Category: Serbia

Prica & Partners has appointed Senior Associate Jelena Edelman to lead its new Employees’ Stock Awards department within the firm, to handle foreign corporations’ employee award and saving schemes.

Edelman has been with Prica & Partners for over 17 years, joining the firm in 2006.

According to the firm, the new department provides legal assistance with “respect to most efficiently structuring the [employee award] plan, as well as leading clients through the whole complex process of implementation of the plan, with a deep understanding of all applicable laws, regulations, and procedures.”

Moravcevic Vojnovic and Partners, in cooperation with Schoenherr, has advised Alstom Transport on the execution of a consulting agreement for the construction of the Belgrade metro.

Alstom Transport is a French multinational company operating in the rail transport market in 63 countries. It is active in the fields of passenger transportation, signaling, and locomotives.

According to Schoenherr, the agreement was executed in early March 2024 by the “Secretariat of Public Transport of the City of Belgrade and PUC “Belgrade Metro and Train” as the investors, and Alstom as the consultant. This agreement will also serve as the foundation for the main construction agreement for the design, construction, and commissioning of the transportation systems for the Belgrade metro. In parallel, to ensure smooth project development, the parties signed an interface cooperation agreement with Power China in its capacity as the contractor for the works.”

The Schoenherr team included Partners Ivana Panic and Milos Lakovic, Attorney at Law Luka Veljovic, and Associate Vukasin Stankovic.

Schoenherr did not respond to our inquiry on the matter.

Last week, the Serbian Commission for Protection of Competition (“Commission”) released two decisions involving the two biggest producers and wholesalers of ground coffee in Serbia – Atlantic Group (“Atlantic”) and Strauss Adriatic (“Strauss”). One decision marked the end of the Commission’s antitrust investigation imposing penalties on Atlantic and Strauss, issued on December 29, 2023 (“Antitrust Decision”), and the other one is the merger control ruling conditionally approving Atlantic’s acquisition of Strauss, issued on February 28, 2024 (“Merger Decision”).

Atlantic is a part of Atlantic Group, a Croatian multinational company whose business operations include the production, development, sales and distribution of consumer goods with simultaneous market presence in over 40 countries around the world. Strauss is a part of Strauss Group, an Israeli manufacturer and marketer of consumer foods, sold through retail stores with more than 15,000 employees worldwide, and is active in more than 20 countries. The two companies collectively hold over 70% share of the overall coffee market In Serbia and are faced with much smaller competition from local coffee producers and imports.

By the Antitrust Decision, the parties were found in breach of Competition Law in the form of a concerted practice, whereby the parties agreed and aligned their business strategies via direct or indirect exchange of information regarding the pricing policy and future wholesale prices of ground coffee in Serbia, thereby concluding a restrictive agreement. The parties have used public announcements to signal the behaviour about future pricing policy and other supporting mechanisms such as market monitoring and resale price maintenance. The antitrust proceeding resulted in the imposition of fines for both parties, in the amount of approx. EUR 1.6 million for Atlantic and EUR 400,000 for Strauss.

Concurrently with the antitrust investigation, Atlantic filed a merger notification concerning their proposed acquisition of Strauss. Following an in-depth proceeding that lasted for more than eight months, the merger approval was granted subject to conditions. Namely, the Commission noted in its decision that post-transaction the parties will have a joint market share of at least 70-80% on the market of production and wholesale of traditional (domestic) ground coffee. Therefore, the deal is subject to both structural and behavioural remedies – Atlantic will have to divest its production operations located in the municipality of Surcin (Belgrade) and is subject to several other obligations in the next five years.

We have outlined below the most interesting aspects of both, Antitrust Decision and Merger Decision. 

Atlantic/Strauss Antitrust Decision

The Commission found that Atlantic, occupying roughly half of the total market, and Strauss, occupying roughly 1/3 of the total market, were in breach of the Competition Law in the form of a concerted practice on the market that effectively functions as a duopoly. Particularly, the parties agreed and aligned their business strategies via direct or indirect exchange of information regarding the pricing policy and future wholesale prices of ground coffee in the Republic of Serbia, thereby concluding a restrictive agreement.

During the investigation, the Commission found evidence of both, a direct exchange of competitively sensitive information between the legal representatives of the two companies, and an indirect exchange through the dissemination of signals and messages via the media. As a result, the Commission imposed fines on both parties, totaling approximately EUR 1.6 million for Atlantic and EUR 400,000 for Strauss.

• What triggered the antitrust investigation?

