Category: Serbia

In accordance with the Law on Protection of Competition that entered into force in 2009 and was amended in 2013 (the “Law”), the Commission for Protection of Competition (“Commission”) instituted ex officio antitrust proceedings for possible infringement of competition rights in the market of the Republic of Serbia against domestic legal entities dealing with retail and/or wholesale in consumer electronics.

Namely, based on the Eurostat (European statistics published by the European Commission) data for 2019, the Commission established that the prices of consumer electronics in the Republic of Serbia were by 13 percent higher than the EU average prices.

The Commission further compared the prices in the Republic of Serbia with those in Hungary and established that the prices for certain product categories in the Republic of Serbia, e.g. TVs, were higher than those in Hungary by 33 to 39 percent.

While comparing the prices of consumer electronics in the above manner, it is important to note that the value added tax in Hungary is 27% (compared with the 20% value added tax in Serbia), whereas the prices of consumer electronics in Hungary are below the EU average by 2.5%.

By analyzing concrete competition conditions in the market, the Commission passed three separate conclusions on initiation of proceedings for investigating alleged competition infringement against four different domestic legal entities and the Commission found reasonable grounds to believe the existence of competition infringement in terms of Article 10 of the Law that refers to prohibition of restrictive agreements.

   I. Definition of restrictive agreements

Restrictive agreements are defined as agreements between market participants aimed at significant restriction, distortion or prevention of competition in the territory of the Republic of Serbia. Restrictive agreements may be in form of agreement, individual provisions of agreement, explicit or silent arrangements, concerted practice, as well as decisions of association forms of market participants, which notably:

• Directly or indirectly establish purchase or selling prices or other trading terms;
• Restrict and control manufacturing, market, technical development or investments;
• Apply uneven business terms among different market participants for same businesses, whereas market participants are put in unfavorable position compared to their competitors;
• Condition the conclusion of contracts or agreements by accepting additional obligations that are not related to the subject of agreement considering their nature and commercial practice;
• Divide markets or sources of supply.

It is noteworthy that restrictive agreements are prohibited and void unless they are generally or individually exempted from prohibition under the provisions of the Law.

   II. Examples in the market of the Republic of Serbia

Prior to passing the conclusions on initiating proceedings to investigate the infringement of competition, the Commission analyzed three different types of consumer electronics and established the following facts.

“TV” Case

To substantiate the statements in the conclusion, the Commission selected one TV brand owned by a domestic legal entity (subject to the investigation of competition infringement initiated by first conclusion) and on the basis of official websites of 10 different retailers, the Commission established that for five different TV models of one brand, 10 of the observed retailers offer identical prices.

 “Coffee machine“ Case

In addition to “TV” Case, the Commission substantiated the statements from a separate conclusion by using the coffee machine brand which is exclusively imported by a domestic legal entity (subject to the investigation of competition infringement initiated by second conclusion) and on the basis of official websites of six different retailers, the Commission established that for four different models of coffee machine of the same brand, six of the observed retailers offer identical prices.

“Console game“ Case

In addition to the above cases, the Commission substantiated the statements from a separate conclusion by using the brand of console game, imported by two domestic legal entities (subject of the investigation of competition infringement initiated by third conclusion), which legal entities are owned by a third domestic legal entity, and in accordance with the Law, they are to be considered as one market participant.

On the basis of official websites of seven different retailers, the Commission established that all seven retailers offer identical prices for the console game. In addition to the console game, the legal entities subject to investigation for infringement of competition are importers of two more TV brands that are sold at identical prices by several retailers.

What is common for all three cases is that the Commission found reasonable grounds, based on the analysis and collected evidence, that the domestic legal entities that are subject to the investigation for infringement of competition, that are importers or distributors of consumer electronics affected product prices in their further sale, having in mind that the prices of consumer electronics in the market of the Republic of Serbia are balanced, yet higher than the prices in the EU.

   III. Following steps

In accordance with the Law, upon rendering the conclusions the Commission will conduct an investigative procedure, in which the Commission will collect evidence so as to achieve accuracy in fact-finding. If the Commission finds that the legal entities that are subject to the investigative procedure have indeed infringed competition, the Commission will enact a decision establishing the infringement of competition, whereas the Commission may also impose a measure for protection of competition in form of monetary fine in the amount that is equal to maximum 10% of total annual profit realized in the territory of the Republic of Serbia.

