko Obradović, CPC Council member, who informed the audience about the Commission’s plans and perspectives against the background of competition policy improvement in the Republic of Serbia.

The document notes significant progress achieved this year also by the Commission in its work and welcomes the efforts to enhance the legal framework aimed to further improve the efficiency of competition policy enforcement in the Republic of Serbia.

According to the Foreign Investors Council’s assessment: “The Commission continued making progress in competition advocacy and public relations. The Commission regularly informs the public on its activities and publishes a great majority of its decisions on its official website. The Commission has published on its website the Guidelines on Rights and Obligations of the Parties during Dawn Raids, as well as the Leniency Policy Leaflet. This positive development

114

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

concerning competition advocacy is important as it contributes to the overall improvement of the current legal framework and to better understanding on the part of the general public and the media of competition policy rules and activities and the importance of the Commission’s role. Finally, it is commendable that the Commission increasingly implements economic analyses in inquiries into competition infringements and complex mergers.” The investors’ recommendations for the Commission is to continue to adopt bylaws defining certain core categories of the antitrust framework, as well as to issue clear guidelines and instructions containing the manner of application of certain provisions of the Law, in addition to publications of the relevant definitions of product markets.

115

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

11. INTERNATIONAL COOPERATION

The competition policy has in previous years, owing to the ubiquity of globalization, transcended national frameworks. In that regard, the best global practices, institutes and rules which have proven efficient in the legal systems of many countries are the subject of great interest of the Commission. The extension of both bilateral and multilateral cooperation profoundly influences the quality and efficiency of the Commission, and in that manner the quality of market freedoms, level of competition and possibility of new undertakings to entry into the market, all of which establish the competitiveness of the economy necessary for the continued economic growth and attraction of foreign investments.

11.1. RELATIONS WITH INTERNATIONAL ORGANIZATIONS

The Commission intensely cooperates with international and regional organizations and fora, and contributes both through the participation of the Commission representatives at events of said organizations and fora and in the processes of harmonization of their proposals, as well as by submitting written contributions and information on selected topics from the competition policy area in the Republic of Serbia. The Commission also continually provides possibilities for further professional advancement of its staff through their participation in the training programs of the above-mentioned organizations.

UNCTAD

The cooperation of the Commission with the United Nations Conference on Trade and Development ( UNCTAD ) was intensified in 2018. In addition to the UNCTAD’s traditional invitation for the participation of the Commission representatives at the session of the Intergovernmental Group of Experts on Competition Law and Policy, held in Geneva, Switzerland, which is considered to be one of the most important events in the field of competition law and policy, the Commission has also taken an active role this year in the UNDTAD’s working group on international cooperation and closely monitors the development of the initiative launched under its auspices. Also, the Commission has provided its written contribution during 2018 to the UNCTAD research titled “ 'Survey: Obstacles to international cooperation in specific cases” .

ICN

The Commission is an active member of the International Competition Network (ICN). Although ICN is not an international organization in the strictly formal sense but an informal network of competition authorities, having regard to its task and focus on the competition law enforcement and policy issues and the composition of the membership (a large number of national competition authorities and NGO representatives, such as the business community and academia, law practitioners, etc.), the cooperation with ICN is perceived as necessity for each competition authority pursuing full information and participation in modern trends in competition law and policy.

116

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

During 2018, the Commission representatives have participated in almost all ICN seminars held via Internet (webinars) and workshops also, to the extent possible. In October 2018, the ICN Cartel workshop was held in Israel, dedicated to developing the capabilities of competition authorities required to uncover a cartel, viewed as a valuable opportunity for the participants to exchange experiences from this highly important domain of competition policy enforcement in the world.

Furthermore, the Commission was awarded for the second year in a row for accomplished activities in competition advocacy by ICN and the WB Group, for the paper submitted at the 2017-2018 Competition Advocacy Contest: Closing the gap through competition advocacy: microeconomic policies, macroeconomic implications. The award is granted in a competition of more than 50 papers from 30 jurisdictions around the world, divided into four categories, while the paper prepared by a representative of the CPC Administrative and Professional Service has competed within the category “ Creating markets for private sector development ”. In addition to Serbia, the only European country awarded this year was Great Britain in the category: '' Prompting structural reforms in key sectors ''.

OECD

In 2018, the Commission has continued to cooperate more intensely with the Organization for Economic Cooperation and Development (OECD) . Although the Republic of Serbia is not an OECD member state, the Commission contributes to the activities of this organization in several manners: by exchanging experiences at high levels during the OECD annual conference “Global Forum on Competition”, delegating representatives to attend numerous seminars and workshops of the Regional Center for Competition ( RCC ), established in 2005 by the OECD and the Hungarian Competition Authority, and submitting written contributions and replies to inquiries on competition policy in the Republic of Serbia.

In order to exchange best practices and experiences, the Commission representatives have taken an active role during one of the most prestige competition conferences, the 17 th OECD conference “Global Forum on Competition”, held in late November 2018 in Paris, France. The Administrative and Professional Service of the Commission has provided its written contribution for this event which gathers representatives of national competition authorities and senior representatives of other institutions from around the world, that is, articles on the following topics: “Requests for information: Limits and effectiveness”, and “Regional competition agreements: Benefits and challenges”.

During 2018, the Commission representatives have also attended a presentation of the OECD’s publication Competitiveness in South East Europe: A Policy Outlook 2018 , whose drafting was supported by the Administrative and Professional Service of the Commission in the segment relating to the competition policy in the Republic of Serbia (legal solutions and overview of the practice).

As in past years, the Commission representatives have attended seminars and events organized by the Regional Competition Center, and contributed through presentations of cases from the Commission’s practice. The following RCC competition seminars can be mentioned:

• “Cartel Detection Tools”, held in Budapest in March 2018,

117

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

• “Introductory Level Seminar - Basic Concepts and Procedures in Competition Law”, held in Budapest in May 2018, and • “Merger Investigations”, held in Tirana, Albania, in June 2018.

