Category: Serbia

NKO Partners has advised Emmezeta on its acquisition of ES Logisticke Nekretnine from BIG Shopping Centers. Markovic Vukotic Jovkovic advised the seller.

According to NKO, ES Logisticke Nekretnine is a Serbian company owning real estate.

Emmezeta operates a retail chain and specializes in home furnishings, household appliances, and home decor.

BIG Shopping Centers is an Israeli company that manages real estate in Israel, the USA, Serbia, Montenegro, and France.

The NKO Partners team was led by Partner Djordje Nikolic and Senior Associate Andjela Mirkovic.

The MVJ team included Partners Marko Jovkovic and Nikola Vukotic and Senior Associate Marija Grujeska.

Spanish authority in charge of personal data protection has recently fined a personal data controller for using the audio recording option of its surveillance system, which data was subsequently used for termination of an employment contract.

Facts

Employer used the existing surveillance system for audio recording of the communication between an employee and clients, for which reason, given that the employer considered the recorded communication inappropriate, that employee’s employment contract was later terminated. The employee instituted a court proceeding for annulment of decision on termination of employment and addressed the Spanish personal data protection authority over unlawful workplace communication surveillance.

Although the conversation that caused the employee’s dismissal happened outside working hours, the termination notice referred to it nevertheless. According to the employer, the employee had been notified in writing about the possibility of audio recording through surveillance system in the employer’s premises, while the recording of the subject conversation could not be provided as it was automatically deleted by the system 30 days after it had been created, according to the standard procedure.

The dispute regarding the termination of employment was amicably resolved, i.e., by a settlement in which the employer acknowledged dismissal to be void, while the case was before the Agency for Personal Data Protection finished by fining of the employer.

Reasons for the decision

The acting authority found that provisions of the local Law on Personal Data Protection were infringed on this occasion, in particular Article 89 that stipulates employees’ right to privacy and prescribes that video and/or audio recording of working processes is allowed within legal framework. Although recording devices were not installed in inadmissible places, their use in this particular case was not reasonable in terms of domestic legislation and court practice, considering that Article 89, paragraph 3 of the local regulation indicates that the use of audio recording devices at workplace is permitted only in the event of risk against safety of installations, objects and persons, with respect to principles of rationality and minimization.

Given that the processor in this case failed to prove that audio recording of communication between the employee and clients was necessary for monitoring the work process, such processing is considered unlawful, i.e., processing done without relevant basis in terms of Article 6 of GDPR.

The fine was designated in the amount of EUR 6,000, considering all mitigating (e.g., that only one person’s right to personal data protection was infringed) and aggravating circumstances of the case (e.g., that infringement was done intentionally).

This decision is interesting from the aspect of domestic legislation in the field of personal data protection, as well as in terms of the practice of competent authorities, particularly considering that employers in the Republic of Serbia are increasingly using various tools for supervising employees’ work, such as video surveillance, GPS, tracker software, etc.

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 Ivana Ruzicic, Managing Partner, and Lara Maksimovic, Senior Associate, PR Legal

European Union (EU) and Western Balkans telecommunication operators signed a Roaming Declaration at the EU-Western Balkans Summit held on Tuesday in Tirana. According to the Declaration, Western Balkans – EU roaming charges will be reduced voluntarily from 1 October 2023, with subsequent reductions gradually leading to their complete elimination. The commitment was also reinforced as part of the Tirana Declaration, which was agreed upon at the Summit.

The initiative is another crucial step in bringing the Western Balkans closer to the EU. It aims to enhance connectivity, mobility, and affordability of telecommunication services for individuals and businesses, contributing to more opportunities for travel, collaboration, and exchange between the Western Balkans and the EU.

The Declaration follows the successful implementation of the groundbreaking Regional Roaming Agreement, signed at the Second Western Balkans Digital Summit in April 2019, held in Belgrade. This Agreement reflected the commitment to creating a positive impact on regional cooperation through simplified connectivity and furthering the digital transformation across the region. Since 1 July 2021, all roaming charges have been removed across the Western Balkans, replicating the “Roam like at Home” concept within the EU. Both initiatives result from the efforts of multiple stakeholders, including telecommunications operators and authorities, with the support of the European Commission.

