Category: Montenegro

  • Harrisons Advises EBRD on its EUR 10 Million Loan to Hipotekarna Banka Podgorica

    Harrisons, working with Bird & Bird, has advised the EBRD on its EUR 10 million loan to Hipotekarna Banka Podgorica, secured with EU Supranational Bonds.

    According to Harrisons, the proceeds of the loan will be used by Hipotekarna Banka Podgorica to provide long-term financing for residential mortgage lending in Montenegro in accordance with the List of Minimum Standards for Residential Mortgage Lending, based on international best practices in mortgage lending. 

    Earlier this year, Harrisons advised EBRD on a EUR 5 million loan to NLB Komercijalna Banka (as reported by CEE Legal Matters on November 12, 2024), as well as on the financing for Alter Modus (as reported by CEE Legal Matters on September 24, 2024), on three financing facilities for Banca Intesa Beograd (as reported by CEE Legal Matters on July 17, 2024) and on its inaugural EUR 50 million loan to AIK Banka in Serbia (as reported by CEE Legal Matters on February 8, 2024). In 2023 Harrisons advised on EBRD’s EUR 27.6 million loan to District Center and PKS-LATEX-HLC (as reported by CEE Legal Matters on November 20, 2023), on EBRD’s EUR 5 million loan to Banca Intesa Belgrade (as reported by CEE Legal Matters on June 29, 2023), and on its EUR 4 million loan to Montenegrin retail chain Voli (as reported by CEE Legal Matters on June 15, 2023).

    The Harrisons’ team included Head of Banking and Finance Ines Matijevic-Papulin and Associate Mina Zeljkovic. 

  • JPM Partners Advises Presto Pay on Payment Institution License in Montenegro

    JPM Partners has advised Presto Pay on obtaining a payment institution license from the Central Bank of Montenegro.

    PrestoPay is a payments and transfers company.

    The JPM Partners team included Senior Partner Lana Vukmirovic Misic, Partners Milica Komar and Alma Karadjuzovic Djindjinovic, and Associate Dajana Drljevic.

  • JPM Partners Represents Montenegrin Agency for Audiovisual Media Services in Dispute with Pink Media Group

    JPM Partners has successfully represented the Montenegrin Agency for Audiovisual Media Services in an administrative dispute initiated by the Serbia-based Pink Media Group.

    According to JPM Partners, the case involved “a challenge to AMU’s decision to restrict specific programming content, notably the morning show Novo jutro, on channels including TV Pink, TV Pink M, and TV Pink Plus. The Montenegrin Administrative Court upheld AMU’s decision, affirming the regulatory agency’s authority to impose content limitations on foreign media broadcasts within Montenegro.”

    The JPM Partners team included Partner Marija Zivkovic.

  • M:tel Fined EUR 806,953.09 for Gun-Jumping in Montenegro

    The Misdemeanor Court in Podgorica recently imposed a fine of EUR 806,953.09 on the telecommunications company M:tel doo Podgorica (“M:tel”) for the acquisition, by its related Serbian company, of 50% shares in the Slovenian company Arena Sport doo Ljubljana (“Arena Sport”).

    The Montenegrin Agency for Protection of Competition (“Agency”) initially approved the concentration between Arena Channels Group doo Beograd (“Arena Channels Group”), a company within the Telekom Serbia group of companies, and Arena Sport on 20 May 2021, after reviewing their request for concentration approval. However, it was soon revealed that the acquisition was conducted in 2020, before the submission of the concentration notification and the Agency’s approval.

    Under the Montenegrin Law on Protection of Competition (“Law”), related companies like Arena Channels Group and M:tel, both of which are part of Telekom Serbia group of companies, are treated as a single entity.

    Although M:tel was not a direct participant in the concentration, the Agency used the possibility to fine the related entity of the notifying party i.e. the Agency targeted the company within the group that operates in the Montenegrin market. In addition, this is significant as this was a foreign-to-foreign transaction without any impact on the market of Montenegro.

    The outcome of the first-instance proceedings initially favored M:tel, but the Agency subsequently appealed the decision to the Higher Misdemeanors Court of Montenegro. On 24 March 2023, the High Court adopted the appeal, overturned the lower court’s ruling, and remanded the case back to the Misdemeanor Court in Podgorica for further evaluation.

    Following this re-evaluation, the Misdemeanor Court in Podgorica found M:tel liable for breaching the Law. The court’s reasoning highlighted that the Arena Channels Group executed the concentration without obtaining prior approval from the Agency. M:tel retains the right to appeal this latest decision to the Higher Misdemeanors Court.