ENERGY COMMUNITY

In 2018, the Commission has continued to actively cooperate with the Energy Community via a competent ministry of the Republic of Serbia (Ministry of Mining and Energy), to whom has on several occasions provided its opinions and commentaries from the competition perspective to reports and letters of the Secretariat, including opinions on the Energy Community reports on the overall progress in soft measures implementation, annual activity reports, proposals of amendments to the Energy Community Treaty, etc. The Republic of Serbia is a signatory party of the Energy Community Treaty, and the Ministry of Mining and Energy participates in negotiations and implementation of said treaty at the international level. The cooperation between the Energy Community and the Commission is established based on the 2012 Declaration, establishing the framework of the Energy Community Competition Network, designed as a platform for the exchange of experiences between competition authorities – signatories of the Declaration and the Energy Community Secretariat, as well as for the development of good practice in competition enforcement procedures in the energy sector, aimed at converging practices and harmonizing with the EU acquis in this particular sector.

EUROPEAN COMMON AVIATION AREA

The cooperation between the Commission and the Civil Aviation Directorate of the Republic of Serbia and EC representatives in the context of compliance with obligations of the Republic of Serbia under the Multilateral agreement on the establishment of a European common aviation area , was established in 2010 and reestablished in March 2017. The Multilateral agreement on the establishment of a European common aviation area was signed on behalf of the Government of the Republic of Serbia in 2006, and ratified by the National Assembly of the Republic of Serbia in 2009. Under this agreement, the Republic of Serbia has committed to harmonize national regulations with the EU acquis in certain areas such as safety, security, air traffic management, etc. The agreement also contains rules on competition in said areas, but at the same time envisages the implementation of other agreements signed by individual signatories if they cover competition rules (the case of accession agreements). However, being that the agreement is multilateral by its nature and contains provisions on competition, the Commission has on two occasions, for the purpose of the EC expert team, provided information to the Directorate on the competition system in the Republic of Serbia, with an overview of the current legislation and closed proceedings of the Commission concerning air operations. In light of the previous mentioned, the Commission’s representative has participated at the TAIEX regional seminar in 2018, organized in cooperation between the Directorate-General for Neighborhood and Enlargement Negotiations (DG NEAR) and the Civil Aviation Agency of Montenegro. The seminar in Podgorica served as an opportunity for attendees to present their comprehensive knowledge and exchange information on best practices concerning the implementation of the aquis communautaire relating to competition, state aid and public commitments in the air traffic sector.

118

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

EBRD

Building on the positive experiences of cooperation with the European Bank for Reconstruction and Development (EBRD), the Commission has continued to cooperate more intensely with this international institution. In addition to active projects on technical assistance, academic skills development etc., the parties have published proceedings in 2018 from the international conference “ Institution Building of the National Competition Authorities in South-East Europe ” held during 2016.

CEFTA

The Commission has continued in 2018 to contribute to the CEFTA Secretariat’s project implementation and drafting of the report titled Implementation Status of Competition and State Aid, by providing relevant information, foremost in the segment of competition policy and current practice, in full and complete compliance with the interests of the Republic of Serbia as a member state. Furthermore, the Commission has on several occasions provided its commentaries to proposals for the expansion of cooperation within the CEFTA agreement, both to the line ministry and the CEFTA Secretariat.

WTO

The Commission is also actively involved in cooperation with the World Trade Organization (WTO) on competition related issues. Accordingly, the Commission representative has attended a seminar following an invitation of the WTO, titled “WTO thematic seminar on competition policy, trade and development: Reviewing practical experience with existing WTO agreements”, held in Geneva, Switzerland. Competition experts from around the world have been provided with an opportunity to meet and establish “the position” of their competition authority in terms of rating, independence and competences.

11.2. BILATERAL COOPERATION

The Commission continuously works on the advancement of cooperation between competition authorities, their interconnectivity and establishment of close relations that will, inter alia, advance the operative efficiency and effective implementation of competition law.

Albania

After a number of years, the Commission’s cooperation with the Albanian competition authority was reestablished in late 2017. The activities directed at advancing the communication between the two authorities are continued in 2018 as well. The delegation of the Albanian competition authority, headed by the ACA Chairwoman, Juliana Latifi, attended an international conference organized by the Commission marking the Serbian Competition Day. President Latifi also took an active role during a panel discussion dedicated to regional cooperation between national competition authorities, while the Commission, in close cooperation with the Albanian colleagues, is currently working on drafting a Memorandum on cooperation which should further consolidate cooperation between the two authorities.

119

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Austria

The Commission has signed the Memorandum on cooperation with the Austrian Federal Competition Authority in 2010. Since then, the two authorities have achieved closer cooperation, particularly considering the rich experience and operational efficiency of the Austrian competition authority. The Austrian representatives have been the Commission’s guests during the 2018 Competition Day event, which served as an opportunity to agree on appropriate initiatives for the continuation of cooperation between the two authorities. Given that experts of the Austrian competition authority have been actively involved in the IPA 2014 project, which will be implemented from 2019, the two authorities have agreed on the extension of joint activities which could prove highly beneficial for the Serbian Commission owing to a considerable experience of Austrian colleagues in the implementation of competition policy.

Bosnia and Herzegovina

The Commission has signed the Memorandum of understanding with the Competition Council of Bosnia and Herzegovina in 2009. During the previous period, the cooperation was actualized through several meetings at international conferences, and in particular, by organizing bilateral visits. The fact that both authorities have expressed the wish to expand cooperation under the 2009 Memorandum is of particular importance, as well as their readiness to invest efforts into advancing institutional and legal framework governing competition policy in the region.