By Ivan Eftimov, Gecic Law

On December 5, 2022, BDK Advokati announced that Francisco Partners’ acquisition of Litmos from SAP (reported by CEE Legal Matters on August 23, 2022) had closed.

As previously reported, BDK Advokati, working with Kirkland & Ellis, had advised Francisco Partners on its acquisition of SAP Litmos from SAP.

Litmos develops e-learning solutions for companies, including the SAP Litmos Training learning management system and the SAP Litmos Training Content, a course library.

Francisco Partners is a global investment firm that focuses on technology and technology-enabled businesses.

SAP is a German company specializing in enterprise application software.

“We are investing in Litmos to accelerate growth by investing in and expanding the Litmos team, advancing product development and marketing, and expanding customer success,” Jason Brein and Christine Wang, Partners with Francisco Partners, commented.

BDK Advokati’s HR and corporate teams worked on the Serbian leg of the transaction.

Immigration from war-afflicted areas, issues with the national energy company, and contentious lithium extraction operations are keeping people talking in Serbia, according to Andrejic & Partners Managing Partner Aleksandar Andrejic.

“In Serbia, like in most of Europe, the geopolitical situation is the biggest driver of activity and change recently,” Andrejic begins. “The country imposed no sanctions on Russia, so a wealth of Russian citizens and companies are looking at Serbia as an opportunity to move and reestablish their work and life here. Consequently, there are a lot of Russians and Ukrainians here that have slowly been migrating and becoming a part of the market,” he says.

Moreover, speaking about significant market occurrences, Andrejic reports of turmoil within the Serbian national energy company: “recently, there have been several adverse events in the energy market which were caused by the incompetence of the management of the Serbian national energy company.” This led to Serbia being forced to buy a lot of electricity – “given the current market prices, the government started pondering an internal reorganization of the national energy company and perhaps bringing in a professional governance board so as to avoid similar situations going forward,” he explains. Andrejic adds that the Serbian national energy company has been fraught with issues last year as well, with “disruptions across multiple production chains which subsequently affected the entire energy network.”

Furthermore, turning to legislative updates, Andrejic reports that, starting from January 2023, “all private companies will be required to issue electronic invoices. Up to this point, companies were allowed to issue simple paper invoices, but the 2021 Act on Electronic Invoices comes into effect after the New Year – meaning that all businesses will have to switch and adapt.” According to him, this will impact “everybody doing business in Serbia – we will see how smoothly this transition goes.”

Finally, Andrejic highlights some political clashes in the country. “There has been a lot of debate around the mining of lithium in the country,” he says. “Serbia has rich deposits of lithium which were recently discovered, and foreign company Rio Tinto was slotted to commence with its extraction and processing. This was heavily protested by environmental groups this spring, just prior to the April general election, and it appeared that they had succeeded in preventing the start of mining,” Andrejic reports.

However, “a few weeks ago, the newly formed government began to backtrack on their pre-election stance of being against the mining operation,” according to Andrejic. “This led to heavy clashing, with environmental organizations opposing it still, and certain politicians advocating that mining would only make sense if it were followed with a battery plant investment as well,” he explains. “It remains to be seen how this all pans out.”

BDK Advokati has advised MediGroup on its acquisition of Konzilijum. Sole practitioner Djordje Ivanisevic reportedly advised the seller. 

The MediGroup private healthcare system and “the Institute for Laboratory Diagnostics Konzilijum have formed a strategic partnership with the aim of further development and expansion of the laboratories network,” BDK Advokati informed. “By this transaction, MediGroup and Konzilijum have expanded their respective networks of laboratories which are now available in 77 locations across Serbia.”

Operating since 1994, Konzilijum is a private accredited laboratory in Serbia. The company provides services in different areas of laboratory diagnostics, including biochemistry, microbiology, pathophysiology, cytology, cytogenetics, and genetics.

MediGroup is a Serbia-based privately-held healthcare provider. The company operates nine health centers, one general hospital, a maternity hospital, an ophthalmology clinic, and an institute for skin and venereal diseases.

BDK Advokati previously advised MediGroup on the acquisition of TalijaLab (as reported by CEE Legal Matters on August 23, 2021).