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 Milan Petrovic, Managing Partner, and Sara Necic, Senior Associate, PR Legal

On 17 September, the Serbian Commission for Protection of Competition (the “Serbian NCA”) initiated official proceedings against a local pharmacy chain (“Jankovic Pharmacy”), in order to investigate whether it failed to file a mandatory merger notification prior to a reportable acquisition.

The Serbian NCA’s concerns were triggered by finding out that in March 2019, the city of Zrenjanin and Zdravstvena ustanova Apoteka Zrenjanin (“AZ”) entered into a Concession Agreement for Financing, Revitalization, Management and Performance of Pharmaceutical Activity in the City of Zrenjanin with Jankovic Pharmacy. This agreement was concluded in order to improve the service provided by the pharmacies managed by ZUA in the city of Zrenjanin, and allowed Jankovic Pharmacy, as a concessionaire, to acquire control over parts of AZ’s business. If the national financial thresholds for mandatory notification were triggered, failure to obtain the prior merger clearance could expose the acquirer to significant fines imposed by the authority, including potentially even a demerger, if the transaction had negative effects on competition.

By Stefan Savic, Associate, independent Attorney at Law in cooperation with Karanovic & Partners, and Jovana Marinkovic, Trainee, Karanovic & Partners

The answer to this question is rather simple – no, by publishing employment-related documents on notice board the employer is not violating personal data of employees that such documents refer to.

The reason for this lies in the fact that the Law on Labour contains a basis for undertaking such activity. What is more, this is controller’s legal obligation by virtue of Article 12, para. 1, item 3) of the Law on Personal Data Protection (“LPDP”).

Namely, the Law on Labour prescribes a special procedure for serving to the employees the decisions on exercising of rights, obligations and responsibilities, including termination notices and warnings on existence of grounds for contract termination (Art. 180, 185 and 193).

The main rule is to serve this documents to employees personally on employer’s premises or to the address of employee’s residence or stay.

If it is not possible to serve the documents in this manner, subsidiary rule shall apply under which the employer shall be obliged to make an official record thereof and the very document (decision/warning) shall be published on the employer’s notice board. The law here prescribes a legal fiction that upon expiry of eight days after publication on the notice board the document shall be deemed delivered (although it will not be physically delivered to the employee).

Such situations are rather frequent in practice since employees are often inaccessible for the employer or they avoid or refuse to accept such document.

Although the described actions of the employer are obviously lawful – since they are based on very clear provisions of the Law on Labour, one may question the sustainability of such legal solution within the framework imposed by LPDP principles.

One should consider the following circumstances:

• Firstly, such documents contain a large number of personal data, and some of them may also be particularly sensitive (for instance, data on employee’s health state). The Law on Labour does not stipulate which employees’ personal data shall be contained in decisions and warnings, therefore these are by default name and surname, address, jobs performed by the employee, date of entry into employment contract and often even personal number (JMBG).

In addition, the law prescribes for instance that decisions on rights, obligations and responsibilities under employment relation shall be elaborated, and that warnings on existence of grounds for contract termination due to violation of working obligation or disrespecting of working discipline shall contain, among other, facts and evidence that indicate the existence of conditions for dismissal.

• Secondly, along with undeniable need for such data to be established and noted in the decision and warning, one can reasonably question the validity of making them accessible to everyone who uses certain working environment and even visitors to facilities where notice board is located. Such transparency is neither necessary nor justified from the aspect of ensuring legality of procedure conducted by the employer, nor does it otherwise contribute to the possibility of using legal remedy against employer’s decision. Making personal data available in this manner seems disproportionate to the purpose this activity is intended to have.

The legislator’s idea, taken over from procedural laws for the purpose of ensuring any certainty whatsoever in delivery of employment-related documents, loses its battle with employee’s right to privacy, which is undeniably enjoyed even by those employees who violated working obligation or disrespected working discipline.

• Thirdly, such legal solution does not lead to greater legal certainty with regard to delivery of documents to employees because a document posted on employee’s premises is not available to the person it is intended for (on the contrary, it is available to an unlimited number of people that it does not refer to), just like when an employee arrives to employer’s premises within eight days after the posting of document on the notice board the employer may attempt to directly serve him/her the document.