Bulgaria

The Bulgarian competition authority has organized the European Competition Day event in 2018, within the framework of the Bulgarian Presidency of the Council of the EU. In addition to Serbia, senior representatives from over 50 European competition authorities took part in this year’s event. During the conference, Dr Obradović also held a series of bilateral meetings with the hosts, Chairwoman and Council members of the Bulgarian competition authority, as well as with the EU Commissioner for Competition, Margarethe Vestager.

Japan

The Commission implements the cooperation with Japan through coordination of activities with various institutions, foremost with the Embassy of Japan in Belgrade and JICA. During 2017, this cooperation was reconfirmed through collaborative work contacts with the Embassy, as well as through the participation of a representative of the Administrative and Professional Service of the Commission in a three-week professional training course held in the Japan Fair Trade Commission (JFTC), organized by JICA. Japan was the guest-host of this year’s Competition Day conference, while in cooperation with the Embassy of Japan, JFTC and JICA, the Commission has organized training sessions on the topic of current and future challenges of Japan in the fight against cartels and bid rigging in public procurements.

These training sessions were aimed at acquiring new know-hows by not only the Commission’s employees, but also representatives of other institutions and the expert community on examples of the best global practices in the implementation of competition policy.

120

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Republic of Korea

In addition to the above-mentioned forms of cooperation achieved with the aforementioned competition authorities, the year was marked by further enhanced cooperation with the Embassy of the Republic of Korea in Belgrade, as well as with colleagues from the Korea Fair Trade Commission (KFTC). Having regard to the considerable experience of the Korean competition authority and important results achieved in the competition area, the Commission was invited to delegate a representative to attend a ten-day training course and in that manner, as the first invited competition authority from the region, take part in a highly qualitative additional education program offered by the Korea Fair Trade.

Romania

The Memorandum on cooperation between the Romanian Competition Council and the Commission was signed in 2012. During the three-year period, the cooperation was further enhanced by holding joint workshops, exchanging experts, etc. In 2018, the Romanian colleagues have visited Belgrade during the Competition Day conference. It is envisaged that the cooperation between the two authorities in 2019, during the Romanian Presidency of the Council of the European Union , will be further intensified, particularly in the context of Romanian experiences in the preparation work on the competition policy chapter during the EU accession process.

The experts of the Romanian competition authority will also take an active role in the Twinning project implementation, administrated by the Italian competition authority.

Russian Federation

The Commission and the Federal Antimonopoly Service of Russia (FAS) have signed the Memorandum on cooperation in the field of competition in December 2012. During the subsequent period, the cooperation established between the two competition authorities has been constant, implemented through a series of trainings, seminars and study visits which were designed and realized with the aim of making this cooperation more enriched and substantial. Two FAS representatives have attended the 2018 Competition Day conference, contributing to the quality and international dimension of this event. In September 2018, the Commission has attended a traditionally held “ Russian Competition Week ” conference, held at Rosa Khutor ski resort (near Sochi). During the four-day visit, the Commission representatives have been provided with an opportunity, inter alia, to learn more about the draft Toolkit on international cooperation, which relates to the prevention of restrictive business practices of transnational corporations and cross-border anticompetitive conducts.

Federal Republic of Germany

The Commission has no signed agreements on cooperation with the German Federal competition authority (Bundeskartellamt), but has invested additional efforts in the strengthening of cooperation between the two authorities. In March 2018, the Commission representatives have attended an international conference on competition in Bonn, organized by Bundeskartellamt. The panel discussion “Competition policy in a globalized and digitalized world - Challenges of today and tomorrow” was held on the occasion.

121

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Slovenia

The Memorandum on cooperation between the Commission and the Slovenian competition authority ( Javna agencija Republike Slovenije za varstvo konkurence) was signed in 2013. The Slovenian competition authority representatives are traditionally present at conferences organized by the Commission, marking the national Competition Day. During the April conference, the participation of the President of the Slovenian competition authority during one of the conference’s panel discussions on regional cooperation was particularly well received. As in previous years, the Commission representatives have attended the Slovenian Competition Day event, held in Ljubljana in September 2018. The event served as an opportunity to confirm the Commission’s commitment to cooperation with the Slovenian competition authority.

Turkey

The Commission and the Turkish competition authority (Rekabet kurumu) have signed the Memorandum on cooperation in the field of competition in April 2018, during the Serbian Competition Day conference. The memorandum was signed by Dr Miloje Obradović, President of the Commission, and Omer Torlak, President of the Turkish competition authority.

The signing of this document has opened a possibility to intensify cooperation between the two competition authorities.

Croatia

Another example of good regional understanding is the cooperation achieved with the Croatian competition authority (AZTN), with whom the Commission has signed the Memorandum on cooperation in 2013. In September 2018, following an invitation from the Croatian competition authority, the Commission representatives have attended an international conference organized by the Croatian competition authority titled “Exchange of information between competitors, fixing prices or price components – the role of professional associations and chambers”, held in Zagreb. The President of the Croatian competition authority has participated as panelist at an international conference in Belgrade, marking the Serbian Competition Day. The meetings with Croatian colleagues during numerous international events have also affected the advancement of cooperation between the two institutions.

One of the more prominent novelties in the Commission’s work is the establishment of close cooperation with foreign diplomatic missions in the Republic of Serbia, aimed at contributing to the advancement of the current business environment and intensifying the exchange of experiences in the competition policy field with other competition authorities from around the world. In this way, the Commission has held a series of meetings and gatherings in 2018 with representatives of embassies and foreign business associations seated in the Republic of Serbia.

The activities of the Commission directed at furthering the business environment in the Republic of Serbia, and in particular efforts placed with regard to negotiations within Chapter 8: Competition Policy, were the main topics of discussion during a meeting held between Dr Miloje Obradović, President of the Commission, and a representative of the Directorate-

122

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

General for Neighborhood and Enlargement Negotiations of the European Commission, Azra Iković.