The BDK Advokati team included Senior Partner Vladimir Dasic and Senior Associate Jelena Zelenbaba.

Strong M&A transaction volumes, rising investor interest in the renewables sector, and a flood of work relating to the immigration waves from Ukraine and Russia are the headlines for Serbia, according to Bojovic, Draskovic, Popovic & Partners Senior Associate Milica Pesteric.

“In the past two months, we have seen an increase in the overall volume of M&A transactions, much like throughout 2022,” Pesteric begins. “Many local IT companies have grown to such a level that they began drawing international investor attention.” Even with the “current political positioning of Serbia, and its current risk profile, investor appetite has been strong. However, if the current ‘limbo’ of being neither to the west nor to the east continues, such transactional vibrancy might be faced with a slowdown,” she shares.

Speaking of investor interest, Pesteric reports “much attention” being placed on renewables. “We have seen a spike in foreign investor interest, primarily driven by the favorable overhaul of the renewables regulatory framework following the establishment of the new government recently,” she explains. “The new law on renewables provided a set of incentives – like new quotas for wind power projects above three megawatts. These incentives proved to be quite appealing to investors, and more are likely to come as soon as the Ministry of Energy is done with all of the delegated acts it’s due to complete,” Pesteric says. 

On the other hand, financing for renewables is not as easily obtained as investor interest has been. “Procuring the funding has become more challenging, given the overall energy crisis in Europe,” Pesteric explains. “The levels of bankability are not as they were before, and banks are just not that willing to venture into new projects. Still, I expect international financial institutions to step in and help with the overall situation, ultimately removing all blockers” to renewable project development in Serbia, she says.

Finally, Pesteric reports that the waves of immigrants from warring Ukraine and Russia have created strong streams of work for lawyers. “This has been, perhaps, the most noticeable consequence of the war – the sheer amount of immigrants that came to Serbia. We have been very busy with establishing companies, setting up bank accounts, and dealing with work and residence permit administrative processes,” she explains. “Setting up bank accounts, for example, has been quite challenging due to the volume of requests and the overall approach of the entire banking sector to the war. Additionally, both the lawyers and the state administration have been struggling when it comes to working and residence permits – the system has never faced such an amount of work,” Pesteric highlights.

In the Official Gazette of the RS no. 131/2022 of November 29, 2022, the Decision on Fees for Registration and Other Services Provided by the Business Registers Agency was published, which regulates the type, amount and method of payment of fees for the registration procedure and other services provided by the Business Registers Agency in keeping registers and records (“the Decision”).

New fee amounts

Pursuant to the Decision, the amounts of fees for registration of incorporation, registration of data about registration subjects and notes, and registration of other data, deletion and bankruptcy data, as well as for other services, i.e., publication of documents and issuance of transcripts, excerpts and certificates, have been changed.

The subject changes concern registration in all registers and records maintained by the Business Registers Agency.

Namely, the respective fees have been increased, so for example:

the fee for registration of the incorporation of a company in accordance with the Decision amounts to 6,500.00 dinars (5,900.00 dinars if the application for registration is filed electronically),
the fee for registering a change in the company’s data is 3,100.00 dinars (2,800.00 in the case of an electronic application for registration), whereby in the case of a simultaneous change of several data, it is increased by 1,500.00 dinars per each additional change (1,400.00 dinars if submitted electronically),
the fee for the registration of the deletion of a company amounts to 3,300.00 dinars (3,000.00 dinars in the case of an electronic application for registration),
the fee for publishing a document that is registered in accordance with the law is 800 dinars (700.00 dinars per document if the application is submitted electronically), and
the fee for issuing an excerpt of the registered data of the data subject in paper form is 1,900.00 dinars (1,700.00 dinars for the electronic form of the subject excerpt).

Payment of fees

The Decision, like the previously valid version of the same, prescribes in detail the method of payment of fees, i.e., what evidence of payment an applicant should submit along with the application for registration filed to the Business Registers Agency.

Validity of the Decision

In accordance with its transitional and final provisions, the Decision shall enter into force on the eighth day from the date of its publication (i.e., on December 7, 2022), while it shall be applied starting from January 1, 2023, except for the provisions of the articles related to cultural institutions, which shall apply as of November 18, 2022.