The Commission launched an investigation against Atlantic and Strauss in 2021 after a market study in food markets revealed a significant positive correlation in the wholesale prices of their coffee brands (between 0.86 and 0.99). Another factor prompting the investigation was a statement by Strauss’ director indicating that 90% of the final product’s price comprises the cost of raw coffee. Observing fluctuations in raw coffee prices and comparing them with retail prices of roasted coffee in Serbia, the Commission noted discrepancies and frequent price movements in opposite directions. With Atlantic and Strauss holding approximately 80% market share, the Commission concluded that this market possesses the structure that facilitates coordination between the competitors. Consequently, on September 14, 2021, the Commission initiated a formal investigation, conducting simultaneous dawn raids on Atlantic and Strauss’s premises. 

• Direct contacts between competitors and market signalling via media as evidence of market collusion

The Commission identified several phases in the cooperation and market conduct of Atlantic and Strauss. Specifically, the period spanning from 2012 to 2014 is characterised as a “price war” during which both parties consistently and intensively reduced prices to compete for customers. During the dawn raid, internal emails of Atlantic revealed the strained relations with Strauss due to differing views on pricing policy. Internal emails of Strauss, on the other hand, showed examples of statements emphasising the desire to avoid a price war with Atlantic at all costs.

From 2015 to 2021, there have been three price increases in the relevant market and the Commission has found evidence of collusion in the price increase in all three instances. Between these increases, the parties colluded to maintain price stability in the market.

During the dawn raid, the Commission identified the direct communication between employees of Atlantic and Strauss regarding the new pricing strategy concerning the 2015 price increase. Additionally, evidence of the exchange of new pricelists between competitors prior to their implementation was found. Furthermore, the same communication revealed that relevant individuals from Atlantic and Strauss met in 2016 to jointly review data from Nielsen reports on sales performance for the previous month. Subsequently, Atlantic made a public statement in an interview explicitly stating that a significant price drop should not be expected. As a result of this meeting, the price of C coffee (Strauss) was reduced in the subsequent month to align with the price of Bonito coffee (Atlantic), without any further escalation of price decreases or a price war.

The price increases in 2017 and 2021 were marked by face-to-face meetings between competitors and the use of media to signal price strategies. After the increase in raw coffee prices on the global market in 2017, the Commission observed a pattern of exchanging signals between the parties via the media. Initially, the responsible person from Atlantic publicly stated that a price increase was “inevitable” and shortly thereafter Strauss echoed a similar sentiment. Following these media announcements regarding the “inevitable” price increase, the actual increase in February 2017 was approximately 11.5%. According to the evidence uncovered, within a little over ten minutes of receiving the pricelist from Atlantic via email, Strauss’ employee informed the group representative via WhatsApp that “Atlantic sent the pricelist so that we have 11.5 as agreed”. Subsequently, Strauss Adriatic adjusted its own price list to mirror the price list of Atlantic.

The pattern of media signalling established in 2017 recurred during the price increase in 2021. Once more, the announcement of the price increase was made through the media, this time by Strauss, signalling to the market their readiness to increase prices. Shortly after, there was a response in the form of a media statement from Atlantic. Of particular scrutiny by the Commission was the fact that the article featuring Atlantic’s statement about the inevitability of price adjustments was a paid media statement, presented as a simulated interview with responses to the journalist’s questions.

• Economic analyses

The Commission conducted high-level statistical analyses of raw and ground coffee prices, in support of its findings of concentred practice between Atlantic and Strauss. These analyses, along with email correspondence from dawn raids and media signaling patterns, served as evidence of collusion.

The Commission analysed the correlation between various price factors in the period from 2015 to 2022: (i) raw coffee prices on the world market and import prices of Atlantic and Strauss; (ii) wholesale prices of ground coffee of Atlantic and Strauss, (iii) retail prices of their brands per retailers; (iv) the relationship between wholesale and retail prices with raw coffee prices.

The analysis revealed that, while import prices mirrored global prices of raw coffee, this consistency was not observed at wholesale and retail levels. Specifically, wholesale and retail prices did not reflect raw coffee price fluctuations on a global level suggesting they were not influenced by it.

Furthermore, the analysis demonstrated significant correlation between the wholesale prices of Atlantic and Strauss and nearly identical retail prices across their brands at different retailers. This led the Commission to conclude that Serbian ground coffee prices were determined by factors other than prices of raw coffee (even though this is an essential input for ground coffee price calculations), indicating that a commercial decision was made. For comparison, as a response to the statement of objection, both Atlantic and Strauss claimed they independently set prices based on their expenses. 

• Exchange of information during the negotiations regarding Atlantic’s potential acquisition of Strauss in 2017

Before Atlantic’s acquisition of Strauss in 2024, there were several unsuccessful negotiation attempts for the same acquisition. Evidence collected during the dawn raid suggests that during 2016 and 2017, Atlantic and Strauss met multiple times to discuss the potential acquisition and explore other scenarios of cooperation, including forming a joint venture.

