Montenegrin Agency for Protection of Competition fines the two largest petrol producers for concerting to fix retail prices of LPG

The Montenegrin Agency for Protection of Competition (“Agency”) published on 25 March 2024 a decision finding that the two largest petrol companies in Montenegro restricted competition on the retail market of liquefied petroleum gas (LPG) in the territory of Montenegro.

According to the operative part of the decision, in the period from 8 July 2019 until the end of December 2019, “INA – CRNA GORA” and “Jugopetrol” concerted to directly determine and apply fixed retail prices of LPG throughout Montenegro.

The investigation was initiated in 2021, based on a third-party initiative and the subsequent analysis conducted by the Agency of the movement of retail LPG prices in Montenegro. In the decision on the opening of the investigation, the Agency stated that it had found that during the first half of 2019, retail prices of LPG on the market in Montenegro followed the movement of market quotations for LPG. However, in the period from 8 July 2019 to 31 December 2019, retail prices of LPG in Montenegro were fixed and did not follow the decrease in market quotations. This led the Agency to suspect a concerted practice between Jugopetrol and INA during that period. However, the Agency did dawn raid the suspected infringers. As unfortunately, only the operative part of the decision is published, we are deprived of the underlying facts and the analysis the Agency used to deduce the existence of concerted practice from the publicly available information on retail prices.

As a measure for protection of competition, the Agency prohibited any further implementation of this restrictive agreement and imposed individual reporting obligations on both undertakings. For the next two years, they are obliged to submit annual written reports to the Agency regarding the monthly movement of:

  1. total quantities and value (excluding VAT) of purchased liquefied petroleum gas;
  2. total quantities and value (excluding VAT) of sold liquefied petroleum gas;

In line with the current competition legislation in Montenegro, the Agency does not have the power to impose fines on the infringing undertakings. It may only initiate misdemeanour proceedings before the competent court, provided that four years have not passed from the date when the infringement was committed. If the four-year statute of limitations expires pending the court proceedings, the court has to terminate the proceedings. The misdemeanour court is not bound by the Agency’s finding of infringement. It conducts its own analysis and may impose fines if it makes its own determination of breach.

In the present case, in order to ensure that the statutory limitation period will not expire, the Agency had initiated misdemeanour proceedings before it even finished its own investigation. As a result, the administrative proceedings before the Agency and misdemeanour proceedings were running in parallel. However, the parties are not facing any monetary fines since the four-year statute of limitations expired before the misdemeanour court reached a decision on the merits, and the proceedings were consequently terminated. Nevertheless, the parties may still challenge the Agency’s decision finding the infringement and imposing the behavioural measures.

The existing dual system of public enforcement in Montenegro. which has proven to be highly ineffective, is expected to end soon with the adoption of the new Competition Act in the pipeline. The new legislation will most likely confer on the Agency the power to directly impose fines when it establishes a breach. This change, along with the expected additional financial and institutional independence for the Agency, is expected to increase the level of public competition law enforcement in Montenegro, and the level of fines, in the coming years.