The President of the Commission had an opportunity on several occasions to exchange views on these and other competition improvement topics, as well as on advocacy-related efforts of the Commission, with H.E. Sem Fabrizi, Head of the EU Delegation to Serbia.

President of the Commission Dr Miloje Obradović has also met with H.E. Junichi Maruyama, Ambassador of Japan to Serbia. The Commission President introduced H.E. Maruyama with the competences and activities, as well as plans of the Commission for Protection of Competition, aimed at advancing and further engaging in competition advocacy activities in Serbia. The Commission President used this opportunity to express its gratitude to the Embassy of Japan in Belgrade for the support provided in the Commission’s operational activities to date. Given that Japan was the guest-host during the 2018 Competition Day event, the cooperation was advanced to its full extent.

Also, Hiroshi Yamada , Senior Official at the Japan Fair Trade Commission – JFTC, has visited the Commission. On the occasion, the parties have emphasized the need to further deepen cooperation, both under the technical assistance programs and exchange program opportunities for competition policy experts.

Likewise, H.E. Hyoung Chan Choe , Ambassador of the Republic of Korea to the Republic of Serbia, has visited the Commission and on the occasion expressed a desire to expand already established cooperation at all levels with the Commission, initiated last year by organizing a highly attended workshop on the implementation of leniency program in the Republic of Korea.

President of the Commission for Protection of Competition Dr Miloje Obradović has received a visit from the EBRD’s new Director for the Western Balkans, Zsuzsanna Hargitai. On the occasion, the parties have agreed that this international institution and the Commission have achieved a qualitative cooperation, while the European Bank for Reconstruction and Development has reaffirmed the readiness of this institution to further improve cooperation and provide support to reforms in the competition policy segment.

The Commission delegation, headed by Dr Miloje Obradović, President of the Commission for Protection of Competition, and Čedomir Radojčić, CPC Council member, was a guest of a special panel of the American Chamber of Commerce dedicated to advancing the legal framework of competition policy in Serbia. The importance of this cooperation can be seen in the fact that the American Chamber of Commerce is the leading business association in the country with over 190 American, international and local member-companies, operating within 18 various sectors, while the value of investments made by member-companies in the country is more than 14 billion euro.

11.3. INTERNATIONAL CONFERENCES AND SEMINARS

On the occasion of the Competition Day , the Commission has organized an international conference titled “New Competition Agenda”.

123

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The conference was opened with keynote addresses presented by Dr Miloje Obradović, President of the Commission for Protection of Competition, Rasim Ljajić, Deputy Prime Minister of the Government of the Republic of Serbia and Minister of Trade, Tourism and Telecommunications, Nikola Selaković, Secretary General of the President of the Republic of Serbia, H.E. Sem Fabrizi, Head of Delegation of the European Union to the Republic of Serbia, and H.E. Junichi Maruyama, Ambassador of Japan to Serbia. The event was also attended by Branko Ružić, Minister of Public Administration and Local Self-Government.

This year’s Honorable Guest of the conference was Japan.

Two panel discussions are organized as part of the conference: “New Agenda for the Region” and “Competition in the Digitalized World”. Within the first panel discussion “New Agenda for the Region”, facilitated by CPC President Dr Miloje Obradović, heads of regional competition authorities touched upon challenges encountered in their attempts to secure a level playing field for all undertakings. Heads of national competition authorities of Slovenia, Croatia, Macedonia, Albania and Turkey participated in the panel, as well as Ms. Camelia Grozea – Knuth, EC policy officer in charge of Negotiation Chapter 8. Nicholas Banašević from the EC Directorate-General for Competition facilitated the second panel focused on the topic “Competition in the Digitalized World”, and discussed with other participants about emerging challenges in the light of new digital technologies and new operating models of competition authorities. The panelists were professor Hassan Qaqaya, former Head of the UNCTAD Competition and Consumer Policies Branch, Kazuhiro Hara, Director of International Affairs Division, Japan Fair Trade Commission, Dr Siniša Milošević, Head of the CPC Economic Analysis Division, Laszlo Gyerko, member of the Board of the Romanian Competition Council, and Željko Tomić, NALED representative and founder of company „Osa računarski inžinjering“. In cooperation with the Embassy of Japan, JFTC – Japan Free Trade Commission and JICA – Japan International Cooperation Agency, the Commission for Protection of Competition has organized training sessions on the current and future challenges of Japan in the fight against cartels and bid rigging in public procurements. These training sessions were undertaken with the prospect of gaining new knowledge and understanding by not only employees of the Commission for Protection of Competition but also representatives of other institutions, as well as stakeholders on the best global practices in competition policy enforcement. Professor Arisa Wakabayashi from the Komazawa University, Tokyo, spoke on the legislative framework and competition policy enforcement practices of Japan, as well as Hideyuki Shimozu, Senior Planning Officer from the International Affairs Division of JFTC, which is a competition authority established in 1947, and globally renowned as one of the most efficient institutions in creating and enforcing competition policy regulations. The Commission and the National Alliance for Local Economic Development (NALED) have organized a conference and presented the results of the phase one of the retail sector inquiry into the sale in nonspecialized stores with food, beverages and tobacco predominating in the Republic of Serbia, conducted by the Commission.

During the conference held in the City Assembly of Belgrade, keynote addresses were given by President of the Commission for Protection of Competition Dr Miloje Obradović, State Secretary at the Ministry of Trade, Tourism and Telecommunications Vesna Kovač, and

124

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

Vladimir Čupić, President of the Food and Agriculture Alliance of NALED and Director of the Atlantic Group Representative Office for Serbia.

The results of the inquiry were presented by Aleksandra Ravić from the Economic Analyses Division of the Commission for Protection of Competition. Following the presentation of the inquiry-based results, a panel session on retail market prospects in Serbia was also held, attended by Dr Siniša Milošević, Head of the Economic Analyses Division of the Commission for Protection of Competition, Bojana Amanović from the Ministry of Trade, Tourism and Telecommunications, Dr Goran Petković, Full Professor at the Faculty of Economics in Belgrade, and Goran Kovačević, NALED Fair Competition Alliance.