The Commission assesses that communication regarding a potential transaction between 2016 and 2017 is not prohibited, but it was considered in the context of exchanging commercially sensitive information which could potentially facilitate coordinated behaviour among competitors regarding pricing.

In this context, the Commission has identified email correspondence concerning a proposed transaction, which includes emails suggesting that the parties exchanged commercially sensitive data. This information pertained to the utilization of production capacities, exchanged prior to direct negotiations or knowing for certain that the communication would lead to a potential transaction. Additionally, it involved discussions about views and expectations regarding future pricing policies.

This is the first time that the Commission scrutinised information exchange during M&A negotiations, underlining the imperative for higher compliance with competition law during M&A transactions among competitors.

• Use of the EU procedural rules for dawn raids conducted by the Commission

Atlantic objected to the evidence gathered during the dawn raid arguing that their lawyers were not present when the Commission reviewed the email correspondence. This objection was grounded in the established practices of the EU Commission and the EU Court, advocating for the presence of lawyers during such reviews.

The Commission responded to these objections by highlighting that the Stabilisation and Association Agreement (“SAA”) entered into between Serbia and the EU obliges Serbia to harmonize with the substantive law of the EU. However, regarding the procedural aspect of dawn raids, the Commission clarified that it is not bound to adhere to EU practices. On the contrary, the Commission is prohibited from doing so, as it would contravene the procedural rules outlined in the Serbian Law on Administrative Procedure and the Competition Law.

Accordingly, this implies that the Commission will adhere to local procedural rules regarding matters pertaining to competition law investigations as well.

Atlantic/Strauss Merger Decision

The Commission conditionally approved Atlantic Group’s acquisition of Strauss after an almost nine-month long in-depth investigation. Following this decision, the two largest coffee producers in Serbia will merge into one.

The antitrust investigation coupled with the parties’ significant joint market share post-transaction (at least 70-80%) heavily influenced the merger control proceedings. The transaction is subject to both structural and behavioural remedies. Atlantic will have to divest its production operations in the municipality of Surcin (Belgrade) and comply with various other obligations over the next five years including reporting obligations and limitations on private label contract manufacturing.

The parties announced closing of the transaction on 1 March 2024, but its finalisation awaits fulfillment of the imposed remedies.

Please find below the detailed description of remedies imposed:

• Divestment obligations

Atlantic is obliged to divest its business operations related to coffee processing and production of coffee products in the production plant of this company located at Surčinska 6, Belgrade by investing reasonable efforts to:

• divest the factory, land, equipment and machinery that is necessary for conducting the said business operations;
• put in place all necessary measures to ensure that no flow of confidential information about the subject matter of the divestment exists between Atlantic and its affiliates on the one hand and the subject matter of the divestment, on the other;
• take an active role in divesting the business by applying reasonable efforts;
• refrain from actions that may significantly adversely affect the operation of the subject matter of disinvestment, in accordance with good business practice and to minimize the risk of losing the competitiveness potential of the subject matter of disinvestment, until its disinvestment,
• keep separate the subject matter of disinvestment, on the one hand, and the remaining business activities of Atlantic/Struss company on the other,
• divest the said business operations to the buyer who cumulatively fulfills the following conditions:
  • • is not an affiliated company to Atlantic,
    • is an actual or potential competitor to Atlantic,
    • has financial resources on the basis of which he will be able to operate on the market, and
    • received approval from the Competition Commission if such an approval was required.

• Appointment of sales and supervisory officers for divestment purposes

Atlantic has to inform the Commission, within the given deadline, about the activities undertaken in connection with the divestment of the business, including providing the information on the sales officer who will be in charge of implementing the divestment and the supervisory officer who will be in charge of overseeing business management and preserving the viability of the subject matter of the divestment subject until the divestment occurs. Several conditions have been defined in relation to who these two officers can be and ultimately only after the Commission approves the company’s proposal, they can be appointed. Both officers have regular reporting obligations to the Commission. 

• Divestment deadlines

Atlantic has 18 months from the date of the decision on the appointment of sales and supervisory officers to divest, i.e. to employ reasonable efforts to divest, the said business operations at a price that is not minimal and which Atlantic considers appropriate. If unsuccessful, upon a reasonable request the Commission may approve an additional 6 months for the divestment to occur at the price offered by the buyer (i.e., Atlantic will not be able to determine the minimal price).

• Prohibition of re-acquisition of the divested business operations

Five years after the successful divestment, Atlantic is not able to re-acquire the sold business operations or influence them in any manner. 

• Reporting on sales policy

Once a year (or more frequently if needed), for five years following the Merger Decision, Atlantic will report to the Competition Commission about its sales policy including submitting the data on sales channels, customer categorisation, rebate policy and other general terms of business. 

• Reporting on production capacities

Every six months, for five years following the Merger Decision, Atlantic will report to the Commission about various aspects of its production output and capacities.