On the date of entry into force of this Decision, the Decision on Fees for Registration and Other Services Provided by the Business Registers Agency (Official Gazette of RS No. 119/13, 138/14, 45/15, 106/15, 32/16, 60/16, 75/18, 73/19, 15/20, 91/20, 11/21, 66/21 and 129/21) shall cease to apply.

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 Lara Maksimovic, Senior Associate, PR Legal

NKO Partners has advised the Dr. Max Group on its acquisition of the Sveti Sava pharmacy chain. Sole practitioners Biserka Crnoglavac and Mihajlo Micic reportedly advised the sellers.

The Dr. Max Group is a Prague-headquartered pharmacy chain operating in Central and Eastern Europe. The company has over 2,200 pharmacies in six countries, including the Czech Republic, Slovakia, Poland, Romania, Serbia, and Italy.

Sveti Sava is a Leskovac-based pharmacy chain comprising 15 pharmacies.

NKO Partners previously advised the Dr. Max Group on its acquisition of the K-Pharma chain (as reported by CEE Legal Matters on June 8, 2022) the Janja pharmacy chain (as reported on March 28, 2022) and the Zlatni Lav pharmacies (as reported on January 5, 2022).

The NKO Partners team included Partner Djordje Nikolic and Senior Associate Branko Jankovic.

The fact that the last 20 years have been marked by the expansion of digital markets has undoubtedly contributed to the “enthronement” of leading companies in dominant positions all over the planet, created issues of effective competition enforcement regulations and the obvious need for more comprehensive and better regulation of the markets themselves.

The applicable regulations of the European Union (EU) have not proven to be effective instruments for the complex challenges of the modern age and the European Commission (Commission), being EU’s executive body, had to take certain radical steps towards proposals concerning both the creation of new and the modernization of existing regulations to create adequate answers to the hasty evolution of the digital world. The Digital Markets Act, i.e. Regulation (EU) 2022/1925 on competitive and fair markets in the digital sector and amending Directives EU 2019/1937 and EU 2020/1828 (DMA) represents the embodiment of all the Commission’s efforts in this sphere and after less than three years of consideration, the DMA will enter into force on 1 November 2022. However, its application will be postponed until 2 May 2023. This six-month, so-called transition period should enable the harmonization of the operations of all leading companies with DMA’s provisions and during its term, the Commission will not perform any actions contained in DMA’s provisions.

Before stepping into more detailed analysis of the most important DMA’s provisions, it is important to note that ratio legis is given in the very introduction of the Commission’s proposal, where, among other things, is stated that digital services in general, and online platforms in particular, play an increasingly important role in the economy, providing new business opportunities in EU and facilitating cross-border trade. Precisely, the characteristics of digital services such as almost zero marginal costs for adding business or end users, strong network effects, the possibility of connecting a large number of business users with many end users, a significant degree of dependence among users, lock-in effects, etc. in combination with the unfair conduct of service providers can lead to a significant undermining and challenging of the core services of a certain platform as well as to endangering the fairness of the commercial relationship between the providers of such services and their business users and end users, a rapid and far-reaching reduction in the choice of business users and end users in practice, and finally, the provider of those services can be put in a privileged position of the so-called Gatekeeper. DMA aims to prevent the world’s leading companies in the world of the IT industry from abusing their dominant position by imposing mandatory required behaviors that will guarantee the establishment of an open market.

Some of the most common core platform services provided by Gatekeepers are online intermediation services (Apple’s Play Store or Google Play), online advertising services (Google ads), social network services (Facebook), the so-called online markets, cloud computing services (Amazon Web Services), online search services (Google Search), video sharing platform services (YouTube, Daily Motion), communication services (WhatsApp), operating systems (Android, Windows, iOS ), internet browser services (Google Chrome, Opera, Internet Explorer, etc.).

What is a Gatekeeper?

For a particular entity to be considered a Gatekeeper in the sense of the provisions of DMA, it must meet following conditions:

• has a significant impact on the internal market;
• is a provider of the core platform service, which is important for business users to reach the end users of the service;
• enjoys or in the future can be expected to enjoy an “entrenched and permanent position” in the market.