One of possible solutions for overcoming this situation is the abolishment of obligation to post the decision/warning on notice board and keep the sole obligation of drafting an official record which would note the impossibility of personal delivery, whereas legally relevant deadlines would also be calculated from the day of its drafting.

Article 100 of the LPDP stipulates that provisions of other laws that pertain to personal data protection will be aligned with it by the end of 2020.

Given the still ongoing situation with the coronavirus, as well as circumstance that the National Assembly of the Republic of Serbia did not convene for several reasons most of the year, it is very likely that alignment of regulations with the LPDP will not be done in a legally prescribed timeframe. It remains to be seen when and to what extent the legislator will recognize the need for amendment of relevant provisions of the Law on Labour in the context of personal data protection.

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, PR Legal

On 23 December 2019, the National Assembly adopted the Public Procurement Act (‘’Official Gazette of RS’’ No. 91/2019 – hereinafter the “PP Act”) that started to apply as of 1 July 2020. The PP Act replaced the previous version of the Public Procurement Act and introduced numerous novelties that significantly change the public procurement landscape.

Without going into all the details introduced by the PP Act, we will outline several changes that we find interesting for companies participating in public procurements.

Submitting application electronically

The PP Act introduced the possibility of submitting an electronic offer. This is done online via the public procurement portal that was revamped in line with the new solutions introduced by the PP Act.

An instruction manual was published for users of the newly established portal.

Threshold increase for application of PP Act

The previous PP Act threshold for application of RSD 500,000 has been increased to varying thresholds depending on the type of procurement (e.g. procurement of works in the value of less than RSD 3 million or services below RSD 1 million).

Also, the procedure of minor value public procurement is removed from the PP Act.

Criteria for selecting the offeror

The criteria and procedure for the qualitative selection of offerors are changed significantly.

One of the major changes is that now the offerors can prove the qualitative criteria by submitting a statement listing the names of the issuing authorities that handle the records relevant for the selection criteria in the procurement procedure.

Naturally, the contracting authority may request the offeror to produce official documents listed in the statement or inquiry with the relevant authority on the validity of the statement made by the offeror.

These changes aim to increase the efficiency and speed of the process of submitting an offer while enabling the contracting authority to request proof of documents when and if needed.

The Register of Offerors, run by the Business Registers Agency, has been updated to include information on the absence of key reasons for exclusion from the public procurements. Although the transition from the previous law to the new information handled by the Register of Offerors was burdened with significant delays and red-tape, the Register should prove to be useful and efficient in the context of public procurements.

Amendments to public procurement agreements

The scope of amendments to public procurement agreements has been significantly expanded. The effect of this change provides for more flexibility in the execution of these agreements, which can be especially useful for complex or long-term agreements.

For example, the previous law allowed amendments to be made only regarding the price if the agreement did not stipulate additional grounds (which was the case too often).

This led to contractors being severely limited in their freedom to change elements of the agreement that were not essential. For example, they could not replace sub-contractors (the only exception was insolvency of the sub-contractor) if the need arose.

Hence, under the previous legislation, if the sub-contractor refused or was unable to participate in the public procurement, there was rarely a way in which the parties could remedy the situation without committing a breach of the contract.

Such situations led to creating considerable risks on both sides. For the contractor, the public procurement agreements were terminated and collaterals activated to compensate for the breach, whereas the contracting authority would lose precious time and resources in order to initiate a new public procurement procedure for the same purpose.

Limitations for engaging sub-contractors

The limitation of a maximum 50% volume of work that could be delegated to sub-contractors was entirely removed, meaning that offerors have significantly more freedom when structuring their offer now in terms of their internal organization and division of work. 

The changes shown above only begin to show the novelties introduced by the PP Act which seems to have received very positive remarks from the public. It remains to be seen of course, how these will be implemented and utilized by contracting authorities and offerors in practice.

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

By Radovan Grbovic, Partner, and Boris Radojcic, Senior Associate, Samardzic, Oreski & Grbovic

Government adopts new minimum labour price of RSD 32,126.

At the session held on 15 September 2020, the Government of the Republic of Serbia adopted the Decision on the Amount of the Minimum Labour Price for the period January 2021 – December 2021, which determined the amount of RSD 183.93 (net) per working hour regardless of the month for which the payment is made. The said amount equals RSD 32,126 per month.