• Limitations regarding contract manufacturing for private labels

Atlantic commits to not renewing current contracts for coffee production for other market participants once the current contracts expire. This applies to agreements made with companies for the production of private brands of coffee. Furthermore, for five years starting from the day of the Merger Decision, the company will refrain from entering into new contracts for coffee production for other market participants.

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

By Bojan Vuckovic and Bojana Miljanovic Hussey, Partners, Mladen Vujic, Senior Associate, and Sanja Dedovic, Associate, Karanovic & Partners

The Serbian Commission for Protection of Competition (“Commission”) has recently determined that the companies KTG Solucije d.o.o. Subotica (“KTG”) and Eco sense doo Subotica (“Eco Sense”) entered into a restrictive agreement that significantly impacted competition in public procurement procedures related to hygiene maintenance materials and services.

Back in April 2023, the Commission initiated a competition infringement investigation procedure after suspicions arose regarding possible violations, on the ground of the initiative from the Public Procurement Office.

Based on an analysis of documentation received from the initiative and further examination of publicly available data, the Commission has determined that in three separate public procurement procedures, KTG, initially the preferred bidder, withdrew its offer. Consequently, contractors engaged with the second-ranked bidder, Eco Sense, at higher prices compared to those initially offered by KTG.

Moreover, by analysing the Internet Protocol address, it was determined that KTG and Eco-sense almost always accessed the Public Procurement Portal from identical IP addresses, as well as from devices that were connected through the same Internet network or possibly through the same device.

Consequently, on 29 December 2023, the Commission rendered its decision, determining that KTG and Eco Sense had indeed entered into a restrictive agreement, which aims at significant distortion, restriction, and prevention of competition, breaching the Law on Protection of Competition.

The Law prescribes that, in case of entering into or implementing a restrictive agreement, a competition protection measure will be determined, in the form of an obligation to pay a pecuniary fine amounting to up to 10% of the total annual revenue generated in the Republic of Serbia. Furthermore, pursuant to the Law, the pecuniary fine may be reduced in case of fulfillment of certain conditions.

By its decision, the Commission imposed a pecuniary fine in the amount equal to approximately 1% of the total annual turnover in the Republic of Serbia in 2022 of Eco Sense. Additionally, the Commission found that the conditions for reducing the pecuniary fine were satisfied in the case of KTG. As a result, the Commission imposed a pecuniary fine for KTG in the amount equal to approximately 0.2% of the total annual revenue in the Republic of Serbia in 2022.

LENIENCY PROGRAM

Considering the information provided by KTG, as a participant in the restrictive agreement, the Commission determined that the conditions for reducing the pecuniary fine were met, which makes this case the first “subsequent” leniency program applied by the Commission.

Namely, during a dawn raid at KTG’s premises, KTG submitted a request for a reduction of the pecuniary fine on the basis of providing the Commission with evidence that was not available to it before.

KTG’s legal representative submitted a statement confessing KTG’s participation in a restrictive agreement with Eko Sense, as well as a statement disclosing that in June 2021, KTG had entered into an agreement with another bidder to participate in public procurement of the contractor JKP Stadion Subotica, instead of Eco Sense. This public procurement was not previously brought to the Commission’s attention. Additionally, KTG stated that they had agreed with Eco Sense on KTG’s participation in the public procurement of the contractor JKP Stadion Subotica, as Eko Sense had recently been incorporated and did not meet the conditions for participation, and provided the Commission with relevant evidence which were not available to the Commission before disclosure by KTG.

CONCLUSION

This decision of the Commission highlights the importance of maintaining competitive integrity within public procurement processes. It serves as a reminder of the consequences awaiting those who engage in anticompetitive behavior, highlighting the Commission’s commitment to upholding fair competition in Serbia’s market.

Furthermore, given that this case marks the first use of a “subsequent” leniency program, and considering KTG’s proactive approach, including the submission of crucial evidence, during the procedure, i.e. after its initiation, it is important to emphasize the significance of cooperation and transparency in these proceedings.

By Nikola Poznanovic, Partner, Zivko Simijonovic, Senior Associate, Katarina Savic, Senior Associate, JPM & Partners

Artificial intelligence (“AI”) has been present in our lives for a while now, but it became a buzzword when OpenAI introduced ChatGPT to the public. Therefore, the lawsuit against OpenAI and the datasets used by ChatGPT deserve more attention than other similar cases.

The New York Times Company (“The Times”) has initiated legal proceedings against Microsoft Corporation and various OpenAI entities, accusing them of illegally using its copyright-protected material. According to the lawsuit, this material was used in the development of AI models like ChatGPT and Bing Chat, which allegedly violates The Times’s copyrights. The case underscores the potential negative effects of AI on traditional media, including potential revenue losses and a decline in reader trust.