The seriousness of Commission’s intention to regulate the digital market as adequately as possible is also reflected in the setting of additional, quantitative thresholds in order to facilitate the identification of a certain entity as a Gatekeeper.A presumption of significant influence on the internal market exists if the entity achieves an annual turnover in the EU of at least EUR 7.5 billion in each of the last three financial years or if its global market value is at least EUR 75 billion in the last financial year and provides the same core platform services within at least three countries.

Furthermore, an entity is considered to provide core platform services important for the passage of business users to end users, if the core platform service has at least 45 million monthly active end users established or located in the EU and at least 10,000 active business users per year in the EU territory.

Finally, an entity is deemed to enjoy or will enjoy an entrenched and permanent position in its business if its core platform services have achieved all aforementioned conditions for the last three financial years.

In the case of meeting the above-mentioned conditions and thresholds, the Gatekeeper is obliged to inform the Commission about it without delay, i.e. no later than within two months from the day when the thresholds were reached. To such an entity, unless it proves otherwise, the Commission grants Gatekeeper status, which will be evaluated every three years.

Gatekeepers’ obligations and powers of the Commission

DMA stipulates a whole range of Gatekeeper’s obligations, which can be divided into two large groups:

i. obligations and prohibitions that must be observed without exception (provided in Article 5 of DMA), whereof, among others, the most important are the following:

• prohibition of combining personal data from the services with data collected through other services of the same Gatekeeper or a third party;
• prohibiting business users from offering the same products or services to end users through third-party online intermediary services at prices and terms different from those offered by Gatekeeper;
• prohibition of direct or indirect prevention of end users from initiating any protection procedures with the respective authorities; and
• prohibition of requiring end users or business users to subscribe to, or register for any other service as a condition of accessing, registering, or using any of the Gatekeeper services.

ii. obligations that are subject to further specification by the Commission (stipulated under Article 6 of the DMA), which also include:

• the obligation to refrain from using any data that is not publicly available and that was generated by the activities of business users;
• the obligation to allow end users to uninstall any pre-installed software applications on their underlying service without prejudice to Gatekeeper’s ability to restrict such uninstallation with respect to software applications that are necessary for the operation of the operating system;
• obligation to provide access to Gatekeeper’s performance measurement tools and information needed by advertisers and publishers to perform their own and independent verification of ad inventory to advertisers and publishers, at their request and free of charge, etc.

In addition to its status as the primary enforcer of the provisions of DMA, the Commission will also have broad specter of powers to sanction “unfair conduct” by Gatekeepers. If the entity, considered as Gatekeeper, does not comply with the obligations stipulated under DMA, the Commission is authorized to impose fines of up to 10% of the Gatekeeper’s total turnover achieved in the previous financial year. Regardless of the imposed fines, the Commission may impose a new fine of up to 20% of the total worldwide turnover if the Gatekeeper repeatedly violates the same DMA obligation.

Additionally, if Gatekeeper continues to systematically violate DMA’s provisions, the Commission may prohibit it from merging with other entities for a certain period. Of course, the Commission also has several other powers such as to ensure compliance with DMA’s provisions, to request for information, market studies, inspection supervision, and likewise.

Critiques and expectations

Despite the growing number of critiques directed at this regulation, with main argument being “punishing the world’s most successful companies for their accomplishments”, DMA undoubtedly represents a rather ambitious and revolutionary undertaking designed with the aim of improving competition protection, establishing “fairer” market, and improving the consumers’ position as end-users of services. Hence, can be perceived as a long-awaited and much-needed “step forward” when it comes to the modernization of European legislature in the sphere of digital business.

Of course, in the upcoming period, the Gatekeepers, smaller companies looking to join the race, as well as the end-users of services will come across all the practical consequences of DMA’s provisions implementation and will be able to form their own stance on whether DMA represents just another one in a series of EU legal utopias or a complete game-changer in the world of digital business regulation.

By Aleksandar Popovic, Partner, Milos Maksimovic, Senior Associate and Milovan Bogdanovic, Senior Associate, JPM Jankovic Popovic Mitic