11.4. ASSISTANCE PROJECTS PROVIDED TO THE COMMISSION

During 2018, the Commission has continued to implement activities and to be more engaged on projects, designed and conceptualized based on own needs and granted by various parents in the previous year. Along these lines, negotiations with the selected Twinning partner were finalized, selected for the implementation of the EU-funded (IPA) Twinning project “ Further Development of Protection of Competition in Serbia ”, The project has three key components designed to: 1) further harmonize national legislation in the area of competition policy with the EU acquis; 2) ensure effective implementation and enforcement of the aligned competition legislation; and, 3) increase awareness of the competition law and policy among all relevant stakeholders. In addition to the Commission, the Twinning project envisages the involvement of other project beneficiaries such as the courts, regulatory authorities, chambers of commerce and industry, and trade associations, thus the Project’s complex influence on the market of the Republic of Serbia is expected, in addition to strengthening the capacities of the Serbian economy on the path of reaching the national strategic goal of EU accession. Unlike the Twinning project whose launching is expected in early 2019, a two-year project approved by the Embassy of the Kingdom of Norway in Belgrade and financially supported by the Royal Norwegian Ministry of Foreign Affairs, has already provided visible results. First of all, the Commission has procured the latest forensic equipment used in dawn raids, which should ultimately increase the detection rate of anticompetitive conducts. With the assistance of expert consultants, the Commission has also started to redesign the official web presentation and social media profiles, which have already started to contribute to the increased visibility of the Commission before a wider audience. During 2019, the Commission plans to produce three video clips which would enable all stakeholders to familiarize with the competition policy in the Republic of Serbia and the Commission’s activities. Also, several training courses on lobbying and successful public debating for the Commission staff were held as part of the project activities, directed at strengthening the Commission’s capacities in the implementation of national competition policy, in addition to public debates on potential legal solutions from the new competition act, which will govern competition policy. For now, public debates were held in two Serbian cities (Kragujevac and Niš), to be followed by public debate in Novi Sad, while the final public debate of this kind will be held during 2019 in Belgrade. The project launched in spring 2018, and implemented by the Commission in cooperation with the European Bank for Reconstruction and Development has produced the first effects in a support segment to the Commission, achieved by procuring an econometric software and ensuring related training for the Commission selected staff members. Owing to the

125

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

cooperation with EBRD, a part of the Commission employees was provided with an opportunity to advance their academic skills relating to competition law and policy. Four employees have attended a multi-day training course for economists, while two colleagues have attended a lawyers’ course, both relating to competition policy topics. Moreover, the project also envisaged the start of activities relating to the revision of a glossary of the competition terminology, developing relevant secondary legislation (guidelines) from the Commission’s competence, and formation of the Western Balkans Forum of Competition Authorities, based in Belgrade. The continuance of activities is expected in 2019, in even more intensified form and closer cooperation. Towards improving the investment climate in the Republic of Serbia, the Government of the RS and the International Finance Corporation (IFC), a member of the World Bank Group (WBG), have signed the Cooperation Agreement. The agreement envisages the provision of technical assistance to the Commission, aimed at advancing the competition and market regulation in the Republic of Serbia.

126

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

12. AWARENESS RAISING ACTIVITIES ON COMPETITION

Competition advocacy and promotion of competitive environment are conducted through the Commission’s communication with state authorities and organizations, academic community and expert groups, associations of undertakings, national and international partners, and the media.

Activities of the Commission that relate to competition advocacy are an indispensable part of its overall work, defined by the International Competition Network (ICN) as activities conducted by a competition authority related to the promotion of competitive environment for economic activities by means of non-enforcement mechanisms, mainly through its relationships with other governmental entities (Government, ministries, judicial authorities, National Assembly, undertakings, non-governmental sector, general public, etc.) and by increasing public awareness of the benefits of competition.

The promotion of competitive environment, that is, competition advocacy activities, operational transparency and successful communication with all relevant stakeholders, are essential for the implementation of competences entrusted to the Commission by the Law.

In order to advance its work in competition advocacy field and respond to increasingly more complex requests in this part of its competences, the Commission has established the Division for Competition Advocacy and International Affairs in 2018. The current practice has demonstrated that this kind of work with a higher degree of complexity needs to be organized in a manner corresponding to the practices of other competition authorities which have integrated advocacy, public communications and international affairs into a single department. The new organizational structure has proven to be adequate and functional, which has resulted in the increased volume, but also in the quality of competition advocacy activities.

As in past years, competition advocacy and awareness raising activities on competition in 2018 have related to all activities of the Commission directed at advancing the legal framework, promoting competition policy and competitive business environment, that is, raising awareness on the importance of competition, by means of non-enforcement mechanisms and voluntary cooperation, while the sanctioning and law enforcement activities are undertaken as a measure of last resort.

The Commission has identified the following activities as key objectives in its competition advocacy efforts:

• raising awareness on the importance of competition for the functioning of an open market economy and benefit of consumers; • public awareness campaigns on advantages of efficient competition (competitive business climate, smaller number of barriers to entry, new employment opportunities, improved quality of products and services, etc.); • building visibility of the Commission in the public, focused on ensuring the widest possible awareness on the Commission’s competences and obligations of undertakings; • familiarizing undertakings with the main aspects of competition regulations as a form of prevention of anticompetitive behaviors.

127

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The most important forms of communication with the public were press releases, publications in print and e-media outlets, publications, animated educational video clips, social networks and internet presentation of the Commission. Important part of the Commission’s promotional activities were numerous thematic meetings, from conferences and round tables to thematic expert workshops and consultations, and other forms of events designed for stakeholders, direct education consultancy, publication of brochures and specialized publications, and campaigns.