The Times, a recipient of 135 Pulitzer Prizes and publisher of over 250 original articles daily, emphasizes the resource-intensive nature of crucial news reporting. They generate significant revenue through content licensing, including some free licenses for academic and non-profit use. The lawsuit alleges that ChatGPT used The Times’s articles to train the system. Once the system is trained, it presents those articles to users, either in whole or in summary form, and imitates their style. Truly interesting examples of the alleged infringement were presented where only small alterations were made by ChatGPT.

Data Training

The first step in training an AI model is to gather a large dataset. This data can be anything from text, images, and sounds to more complex data like user interactions or sensor readings. The quality and quantity of this data significantly impact the model’s performance. Earlier versions of ChatGPT used substantial content from The Times (e.g., a dataset with 333,160 entries led to The Times). Later versions diversified their data sources (mostly social media posts and comments), yet The Times remained a critical source of reliable information. These entries were used for training without The Times’s permission.  One of the sources used is a large collection of online material called “Common Crawl,” which the suit alleges contains information from 16 million unique records from sites published by The Times. Some of the articles were copied in their full length.

According to the lawsuit, Microsoft developed specialized systems to replicate the content of The Times for AI models. To train the GPT models, Microsoft and OpenAI worked together to create a complex and customized supercomputing system that could store and replicate copies of the training dataset, including The Times’ content. For the purpose of training GPT models, allegedly, The Times articles were copied and ingested multiple times.

The defendants publicly defend their actions as fair use, arguing that the use of copyrighted material in AI training serves a transformative purpose (the AI-generated output has a different character than the input). However, The Times argues this is not transformative, as it involves creating competing products without compensation. 

(Non)Profit

A competing product? OpenAI initially declared as an altruistic organization, saw a shift in 2019 when an affiliate company was established for profit. Since transitioning to a for-profit model, OpenAI ceased open-source releases of its models, starting with GPT-3 in 2020, keeping subsequent model designs and training details secret. As of August 2023, OpenAI was on pace to generate more than USD 1 billion in revenue over the next twelve months. The market valuation of ChatGPT now is as high as USD 90 billion. Users might get the same or similar articles in both The Times and ChatGPT, which could lead to market disruption. 

Negotiations re Licensing

Different standpoints led to the negotiations. The Times, with numerous other media outlets, began talks regarding the price and terms of licensing of the content to the AI creators. The negotiations focused on a concept of partnership around the real-time display of The Times Articles (with attribution) in ChatGPT, in which The New York Times would gain a new way to connect with their existing and new readers, and ChatGPT users would gain access to their reporting. However, the negotiations with The Times have not resulted in a settlement. On the other hand, The Associated Press reached an agreement.

Claims

The Times contends that the success of OpenAI and Microsoft’s AI models heavily relies on copyright infringement.

The professional public already talks about the “hallucinations” Chat GPT has. The lawsuit also addresses this issue along with the false attributions to The Times, causing commercial harm.

The lawsuit seeks to address various legal claims, including vicarious and contributory copyright infringement and trademark dilution and requests the destruction of all infringing AI models that are based on The Times’s articles.

AI is neither good nor bad, and there are still nuances in its creation and use. This court case will certainly make more aspects clear and enable more legal security in the field of new technologies.

OpenAI responds

On 8 January 2024, OpenAI published a blog post with its position claiming:

1. They collaborate with news organizations and are creating new opportunities;
2. Training is fair use, but we provide an opt-out because it’s the right thing to do;
3. “Regurgitation” (providing almost unchanged articles) is a rare bug that they are working to eliminate;
4. The New York Times is not telling the whole story, emphasizing the content of the negotiations and good faith actions of the defendant when they took down Chat GPT to solve bugs that tackled The Times.

The official response before the court in New York is still expected.

The entire tech and IP world is watching how these interdependent interests will be resolved. 

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

By Rastko Petakovic, Senior Partner, Goran Radosevic, Partner, and Nikola Kliska, Senior Associate, Karanovic & Partners

BDK Advokati has advised Atlantic Grupa on its acquisition of Strauss Adriatic – the owner of Serbian coffee brands Doncafe and C Kafa – from the Strauss Group. Sole practitioner Sarig Shalhav reportedly advised the Strauss Group.

According to BDK Advokati, Atlantic Grupa will also assume control of Strauss Adriatic’s production facility in the Simanovci industrial zone near Belgrade, along with its 220 employees.

The BDK team included Senior Partners Vladimir Dasic and Bogdan Ivanisevic, Associates Milan Popovic and Anja Gligorevic, and Junior Associate Petar Eric.