    This case shows the Agency’s focus on ensuring that companies follow the established rules and procedures under the Law, regardless of the actual market impact and its ongoing enforcement efforts since 2021.

    Market participants are advised to exercise notifiability assessment of transactions that may require prior approval from the Agency. We will continue to monitor this case and the Agency’s future activities closely.

    By Nikola Poznanovic, Partner, Luka Hajdukovic, Senior Associate, and Jana Stanojevic, Associate, JPM & Partners

  • Waiver of Interest on Outstanding Tax Obligations in Montenegro

    The Law on the Waiver of Interest on Outstanding Tax Obligations (“Law”) has been officially adopted and will take effect on 1 January 2025. This Law allows for the waiver of unpaid interest on tax obligations that became due before 31 December 2024.

    The Law encompasses taxes, fees, contributions, charges, and other monetary payments established by tax regulations, for which the collection and control are managed by tax authorities.

    Tax debtors can qualify for this waiver by submitting all required tax declarations by 31 December 2024 and paying their principal tax debt within 60 days of the Law’s implementation. This possibility for the waiver also applies to those with restructured debts under previous regulations.

    To receive the waiver, tax debtors must submit a formal request to the relevant tax authority within 60 days of the Law taking effect. Additionally, the relevant tax authority will, ex officio, issue a decision to waive interest for tax debtors who have calculated interest as of 31 December 2024 but do not have any recorded principal tax debt.

    Local authorities may also establish regulations for the waiver of interest on local tax obligations.

    The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

    By Branimir Rajsic, Senior Consultant, and Ana Pavlovic, Associate, Karanovic & Partners

  • New Waste Management Law of Montenegro – Key Changes for Producers and Retailers

    The new Waste Management Law of Montenegro (“the Law”), which came into force on April 12, 2024, represents a step further towards harmonizing Montenegrin legislation with the acquis communautaire, namely key European Union (“EU”) directives in the area of waste management.

    The Law introduces the concept of Extended Producer Responsibility (EPR), further emphasizing the role of producers in the waste phase of the product life cycle. Additionally, in preparation for the entry into force of provisions restricting the use of plastic bags and single-use plastic products, which will take effect on October 20, 2024, it is particularly important for producers and retailers to timely assess their new obligations and adjust their operations to meet legal requirements and contribute to environmental protection.

    The introduction of the EPR concept is the result of harmonization of Montenegrin legislation with Directive 2008/98/EC on waste and repealing certain directives, under which Extended Producer Responsibility entails the introduction of a set of measures by the Member State, i.e., Montenegro as an EU candidate country, to ensure that producers bear financial responsibility, or financial and organizational responsibility, for managing the waste phase of the product’s life cycle. Some of the obligations imposed on producers include the obligation to keep records of produced or imported products, as well as the equipment in which these products are incorporated, the obligation for producers to accept returned products or waste generated after their use without charge, the obligation to manage waste and bear the financial responsibility for these activities, and the obligation to fulfill responsibilities under the EPR program, particularly concerning the payment of contributions and the collection of data on products placed on the market.

    The term “producer” is broadly defined, as Article 14, paragraph 1 of the Law provides that a producer is considered to be any legal entity or entrepreneur engaged in the production, improvement, processing, handling, sale, or importation of products (new, used, repaired, or reconditioned).

    Furthermore, the amendments, which were made to align the Law with Directive 94/62/EC on packaging and packaging waste, will significantly impact daily life in relation to the ban on the use of plastic bags. The ban on the use of plastic bags includes the obligation for retailers to phase out plastic carrier bags with wall thicknesses from 15 to 50 microns. In the event that retailers use plastic carrier bags with a thickness greater than 50 microns at the point of sale, they are required to pay a fee, the amount of which is determined by the Regulation on the fee payable by the seller for light plastic carrier bags with a wall thickness of more than 50 microns, adopted by the Government of Montenegro on October 10, 2024. According to this Regulation, retailers will be obliged to pay a fee of EUR 0.03 per bag, and the amount will be calculated based on the monthly report on the number of bags sold, starting from the day the said Regulation comes into force[1]. A legal entity that does not comply with these provisions may be subject to a fine ranging from EUR 1.000,00 to EUR 20.000,00 in a misdemeanor proceeding.