Competition advocacy also included the following activities: initiatives undertaken by the Commission directed at other state authorities/bodies towards exerting an influence on the legal framework and implementation of competition policy, as well as activities conducted in order to raise the level of awareness of the business community, authorities and the general public on the benefits of competition in a society.

Also, the reputation and visibility of the Commission in the public are built both through the efficient implementation of regulations, advocacy, international cooperation, and contacts with the media. During 2018, the Commission has communicated with the media through various forms (public releases, interviews, thematic events, conferences, Q&As, promoting topics and publications in the media, preparation and distribution of brochures) etc.

As part of its initiative, launched to enact a new competition act that will ensure more efficient work of the Commission and facilitate competition policy enforcement in the Republic of Serbia, the Commission was engaged in advocacy activities with several key partners in 2018 in order to carry out these complex operations.

A series of meetings were held with the Serbian Chamber of Commerce and Industry, and other business associations, in addition to representatives of the civil sector in order to ensure their active participation in the drafting of a new law.

By participating at the inaugural meeting, the Commission for Protection of Competition has supported the start of operations of the Corporate Compliance Association.

The Foreign Investors Council (FIC) in Serbia has presented its traditionally published edition, the White Book 2018, an overview of the business climate in Serbia containing recommendations aimed at supporting economic growth and business climate improvements from the investors’ point of view. The document notes significant progress achieved this year also by the Commission for Protection of Competition of the Republic of Serbia in its work and welcomes the efforts to enhance the legal framework aimed to further improve the efficiency of competition policy enforcement in Serbia. According to the Foreign Investors Council’s assessment: “The Commission continued making progress in competition advocacy and public relations.”

Representatives of the Commission for Protection of Competition have participated as guests at the Working group session of the National Convention on the EU which monitors the negotiations on Chapter 8 – Competition policy, held in Niš. This occasion also served as an opportunity to present results to the expert public of Niš of the Phase I of the Retail sector inquiry into the sale in nonspecialized stores with food, beverages and tobacco predominating in the Republic of Serbia.

128

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

12.1. RELATIONSHIP-BUILDING ACTIVITIES OF THE COMMISSION WITH THE BUSINESS COMMUNITY AND EXPERTS

The Commission is very active in introducing the business community in the Republic of Serbia, as well as members of the professional public, on all aspects of its activities, which stems from the competences entrusted to the Commission by the Law. In that regard, the Commission has continued this year as well to pay particular attention to numerous competition advocacy activities. The Commission representatives have been active participants at a number of events organized by business associations such as NALED, FIC, AmCham Serbia, Privrednik club, etc. Also, the Commission representatives have often been invited lecturers at a number of faculties of the Serbian universities.

12.2. COOPERATION WITH THE MEDIA

The Commission is committed to maintaining transparent relations with the media, achieved by timely provision of relevant information and continuous cooperation with the media, data organization, long-term planning and scheduling of activities.

Also, by educating and raising the interest of the media on competition issues, the Commission achieves a better understanding and gains support of the public, which, in turn, can put positive pressure on undertakings and policymakers. In such manner, the Commission also fulfills its obligation to provide information on the Commission’s work.

During 2018, the Commission has invested additional efforts in order to bring competition policy closer to the general public (undertakings, consumers and the media), and to make it even more transparent, understandable and accessible. All important decisions and information on events in which the Commission has participated are published in a transparent and timely manner, both on the webpage of the Commission and in all relevant media outlets (print and e-media). Also, the public profile of the Commission representatives has significantly aided in maintaining and proved extremely important for the quality of public relations of the Commission and promotion of its operational activities.

Similar to previous years, this period was also marked by the media representatives’ interest in all forms of activities implemented by the Commission. In 2018, the Commission has conducted proceedings and enacted decisions in cases where the parties, inter alia, were big national and foreign companies operating on the market of the Republic of Serbia, as well as public enterprises.

The media interest in mergers approved with conditions has related not only to cases opened and closed in 2018, but also to merger cases from the previous period in which the implementation of ordered measures has related to the reporting period as well.

The Commission has not received any request from the media representatives for the provision of information pursuant to the Law on Free Access to Information of Public Importance, given that all inquiries presented by the media representatives have been replied to in the shortest possible time, with due regard for redacted information considered as trade secrets, treated by the Commission in accordance with the Law. During 2018, the Commission

129

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

had more than 1300 print and e-media publications on its activities and antitrust proceedings, all of which have been presented in a positive or neutral light.

Chart 22: Structure of media publications

The Commission has organized or hosted several events serving as an occasion for the communication with the media in order to promote its activities, among the most prominent being the following two:

• Competition Day – New Competition Agenda, and • Conference co-organized by the Commission for Protection of Competition and NALED, in order to present the Phase I of the Retail sector inquiry into the sale in nonspecialized stores with food, beverages and tobacco predominating in the Republic of Serbia, conducted by the Commission.

The Competition Day event organized by the Commission was covered by various media publications (in print and e-media and on internet portals with national and regional coverage) in the form of interviews, statements and reports, as well as on the official web portals of the Government of the Republic of Serbia and the Ministry of Trade, Tourism and Telecommunications. The coverage included both the short news article format and more detailed agency news reports. The news agencies have also published the save-the-date reminders in the form of agency news and later distributed more detailed reports on the event to their subscribers.

The interest of national and foreign media representatives in the work of the Commission was continued in 2018 as well. Journalists of the print and e-media outlets, as well as web portals, have raised various issues of concern on activities from the Commission’s competence. The scope of raised issued was sometimes guided by the public interest concerning certain competition cases before the Commission, but have also related to requests for more detailed interpretation of individual legal norms or provision of copies of particular case files. On all related occasions, the Commission has responded in the shortest possible time.