On 14 February 2024 the Decision of the Constitutional Court of the Republic of Serbia no. IUz-60/2021 was published, which determines that the provision of Article 13, Paragraph 1 of the Law on Financial Support for Families with Children (“Off. Gazette of the RS”, no. 113/17, 50/18, 46/21 – Decision of the CC, 51/21 – Decision of the CC, 53/21 – Decision of the CC, 66/21, 130/21, 43/23 – Decision of the CC and 62/23), is not in accordance with the Constitution of the Republic of Serbia in the part that reads:

“absence due to complications related to pregnancy maintenance, or” and “if leave due to complications related to pregnancy maintenance was not used.”

In its explanation, the Constitutional Court found that the different calculation of the relevant period for determining the right to remuneration during maternity leave and child care leave unjustifiably places women who were prevented from working due to complications related to maintaining a pregnancy in a less favorable position compared to women whose pregnancy passed without complications.

Namely, according to the contested provision, for a woman who has started leave due to complications related to pregnancy maintenance, the salary compensation base is determined on the basis of the sum of the monthly basis on which the contributions to earnings that have the character of salary have been paid for the last 18 months preceding the first month of starting the leave. On the other hand, in the case of an employee who did not have complications related to pregnancy maintenance, the period relevant for the calculation is the last 18 months preceding the first month of maternity leave.

According to the opinion of the Constitutional Court, this further means that for women who had complications related to the maintenance of their pregnancy, the compensation of salary is calculated according to earnings that have the character of salary earned in a significantly earlier period compared to the moment when maternity leave began, than for women whose pregnancy went without complications. The contested provision stipulates that, when calculating the compensation of salary during maternity leave and child care leave, the period in which the employed woman was temporarily prevented from working due to complications related to maintaining the pregnancy and for which, in accordance with the valid Law on Health Insurance, she achieved the right to compensation of salary in the amount of 100% of the basis for compensation, on the basis of which the contributions were paid.

Practically, a woman who uses the so-called “pregnancy sick leave” and who has a working experience of less than 18 months before the start of the leave, as a result, receives a significantly lower compensation of salary during maternity leave and leave of absence for nursing a child compared to a woman without pregnancy complications. 

Finally, in accordance with the current Law of the Constitutional Court, as well as the invitation of the Secretariat for Social Protection of the City of Belgrade, women who belong in the damaged category, and who have a final decision on the right to compensation of salary during maternity leave and child care leave, adopted starting from 19 April 2019, may submit a request to amend the existing decision.

The request for amendment of decisions by users residing in the territory of the city of Belgrade can be submitted to the Secretariat for Social Protection, 27 Marta Street, no. 43-45, Belgrade, no later than 14 August 2024. Along with the duly completed and signed request form, it is necessary to attach a scanned ID card and a photocopy of the bank account card.

Decisions that have not yet become final will be changed ex officio

By Marko Ilic, Senior Associate and Marija Vranic, Associate, JPM & Partners

Karanovic & Partners has advised the Green for Growth Fund on a EUR 50 million loan for UniCredit Bank Serbia to finance utility-scale renewable energy projects in the country with a focus on solar and wind.

According to Karanovic & Partners, “GGF stated that this initiative marks a deepened engagement with UniCredit Bank Serbia and is in alignment with the Serbian Government’s renewable energy auction plans and its targets under the National Energy and Climate Plan.”

Back in 2022, Karanovic & Partners advised GGF on another loan to UniCredit Serbia (as reported by CEE Legal Matters on January 17, 2022) to finance “energy efficiency and renewable energy investments in the Southeast Europe region.”

The Karanovic & Partners team included Partner Maja Jovancevic Setka and Senior Associate Marija Vicic Simic.

In the Official Gazette of the Republic of Serbia no. 6/2024 from January 26, 2024, the following by-laws have been published:

• Rulebook on Issuing a Unified Permit for Temporary Residence and Work of a Foreigner;
• Rulebook on Approval of Temporary Residence; and
• Rulebook on Electronic Submission of a Request for Permanent Residence.

The aforesaid rulebooks on the issuance of a unified permit for temporary residence and work of foreigners, and on the approval of a temporary residence came into force on February 1, 2024, while the rulebook governing the electronic submission of a request for permanent residence became effective on January 27, 2024.

Below is an overview of the most significant provisions of each of the above-mentioned enactments.

Rulebook on Issuing a Unified Permit for Temporary Residence and Work of a Foreigner

The most significant novelty prescribed by this regulation is that the request for issuing a unified permit for temporary residence and work to a foreigner can now be submitted exclusively in electronic manner.

This request can be filed by:

• a foreigner, in which case it is necessary to be registered, i.e., to create an account on the so-called “Portal za strance”;
• employer (on behalf of the foreigner), through an authorized person, in which case it is necessary to be registered on “eUprava” portal; or by
• a person authorized by them.

The request can also be filed from abroad. The employer can submit a request for issuing a unified permit individually or collectively for a larger number of individuals, based on the same grounds.