    Additionally, the new Law prohibits the trade of oxo-degradable plastic[2] products and certain single-use plastic products, as specifically listed in the Law, which includes plastic cotton buds, cutlery, plates, and straws. EU Directive 2019/904 on the reduction of the impact of certain plastic products on the environment, which introduced the ban on single-use plastics, provides examples of certain products that are or are not considered single-use plastic products within the meaning of the Directive. Accordingly, single-use plastic products do not include containers for dry food or food sold cold that requires further preparation, whereas, on the other hand, containers for fast food or boxes for meals, sandwiches, tortillas, and salads with hot or cold food are considered single-use plastic products. The primary goal of the solutions envisaged by the said Directive is to reduce the amount of waste generated by promoting a circular approach that prioritizes sustainable and non-toxic reusable products and reuse systems over single-use products.

    The new Waste Management Law introduces numerous new obligations that, on the one hand, will compel producers and retailers to promptly adapt their products and packaging to new standards and develop strategies for financing recycling processes. On the other hand, the Law is expected to stimulate a reduction in the negative impacts of pollution and introduce environmentally friendly habits into the daily life of the community. It is important to follow the deadlines and actively engage in the development of sustainable waste management solutions, given that the adoption of the new Law in the area of waste management represents an initial step towards further infrastructure development and improved implementation, with the aim of meeting all the objectives in this area by 2030.

    [1] Article 3 of the Regulation on the fee payable by the seller for light plastic carrier bags with a wall thickness of more than 50 microns stipulates that the regulation enters into force on the day following its publication in the “Official Gazette of Montenegro”.

    [2] Plastic containing additives that accelerate its degradation under the influence of oxygen and UV light and is often used in the production of plastic bags, packaging, and other short-term use plastic products.

    By Lana Vukmirovic Misic, Senior Partner, and Mina Coguric, Associate, JPM & Partners

  • Montenegro’s Trust in Banks: A Buzz Interview with Milan Keker of KBP Legal

    Montenegro’s financial sector is experiencing growth with record-high deposits and increasing trust in the banking system while advancing infrastructure projects and tapping into renewable energy opportunities, according to Keker, Bujkovic & Pejovic Partner Milan Keker.

    “Montenegro’s financial landscape has recently seen significant developments,” Keker points out. “Deposits in local banks have reached historic highs, with a whopping 38% increase compared to 2019, or to put it in another perspective at the end of Q3 deposits in banks amounted to 78% of GDP. While deposits from foreigners have seen a slight decline, there is still a noticeable presence of spending of expats.” This, according to Keker, reflects Montenegro’s appeal as a destination for people from distressed regions, “largely due to its relatively lenient immigration policies and ease of establishing companies which can in turn secure residency.”

    “Despite inflationary pressures, there seems to be growing trust in the Montenegrin banking sector,” Keker stresses. “The country’s resilience is more robust than it might appear at first glance. The bankruptcies of two commercial banks, Atlas Bank and Invest Banka Montenegro from the same holding company in 2019, did not shake confidence, as all guaranteed deposits have been duly and fully disbursed.” Additionally, he notes that due to availability of money at the market “the state is considering issuing bonds on domestic markets, allowing the government to borrow at lower interest rates, and the depositors to benefit from higher interest rates by purchasing bonds compared to the returns offered by interest-bearing bank deposits.”

    Keker adds that there are also signs of consolidation in the banking sector, with everybody closely following what is happening with the Addiko Group takeover attempts by regional players. Keker speaks of a trend of larger regional players acquiring (or attempting to acquire) smaller banks, but also notes a renewed interest from Western financial groups in re-entering the Balkan markets. Moreover, he notes that “the legislation on capital markets has spurred increased interest from payment institutions to set up operations in Montenegro, with the country aligning its legislation with the EU’s PSD2 Directive.”

    Keker emphasizes that Montenegro’s geopolitical position and its aspirations toward EU accession are also shaping its economic trajectory. “There is growing interest from the EU and Western nations to integrate Montenegro into the European Union, sending a message to the Western Balkans,” he points out. “This has led to a push for improved legislation across various sectors like tax collection, UBO registrations, customs management, in order to better access IPA funds and meet EU benchmarks.”

    In terms of infrastructure, Keker says that “significant investments are being made or are in the pipeline. The second stage of the country’s highway project Bar-Boljare is underway, although only 42 kilometers have been completed so far, financed through a Chinese loan.” Until this highway connects Montenegro with Central Europe, he says that “the economic benefits will remain limited, though any major investment in such a small market has a noticeable impact.”