130

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

During 2018, several media publications, feature articles and appearances of the Commission representatives are recorded in the most widely circulated and highest-viewed print and e- media outlets (Politika, Danas, Blic, Večernje novosti, RTS 1, TV N1, TV Pink, TV Happy, TV Studio B, etc.).

In view of furthering relations with the media and evaluation of the Commission’s work in this segment, an external agency for the provision of news release monitoring services concerning the Commission was commissioned in order to obtain a complete picture and information on the Commission’s media coverage.

12.3. COMMISSION’S CONDUCT UNDER THE LAW ON FREE ACCESS TO INFORMATION OF PUBLIC IMPORTANCE

The Commission keeps special records of requests in accordance with the Law on Free Access to Information of Public Importance. Furthermore, in accordance with the Law on Personal Data Protection, the Commission keeps appropriate records entered into the Central Register of the Commissioner for Information of Public Importance and Personal Data Protection. The Commission regularly replies to requests relating to the provision of access to information of public importance.

During 2018, the Commission has received a total of seven requests for the provision of access to information of public importance, pursuant to the provisions of the Law on Free Access to Information of Public Importance.

The applicants in six cases were attorneys at law, while the remaining request was filed by citizens. In one such case (private citizens), the Commission has received an appeal against its decision on the refusal to examine request. During 2018, the Commission has received no requests of the media representatives for the provision of information pursuant to the Law on Free Access to Information of Public Importance. The Commissioner for Information of Public Importance and Personal Data Protection has enacted one decision instructing the Commission to act on appeal.

The Annual report was provided to the Commissioner by email, within the period prescribed.

12.4. PROTECTION OF BUSINESS SENSITIVE INFORMATION AND TRADE SECRETS

The provision of Article 45 of the Law stipulates an option of the Commission to set measures on the protection of source of information or specific data. Such protected information and data do not have the status of information of public importance within the meaning of law governing free access to information of public importance. The Commission President decides on the protection and enacts respective conclusions, based on a reasonable request of a party, applicant of the initiative on competition infringement or the third party submitting or providing requested particular information. The protection is only set if it is evaluated that the interest of that particular applicant is justified and substantially more important than the public interest – public's right to know, and only if the party plausibly presents the possibility of a likely substantial damage occurring due to the disclosure of the source of information or information and data specified in the request.

131

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

It is important to mention that this protection measure implies the non-confidentiality of protected data in accordance with regulation governing data confidentiality. The measure only relates to the Commission’s acting, i.e., the Commission cannot provide access to such information in accordance with regulation governing free access to information of public importance. Any other person, legal or natural, including authorities within the meaning of the Law on Free Access to Information of Public Importance can disclosure related data, regardless of the protection measure from Article 45 of the Law, in accordance with the positive law.

12.5. VIDEO PRODUCTION

In view of advancing the Commission’s communication with both undertakings and the general public, in cooperation with the British competition authority (Competition Market Authority, CMA), the Commission has continued to adapt to the local settings and distribute short animated video clips on competition. In 2018, the Commission has added ten more video clips to the series, and produced a video clip titled “Mergers – what they are and why we control them”. The video clips are distributed to undertakings, associations of undertakings, participants at conferences and seminars organized by the Commission, in addition to being published on various social platforms. The video material was very well received because of the simple and popular style in which some of the most complex competition issues were presented and explained, while their added value can be seen in the fact that they contribute to the public image and visibility of the Commission and its work.

12.6. PUBLICATIONS

During 2018, the Commission has continued to publish materials prepared both for undertakings and the general public. In the course of 2018, the Commission has published the following publications:

• Short guide to the rights and obligations of the parties during dawn raids. The Commission’s intent was to bring closer the dawn raid procedure to undertakings in this manner and to inform them on potential sanctions imposed in cases when the related party(ies) interrupt the implementation of such inspections by presenting the rights and obligations of the parties during dawn raids. • Four-piece leaflet that streamlines the risks of companies and individuals, even unintentionally, to breach the Law on Protection of Competition. The leaflets are designed in a testing survey form, providing an opportunity to each undertaking to check the risk of anticompetitive behaviors by answering questions. The cases of failure to notify the Commission on mergers and inadvertently encouraging tie bids and collusions are particularly addressed, in addition to public procurement participations, rules of business conduct, etc., which can represent a form of anticompetitive behavior that could cause the infringement of competition. • Following the publication of the “Be the first” leaflet on the leniency program, the Commission has added two more leaflets to the series in 2018: „Recognize and prevent rigged bids in public procurements” and „Avoid resale price maintenance”. Namely, when handling competition cases, the Commission has noted poor information of undertakings on anticompetitive behaviors that violate the Law on Protection of Competition, thus has produced these leaflets as a form of preventive action.

132

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

• Guide “Rigged or cover (fictitious) bids in public procurements – how to recognize and prevent them” is designed so as to enable the recognition of prohibited restrictive agreements in public procurements and manners of their prevention. The guide is distributed to public procurement participants – bidders, ordering parties, and the third parties.

12.7. E-BULLETIN

In mid-2018, the Commission has started to publish an e-bulletin, with the prospect of bringing global competition events closer to all stakeholders in Serbia. Also, the publication is used to publish news from the Commission. By the end of the year, the Commission has updated its mailing list, which currently contains around 1000 email addresses in Serbia.

12.8. INTERNET PAGE OF THE COMMISSION

During the reporting period, the Commission has continued to implement its previously established practice, and in some parts to fulfill its legal obligation, of full operational transparency, both by publishing all relevant documents on its official internet page (www.kzk.gov.rs ) and by providing press releases on all events in the Commission considered to be of particular relevance for the public interest. All publications on the Commission’s official Internet page are available in Serbian and English.

Members of the professional and general public are provided with all decisions enacted by the Commission in its competition cases, initiated either on the initiatives of the parties or ex officio . Also, the Commission publishes its economic inquiries, in addition to draft regulations. It has also intensified its practice of providing press releases with reference to competition cases that are likely to cause interest in the media, but also in cases when the Commission assesses the importance of presenting its position on certain issues. Likewise, all information on important activities of the Commission President, members of the Commission Council and CPC staff are also published.

