In an earlier post, I analyzed a decision of the Commission for Protection of Competition finding that the Serbian ice-cream manufacturer Frikom abused its dominance on the wholesale market of industrial ice-cream by engaging in vertical price-fixing, imposing exclusivity on retailers either through explicit exclusivity clauses or through rebate schemes, and discriminatingamong customers by offering them differing payment terms. The Commission imposed on Frikom a fine in the amount of approximately EUR 3 million. Following Frikom’s judicial challenge to the Commission’s decision, the Administrative Court, in its judgment of 12 March 2013, upheld the Commission’s decision both in the part determining infringementsand in the part imposing the penalty.
Frikom challenged the Commission’s decision on all three grounds envisaged by the Law on Administrative Disputes: error of law, breach of procedure and error of fact. As the Commission has not yet made available the reasoning of its decision, the account in this post is based on the text of the judgment and on the dispositive part of the Commission’s decision.
Relevant market
The Commission defined the relevant market as the wholesale market of industrial ice-cream in the territory of the Republic of Serbia. Frikom argued in the court proceedings that the Commission did not adequately determine the relevant market, specifically that it failed to show why ice-cream produced in pastry shops cannot be considered as substitute for industrial ice-cream.
The court dismissed this argument but offered no analysis on this point.
Existence of dominance
Frikom also challenged the Commission’s finding that the company was dominant on the market of industrial ice-cream. The company argued that the Commission should have taken into account not only the market shares but also other criteria set out in Article 15, paragraph 1 of the Law on Protection of Competition, including access to distribution and supply channels, production capacities and economic strength of Frikom’s competitors, effects of Frikom’s actions and buyer power.
It can be inferred from the text of the judgment that the Commission in its decision referred to an ECJ judgment (most likely United Brands) in support of its finding that Frikom was dominant on the relevant market. In the judicial review proceedings, Frikom argued that the legal standard set forth in that ECJ judgment is not law in Serbia, all the more because the definition of dominance set forth in the said judgment differs from the one adopted in the Serbian Law on Protection of Competition.
The court dismissed Frikom’s challenge to the finding of dominance, stating that the Commission established that Frikom, having itself a market share of approximately 80%, had only one significant competitor and that it acted independently of competitors, suppliers, customers and ultimate consumers.
Acts constituting abuse
The Commission found that Frikom abused its dominant position by engaging in vertical price-fixing, imposing exclusivity on retailers either explicitly or through rebate schemes, and discriminating between customers by offering them differing payment terms. The company attacked this finding ofabuse, arguing that the Commission failed to establish the effects of Frikom’s acts on competition.
The court sided with the Commissionin this respect as well. According to the judgment, the Commission established that contractual terms between Frikom and its customers amounted, by their effects, to the acts listed in Article 16, paragraph 2 of the Law on Protection of Competition (corresponding to Article 102, paragraph 2 TFEU). These acts, says the court, are abusive by their very nature. The court thus seems to have introduced a per se approach in the abuse of dominance area.
Breach of procedure
Frikom also argued that the Commission breached procedure, inter alia by not rendering a formal decision on Frikom’s proposal to take certain evidence, including the proposal to hear a witness on the issue of rebates allegedly offered by Frikom’s main competitor to its customers. The company also submitted that it was not afforded an opportunity to comment on certain evidence on which the Commission based its decision, specifically, information provided by state authorities and competitors.
The court found no breach of procedure, noting that Frikom had exercised its right of defense by submitting a response to the statement of objections and filing other submissions during the proceedings. According to the court, the Commission was correct in rejecting Frikom’s proposal to hear a witness on the issue of competitor’s rebates, noting that the proposed evidence pertained to the relationship between the proposed witnesses and an undertaking that was not a party to the proceedings.
Statute of limitations
Frikom further submitted that the statute of limitations for imposition of fine with respect to infringements committed in the course of 2008 and 2009 had expired. Under the Law on Protection of Competition, the Commission cannot either impose or collect penalty following the expiry of three years from the date of the last act constituting an infringement.
The court disagreed with the company, finding that the relevant infringement continued through 2011 and in some individual cases through 201