    Lastly, Keker highlights that energy has become a key topic. “With 240 sunny days per year, Montenegro is well-positioned for renewable energy development, particularly in wind and solar,” he notes. “The construction of hydropower facilities also helps balance the energy supply. France’s EDF (state-owned energy company) has signed several memoranda with the Montenegrin counterpart, positioning itself as a partner in these projects. This follows a meeting between the Montenegrin Prime Minister and French President Macron, signaling a deeper interest in strengthening ties and capitalizing on Montenegro’s potential as a regional energy hub, especially for exports to southern Italy and the broader EU market through the grid. The move toward renewables is expected to pay dividends for both Montenegro and its international partners.”

  • Recent Changes in the Montenegrin Labour Regulations

    Recently, the Parliament of Montenegro has amended the labour regulations by adopting two amendments to the Labour Law in August and September 2024, and by adopting the amendments to the Law on Contributions for Mandatory Social Insurance in September 2024.

    1.      Novelties in the Labour Law

    The recent amendments to the Labour Law introduce two main novelties:

    • Change of the maximal duration of the fixed-term employment; and
    • Change of the minimal salary.

    a)     Change of the Maximal Duration of the Fixed-Term Employment

    The amendments to the Labor Law related to the maximum duration of a fixed-term employment agreement entered into force on 13 August 2024. These amendments reduce the maximum duration of fixed-term employment from 36 months to 24 months. After 24 months, the employer may only conclude an indefinite employment agreement with the same employee.

    There is an exception from this rule, that relates to fixed-term employment agreements that were concluded for a period longer than 12 months (based on one or more agreements) before 13 August 2024, i.e. before these amendments of the Labour Law came into force. To fixed-term employment agreements concluded in such a way, the previous provisions of the Labor Law would remain applicable, allowing such fixed-term agreements to last up to 36 months. 

    b) Change of the Minimal Salary

    Amendments to the Labor Law relating to the minimal salary in Montenegro entered into force on 1 October 2024. These amendments envisage that the minimal net salary amounts to:

    • at least EUR 600, for the employees who are employed on the jobs with I to V level of educational qualification; and
    • at least EUR 800, for the employees who are employed on the jobs with VI or higher level of educational qualification.

    2.     Novelties in the Law on Mandatory Social Insurance Contributions

    The amendments to the Law on Contributions for Mandatory Social Insurance also entered into force on 1 October 2024. These amendments introduce a decrease in contributions for pension and disability insurance from 20.5% to 10%.

    This reduction is shared between contributions borne by the employer and employee. Specifically, the employers will no longer bear the burden of contributions, as their part will be reduced from 5.5% to 0%, while the employee’s burden will be reduced from 15% to 10%.

    When it comes to insured persons fully responsible for bearing salary contributions (e.g. members of the board of directors, Montenegrin citizens employed abroad, etc.), their burden is reduced from 20.5% to 10%.

    The Government proposed these amendments, explaining that the labour costs significantly affect micro and macro competitiveness, the level of investments, and ultimately economic growth. Also, the level of these levies is directly related to the unemployment rate, as well as the existence of informal employment. In any case, the direct result of these changes will certainly be an increase of the net salaries of the employees.

    The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

    By Milena Jaksic Papac, Partner, Milijana Tomic and Sandra Perisic, Senior Associates, and Ana Pavlovic, Associate, Karanovic & Partners

  • Power Play: EU’s New Rules on Market Giants’ Exclusionary Tactics

    Montenegro is not a member state of the European Union but rather a candidate country for membership, which status was granted on December 17, 2010.  As such, European Union regulations are not directly applicable in Montenegro, however, many regulations have been harmonized with EU directives as a result of the harmonization process (acquis Communautaire).

    The European Union seeks to unify the legal regulation of certain areas through the adoption of acts, such as guidelines. Although they are not legally binding on national authorities, the guidelines can have a significant positive impact on legal certainty.

    European Commission has prepared draft Guidelines on the application of Article 102 of the Treaty on the Functioning of the European Union to the abusive exclusionary conduct by dominant undertakings, published on August 1, this year, while the period of consultation ends on October 31. Text of the draft is available on the link: 2024 article 102 guidelines – European Commission (europa.eu).

    Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’) prohibits dominant companies from engaging in abusive practices that are capable of excluding competitors from the market. This is one of the few areas of European competition law where no Guidelines, still, clarify the application of the rules of the Treaty. However, the enforcement of Article 102 TFEU is key to ensuring that competition works effectively and that consumers can reap the benefits of competitive markets.

    The Guidelines seek to establish, in line with the case law of the EU Courts, the principles on the basis of which it is determined whether there is an abuse of a dominant position in accordance with Article 102 TFEU. It should be pointed out that this article does not prevent the independent achievement of a dominant position in the market due to abilities and skills, but it is forbidden to abuse such a position.