Chart 23: Overview of website traffic by years

Број појединачнихWebsite улазакаtraffic byна yсајтears, Комисије 2014 - 20182014/2018 године 300000

250000

200000

150000

100000

50000

0 NumberУласци of на visits сајт 2014 2015 2016 2017 2018

133

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The Commission notes the continued high interest of the national and foreign media in its work in 2018. Journalists of the print and e-media outlets, as well as of various Internet portals, have presented a great number of questions and inquiries before the Commission from the scope of its entrusted competences.

12.9. SOCIAL NETWORKS

In order to further improve the communication with all stakeholders and achieve full operational transparency, the Commission has proceeded with the work on advancing its Internet-based communication and spreading out to the new media such as social networks in 2018. Under the project “Increasing economic growth through support to the promotion of competition policy”, supported by the Royal Norwegian Ministry of Foreign Affairs, the Internet and social media communication strategy of the Commission was drafted.

The Communication strategy should provide frameworks for appropriate action of the Commission in the digital world, both via its new website and newly-opened social network accounts. The objective of this new and more open public approach is to provide more complete information on activities of this important institution, in a manner which will ensure an improved understanding of the Commission’s role in securing and advancing market competition.

The Strategy represents a support to previously established communication routes of the Commission and an expert and operational support to the Commission staff, provided in the form of timely, modern and professional transposition of the Commission’s activities into the online content.

Under the same project, the Commission has started to design a new website, built on a more modern platform. Also, the Commission has opened accounts on several social networks (Facebook, Twitter and LinkеdIn), managed in accordance with the Strategy, which had a considerable positive impact on the Commission’s public image and visibility of its activities.

134

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

13. OVERVIEW OF THE COMMISSION’S ACTIVITIES IN 2018

Number of Pending, enacted 2018 as on Dec decisions, as 31 on Dec 31 INFRINGEMENTS OF COMPETITION Restrictive agreements 7 14 Individual exemption of agreement from prohibition 22 1 Abuse of dominance 2 4 Antitrust initiatives before the Commission and notifications 97 12 TOTAL 128 31

MERGERS BETWEEN UNDERTAKINGS Approved in summary procedure 158 Approved in ex officio proceedings, with conditions 1 Prohibited in ex officio proceedings /

Violations of the law / Rejected notification 6 Suspended proceedings 1 TOTAL 166 19

OPINIONS Opinions on regulations with impact on the market competition 8 / Opinions on the implementation of the provisions of the Law 19 / on Protection of Competition governing mergers Opinions on the implementation of competition regulations 15 / relating to restrictive agreements and abuses of dominance Opinions on reports of regulatory bodies 4 / Opinions issued pursuant to Article 157 of the Law on 24 / Bankruptcy TOTAL 70 /

SECTOR INQUIRIES 5 / TOTAL 5 /

135

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

14. CONCLUSION

The Commission is primarily devoted to efficient implementation of competition regulations towards ensuring and advancing competition on the market of the Republic of Serbia. In addition to that, the Commission continues to intensively implement competition advocacy activities.

Since its establishment in 2005, the Commission is basing its plans on best experiences and following on its role as the national competition authority, in line with the best comparative practices and principles of protection of fundamental rights of undertakings. In that regard, the Commission will continue to ensure the protection of competition and safeguard the adequate protection of fundamental rights of undertakings, while taking into account the interests of consumers. At the same time it will endeavor, to the greatest extent possible, to influence the legislative and executive branches, that is, various policymakers and their decisions that affect the state of competition on the national market in order to promote the idea of competition and its protection, but also to remove the barriers to entry on the market, aimed at creating a more favorable business environment.

In line with the prevailing tendency in the EU, particularly following the adoption of the EC Directive designed to empower the national competition authorities of the EU Member States, the Commission will pay special attention to its continued growth and strengthening of its powers. Also, it will intensify the implementation of tools required for efficient detection of anticompetitive behaviors and handling competition cases such as leniency program and dawn raids, in addition to preserving the independence and autonomy, including its financial independence.

The Commission has adequate education and professional staffing structure, while from the perspective of age structure, the institution is rejuvenated with trained and professional staff following the natural employee attrition. The Commission has set high staff eligibility criteria, considering that the work involves very complex and sensitive issues that require a very specific set of knowledge and skills. The Commission is also faced with the outflow of highly qualified staff to the private sector.

The level of transparency in the Commission’s work is desirably high as measured by international standards as well, with a great number of published opinions, instructions, decisions and other acts. In that regard, the Annual report itself is very detailed document, provided with the goal of presenting all relevant information relating to the Commission’s work. Also, in order to ensure the highest possible visibility of the results of its work, the Commission also publishes the abridged version of the Report as of this year, which will also be available to the general public.

The increased number of closed proceedings also has a bearing on the visibility of the Commission’s work, which strengthens the awareness in business circles on the importance of a level playing field. Furthermore, the decision to give priority in antitrust probes to those sectors that most directly influence the standard of living, well-being of the society and benefit of consumers, has also contributed to the increased visibility of the Commission.

136

COMMISSION FOR PROTECTION OF COMPETITION ACTIVITY REPORT 2018

The Commission has a key role in the implementation of competition regulations, and accordingly ensures the predictability in its work and sets transparent competition policy criteria. That is how the trust earned after more than a decade of competition policy enforcement and implementation of competition regulations in the Republic of Serbia will be preserved in the period to come.

“Our goal is the creation of a competitive market where undertakings will increase their productivity, innovations and investments, which will in turn result in growth, development and increase in the standard of living of all citizens of Serbia.”

Dr Miloje Obradovič, President of the Commission for Protection of Competition of the Republic of Serbia

137