Social and Economic Council of the Republic of Serbia decided on its session to increase the minimum price of labour for 6.6%, comparing to 2020.

Note*

The current minimum labour price of RSD 172.54 per hour is valid for all payments that will be made until 31 December 2020.

By Jelena Nikolic, Partner, and Andrea Cvetanovic, Senior Associate, JPM Jankovic Popovic Mitic

In line with the new Health Care Law (“Law“) which came into force on April 11, 2019, the Business Registers Agency (“BRA“) announced the establishment of a new Register of Health Care Institutions on October 11, 2020, after which the Health Care Institutions, both private and public owned, shall be obliged to harmonise with the Register of Health Care Institutions maintained by BRA.

Apart from this Register, the BRA shall also maintain the Uniform records of health care subjects, containing unified data regarding health care institutions and private practices on the territory of the Republic of Serbia.

The new Register of health care institutions will be an electronic, central, public database of health care institutions available to everyone on the BRA portal, which will facilitate to great extent access to data regarding health care institutions pertaining to business information, internal organisation and changes taking place within the health care institutions.

In accordance with Article 263 of the Law, the BRA is obliged to establish a new Register of health care institutions and officially transfer the data regarding health care institutions from the Commercial Courts’ Register, according to the last registered status, within 18 months from Law coming into force, i.e. until October 11,  2020.

Deadline for harmonisation for health care institutions

The procedure of harmonisation with the Register of Health Care Institutions will last three months, starting from October 11,  2020, to January 11, 2021. Within that period, the procedure shall be conducted without having to pay any fees to the BRA.

Applicants will be obliged to pay the fee of 4.900 RSD if the registration application for harmonisation is submitted after January 11, 2021.

Necessary documents

In accordance with Article 33. of the Rulebook on detailed contents of the Register of Health Care Institutions and documents required for registration, the following documentation must be submitted along with the registration application for harmonisation as originals or certified copies of originals:

• Valid memorandum of association, adopted by the founder, whereby the signature of a privately owned health care institution’s founder shall be certified in line with the law;
• The new article of association adopted by a privately owned health care institution founder i.e. the management board of a publicly owned health care institution;
• Approval of the relevant body for the new article of association of a publicly owned health care institution;
• Decision i.e. extract from the relevant institution’s act determining the weekly working schedule as well as start and end of working hours at a health care institution.

Obligation related to harmonisation of general acts of health care institutions

Publicly and privately owned health care institutions, as well as private practices, probably already harmonised their general acts, organisation and work with the provisions of the Law, taking into account that they were obliged to do so within 12 months from the Law coming into force, i.e. until April 11, 2020.

Even though no sanction is prescribed for health care institutions which have failed to fulfil this obligation, those who have not completed it within the prescribed deadline will certainly have to harmonise their general acts, organisation and work with the Law, before the process for harmonisation with the Register of health care institutions begins.

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 Milan Petrovic, Managing Partner, and Sara Necic, Senior Associate, PR Legal

“Due to a very hefty package of financial aid, at least judging by Serbian standards, our economy shouldn’t suffer a significant drop in GDP,” says Karanovic & Partners Partner Goran Radosevic. “Some estimates show that the drop shouldn’t be higher than 4%, which is much better than what our neighboring countries are expecting.”

“There are several reasons for the apparent small economic loss,” Radosevic says. “One is definitely the aid that our companies have received from the government (although there are valid arguments that it should have been better allocated depending on the impact they suffered). Another one is that our economy is structured in a different way than the economies of our neighbors. For example, tourism as an industry does not participate in our economy as much as it does in, say, Croatia or Montenegro.”

The stimulus measures for the private sector also included postponing the payment of taxes and covering a percentage of the minimum wage, among other things. In addition, the Serbian government provided a one-time payment of EUR 100 to every adult citizen. The total value of the government’s aid package has been estimated at EUR 5.6 billion.

Radosevic acknowledges that, despite the positive results of its initial measures, there may be a more serious economic crisis down the road. “That is the million-dollar question,” he says, in part because companies that accepted the government’s financial assistance are precluded from laying off employees for three months. “Some of our clients are concerned,” he says, “since the financial aid program is supposed to end soon, and companies will not be able to lay off their employees for a while after that. It is quite possible that we will feel the crisis quite a bit more by the beginning of the next year.”