    Guidelines make a difference between the dominant position held by one or more undertakings. The existence of a dominant position depends on and is assessed in relation to the circumstances of each case and the analysis of the position of the market, and in particular of the market shares. It is also relevant to determine the existence of barriers to market expansion and entry that prevent actual competitors from expanding their activities on the market or that prevent potential competitors from gaining access to the market

    Some barriers have been found and detected to include: tariffs or quotas, planning regulations, licensing requirements and authorization requirements, statutory monopolies and intellectual property rights, established distribution and sales network, vertical integration and exclusive or preferential access to inputs or customers, access to critical raw materials, inertia of doctors in their prescribing habits, etc.

    When it comes to collective dominance it has been found that some of the elements that give rise to a connection between undertakings enabling them to act together independently of their competitors, their customers, and consumers may be reaching terms of coordination, ability to monitor adherence to terms of coordination, the existence of a credible deterrence mechanism, external stability – lack of constraints exercised by actual or potential competitors and lack of countervailing power by customers.

    Guidelines also established general principles applicable to the assessment of whether conduct by dominant undertakings is liable to be abusive. It is determined that the concept of abuse is an objective one and is generally not necessary to show that an undertaking had the intent to impair effective competition in order to establish an abuse of a dominant position.

    To determine whether conduct by dominant undertakings is liable to constitute an exclusionary abuse, it is generally necessary to establish whether the conduct departs from competition on the merits and whether the conduct is capable of having exclusionary effects.

    The concept of competition on the merits covers conduct within the scope of normal competition on the basis of the performance of economic operators and which, in principle, relates to a competitive situation in which consumers benefit from lower prices, better quality, and a wider choice of new or improved goods and services, which provides such competitor. Guidelines further determine relevant factors to establish that conduct departs from competition on the merits.

    The guidelines also determine the ability to produce an exclusionary effect by establishing the burden of proving that the conduct may lead to an exclusionary effect. The categorization of behavior has been made into conduct for which it is necessary to demonstrate a capability to produce exclusionary effects, conduct that is presumed to lead to exclusionary effects, and naked restrictions.

    The case law of the Union Courts has developed specific analytical frameworks to establish whether certain types of conduct by dominant undertakings infringe Article 102 TFEU (specific legal tests as referred in Guidelines), which represents concretization of general principles. 

    Specific legal tests have been developed for five types of abuse classified as: exclusive dealing, tying and bundling, refusal to supply, predatory pricing, and margin squeeze. 

    Guidelines recognize specific conduct for which Union Courts did not develop specific tests but have provided guidance as to how to apply general legal principles.

    Finally, Guidelines determine general principles applicable to the assessment of objective justification of certain conduct.

    It may be defended that certain conduct is objectively justified and does not violate article 102 of the TFEU if it is objectively necessary (objective necessity defense) or produce efficiencies that counterbalance, or even outweigh, the negative effect of the conduct on competition (efficiency defence).

    By Dajana Drljevic, Associate, JPM & Partners

  • Keker, Bujkovic, Pejovic Opens Doors in Montenegro

    Milan Keker, Aleksandra Bujkovic, and Ivan Pejovic have founded Keker, Bujkovic, Pejovic – KBP Legal – in Montenegro.

    Before founding KBP Legal, Partner Milan Keker was the Head of Harrisons Podgorica office since 2018 (as reported by CEE Legal Matters on September 26, 2018). Keker first joined Harrisons in 2017. Before that, he worked for Karanovic & Partners between 2012 and 2017. Earlier still, he worked for Jovovic, Mugosa and Vukovic between 2010 and 2012. In 2022, Keker was featured in a Buzz interview with CEE Legal Matters (on December 19, 2022). His primary area of expertise is corporate law.

    Prior to establishing the new firm, Bujkovic worked for Harrisons between 2018 and 2024. Earlier, she spent three years with the Higher Court in Podgorica and, earlier still, she spent two years with the Basic Court in Podgorica. She specializes in corporate law, maritime law, real estate, and dispute resolution.

    Pejovic specializes in corporate and commercial law. He also hails from Harrisons, having spent seven years with the firm.

    Rounding out the team is Attorney at Law Iva Rolovic.

    “We are thrilled to announce the launch of our new law firm,” commented Keker. “With a team of dedicated professionals, we are committed to providing comprehensive commercial law services to help businesses navigate the Montenegrin legal landscape with confidence and clarity. The community can expect to hear much more from us as we actively engage and demonstrate our commitment to excellence in commercial law.”