After successful registration, the applicant is assigned a Unique Electronic Mailbox (the so-called “eSanduče”), through which notifications and instructions for further proceedings are delivered to them.

The prescribed documentation is attached to the request, which partially depends on the grounds for issuing the unified permit. All evidence is submitted in the form of an electronic document in its original form or as a digitized document. In addition, the evidence which isn’t issued by the competent authorities of the Republic of Serbia or in Serbian language need to be submitted with a translation made by an official court interpreter.

When submitting a request for issuing a unified permit based on employment, the employer initiates the labor market test. The respective request is submitted simultaneously with the request for issuing a unified permit, whereby it can be submitted on “eUprava” portal at the earliest 60 days before and at the latest on the day of submitting of the request for issuing a unified permit. Based on the conducted labor market test and submitted evidence, the National Employment Service shall assess compliance with conditions, by using the evaluation “fulfilled”, which includes the time period for which the subject evaluation is valid, or the evaluation “not fulfilled”, with providing reasons for why the conditions have not been met in the specific case. This information is then forwarded to the competent authority within the Ministry of Internal Affairs (the Administration for Foreigners).

If all conditions are fulfilled, the outcome of the process is the issuance of the unified permit card, which is delivered to the foreigner personally, and this is preceded by verifying the foreigner’s identity by the acting police officer, as well as taking their biometric data and checking whether the prescribed fees, i.e., charges have been paid.

Rulebook on Approval of Temporary Residence

The request for approval or extension of temporary residence is now also submitted exclusively through electronic means, i.e., by filling out the appropriate online application form on “Portal za strance”.

The request is submitted by a foreigner, based on one of the grounds for approving temporary residence prescribed by the Act on Foreigners.

As with the request for issuing a unified permit, the evidence is attached in the form of an electronic document in its original form or as a digitized document, whereby documents that are not issued by the competent authorities of the Republic of Serbia or in Serbian language need to be submitted with a translation by an official court interpreter. The request also includes, among other things, a proof that the foreigner has means to support themselves during the planned stay in the Republic of Serbia, as well as a proof of health insurance covering the territory of the Republic of Serbia, whereby the subject rulebook specifies what is considered an appropriate proof.

If the conditions for approving temporary residence are met, the foreigner is obliged to personally visit the premises of the competent authority, to provide biometric data and receive a confirmation of the initiated process of issuing a temporary residence permit (in the form of a card). Prior to collecting biometric data, a police officer shall verify the foreigner’s identity based on their foreign travel document or ID, and confirm whether the prescribed fees, i.e., charges have been paid.

In case the temporary residence is approved, the permit card is delivered to the foreigner in person.

Rulebook on Electronic Submission of a Request for Permanent Residence

Finally, electronic submission is also envisaged regarding the submission of a request for permanent residence in the Republic of Serbia, i.e., through the registered account of the foreigner, created on Portal za strance, by selecting the appropriate service, i.e., filling out the online request form, after which the foreigner is assigned a Unique Electronic Mailbox, i.e., “eSanduče”.

More information about the new Rulebook on Approval of Permanent Residence, published in the Official Gazette of the Republic of Serbia no. 118 on December 28, 2023, is available in one of our previous texts, which is available here.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Borinka Dobrnjac, Senior Associate, and Minja Mucic, Junior Associate, PR Legal

For those familiar with the situation in the world of football in Europe, the end of 2023 was very interesting bearing in mind that the European Court of Justice (ECJ) made two important decisions concerning football organizations FIFA and UEFA.

While the case of establishment of the European Super League by the 12 largest European football clubs outside the jurisdiction of UEFA and FIFA (Case C-333/21), was extremely covered by the media, almost unnoticed was the case submitted at the initiative of a football player and the Royal Antwerp Football Club, on the minimum number of domestic players in clubs (Case C-680/21). While the two cases are unrelated, they both involve a conflict with FIFA and UEFA rules, which serve as umbrella football organizations at the global and European levels, respectively.

The European Union Competition rules, referred by the footballer and the Belgian football club on one side and the 12 largest European football clubs on the other, cross equate to the rules adopted on the functioning of football associations and competitions within FIFA and UEFA, and in both cases, the question arose as to whether these sports rules can survive to the full estimation without prejudice to European competition rules and also about competition in the field of sports, i.e. sports organizations and sports competitions.

“Domestic Players” Rule – Royal Antwerp Football Club

UEFA rules, as well as the rules of the Belgian Football Federation – URBSFA (adopted according to the same UEFA model) provide for a minimum number of “domestic players” in football clubs. The “domestic players” rule adopted in 2005 was fully implemented in the 2007/2008 season. This right stipulates that professional football clubs participating in international football competitions organised by UEFA must have at least 8 “domestic players” on the list of up to 25 players. The term “home-grown players” does not refer in any case to nationality (which is prohibited) but to players who have trained at one club (or another club of the same national football federation) for at least 3 years between the ages of 15 and 21. Out of a total of 8 domestic players, 4 of them must be domestic players of the club on whose roster they are. Following UEFA rules, the Belgian Football Federation has adopted similar rules.