That’s not the only threat to the economy, Radosevic says. “The new government has not been formed yet, now more than three months after the elections. That is not a very good signal for foreign investors, especially when coupled with coronavirus crisis, so we are seeing a bit of a slowdown on the market, especially in the M&A sector. There is little doubt over who will constitute the government, so there is really no reason to stall the process. It only postpones the infrastructure and legislative processes.” Still, Radosevic says, “despite all that, some positive trends can be seen on the market, and industries like e-commerce, IT, and pharmaceuticals have been on the rise.”

Finally, Radosevic says, “the new Law on Public Procurement, which has largely been harmonized with the EU directives, entered into force in July. It should, in principle, increase transparency. In addition, the law regulates the criteria for choosing between open tendering and direct negotiated procedures with more precision, and in line with EU practices. Direct tendering will be possible in the case of emergency, or when there is only one supplier on the market for the specific procurement. Another important aspect is that the electronic form of the procurement process has been introduced, which should make it both faster and more efficient.”

JPM has established a Criminal Law and Criminal Compliance team.

According to JPM, “scrutiny of state authorities of the business sector practices is resulting in the increased number of criminal investigations and prosecutions, launched in respect of both infractions and corporate offenses, that need to be addressed with proper legal counseling to avoid or minimize serious negative consequences. In anticipation of an increase of inquiries in the second half of 2020 in this area, JPM has established a three partner-strong Criminal Law and Criminal Compliance team.”

According to the firm, its Criminal Law and Criminal Compliance team’s specialization includes: (i) White Collar Crimes, including Anti-Money Laundering; (ii) Corporate and Competition Crimes; (iii) Tax Fraud; (iv) Custom Crime; (v) Corruption in Public Sector; (vi) Crimes committed by Public Officials; (vii)  other Economic Crimes; (viii) Environmental Protection; (ix) Real Estate and Construction Crimes; and (x) Intellectual Property Crimes.

In addition, the firm reports, “our best practice within Criminal Law and Criminal Compliance includes: (i) Risk assessment; (ii) Internal controls; (iii) Reporting of suspicions (iv) Defense in law enforcement bodies; and (v) Defense in criminal proceedings.

Finally, the firm reports, “the Criminal Law and Criminal Compliance team also performs internal investigations where our experts conduct corporate internal investigations into the full scope of potential liability for clients who have reason to believe some wrongdoing may have taken place.”

Kinstellar’s Belgrade Office has successfully advised the Serbian Orthodox Church on a case heard by an English High Court regarding claims of alleged abuse by clergymen in Serbia, Bosnia-Herzegovina, and Croatia. DWF and Michael McParland, QC, also reportedly provided legal assistance to the Church in the UK.

According to Kinstellar, “the High Court dismissed the claims earlier this year. Following the judgement, on August 13, 2020, the High Court handed down a ‘wasted costs’ judgment that obliges the claimants’ solicitors to compensate the defendant for the costs of the proceeding.”

Kinstellar’s team was led by Counsel Petar Grozdanovic.

DWF’s team reportedly consisted of English Partner Paul Donnelly and Associate Samantha Chambers.

Zivkovic Samardzic has advised Manchester-based biotech firm APIS Assay Technologies Ltd on the Serbian aspects of its acquisition of BeoGenomics. CT Legal advised the unnamed seller of BeoGenomics on the deal.

According to Zivkovic Samardzic, APIS Assay combines “In Vitro Diagnostics expertise with integrated AI to develop biomarker-based diagnostic assays.” BeoGenemics is a specialized software developer with expertise in bioinformatics and artificial intelligence.

According to Zivkovic Samardzic, “BeoGenomics has been developing both on-prem and secure cloud-based data analysis solutions – helping customers design, build and run custom-tailored genomics & proteomics pipelines. The start-up will be integrated into Manchester-based APIS, supporting the launch of a new BIOX Service Line as part of the company’s ongoing Biomarker Research and Development activities.”

Finally, according to Zivkovic Samardzic, “APIS develops new tests for the prediction, prevention, and diagnosis of disease from discovery to regulatory approval. The company’s business model is based on three pillars: biomarker diagnostics development, molecular diagnostic contract development, and applied bioinformatics.”

Zivkovic Samardzic’s team included Partners Igor Zivkovski and Ana Popovic.

CT Legal’s team included Partners Jovana Tomic and Anita Cakovic.