The demand of the footballer and the football club was based on the fact that the rules of UEFA and the URBSFA (Belgian Football Federation) on domestic players violate the rules on the free movement of workers guaranteed by Article 45 of the Treaty on the Functioning of the European Union (TFEU) and the competition rules provided for in Article 101 TFEU. The Local Court in Brussels has referred to the ECJ on these two issues, namely:

• Can UEFA and URBSFA rules on domestic players be categorized as restrictive agreements within the meaning of Article 101 TFEU?
• Are these rules consistent with the freedom of movement of workers guaranteed by Article 45 TFEU, and can these rules be justified, appropriate, necessary, and proportionate? 

With regard to competition rules, the ECJ has taken the stance that the rules on domestic players may be aimed at limiting or distorting competition with regard to the recruitment of talented players between clubs. However, the ECJ leaves it up to national courts to determine whether these rules restrict competition because of the objective or the potential effects. If this proves to be the case, UEFA and URBSFA will have the opportunity to demonstrate that these rules can be justified under the conditions relied on by the ECJ in its ruling.

With regard to the free movement of workers, the court considers that these rules can also lead to discrimination on the basis of nationality, according to players coming from other countries. In this regard, UEFA and URBSFA reserve the right to demonstrate that these rules nevertheless encourage employment and training and are proportionate to this purpose.

This case is important, especially considering the earlier case in 1995 (Bosman, C-415/93) which launched the story of foreign players. The famous “Bosman rule” which prohibited restrictions on foreign players, had a direct impact on the aforementioned Article 45 of the TFEU.

The “SUPER LEAGUE” Project

European Superleague Company SL (ESLC), a company founded in Spain at the initiative of a group of professional clubs: in Spain (Club Atlético de Madrid, Fútbol Club Barcelona, and Real Madrid Club de Fútbol), in Italy (Associazione Calcio Milan, Football Club Internazionale Milano and Juventus Football Club) and in the United Kingdom (Arsenal Football Club, Chelsea Football Club, Liverpool Football Club,  Manchester City Football Club, Manchester United Football Club and Tottenham Hotspur Football Club). The goal of the gathering of these clubs is a project known as the “Super League”. The plan was for this company to deal with the management of the Super League, and exploit media rights and other commercial content. The funds for the start of such a large project were offered primarily by JP Morgan AG in the form of financial support in the form of a loan with a total value of about EUR 4 billion.

As conditions for the project to come to life, it was necessary either for FIFA/UEFA to confirm the compliance of this project with its rules or to provide legal protection to clubs and players that the project would not jeopardize their participation in national and international competitions. This meant only one thing – FIFA and UEFA had to be familiar with this project.

As FIFA and UEFA did not look kindly on the project, which they see as competing, they issued a statement that they do not recognise the competition and that any football club and football player participating will face sanctions.

This attitude has contributed to the fact that in the previous period a good part of the founding clubs of the Super League announced that they no longer stand by their support for the formation of such a league.

The local court, acting on ESLC’s lawsuit, imposed interim measures prohibiting FIFA and UEFA from interfering with or acting in connection with this project.

The questions referred to ECJ by the local court are to discuss:

• Whether sports activities are excluded from the TFEU provision on freedom of movement; and
• Is this behavior of FIFA and UEFA contrary to competition rules?

As regards these two questions, the court found:

1. That the organization of international club competitions and the exercise of media rights are – economic activities, and that the rules of competition and freedom of movement must be respected, although sports activities have specific characteristics;
2. That FIFA and UEFA are abusing a dominant position because the powers of FIFA and UEFA are not subject to any criteria, although the adoption of transparent, objective, anti-discriminatory, and proportionate criteria for market entry is necessary by those in a dominant position;

• That FIFA and UEFA rules regarding the exercise of media rights can be harmful to market participants, but that it is left to the local court to determine whether there are benefits to market participants. 

In any case, this court’s decision does not mean recognition of the Super League project but is in any case a harmful blow to FIFA and UEFA.

However, FIFA and UEFA, aware of the existence of this project, embarked on the consideration of their version of the Super League, so further development regarding the future of European football remains to be seen.

The new practice undermines the traditional influence of FIFA and UEFA on the establishment of rules in the functioning of football competitions, therefore openly raising the question of whether FIFA and UEFA are willing to change their rules or whether someone else will do so in a different format.

By Zivko Simijonovic, Senior Associate, JPM & Partners