In the context of the Montenegro’s improved EU accession prospects, the country’s Agency for Protection of Competition (“Agency“) has stepped up its enforcement efforts. Most recently, in a decision adopted on 18 November 2024, the Agency established that the three telecom companies in Montenegro, Crnogorski Telekom AD Podgorica (part of Deutsche Telecom Group) (“Crnogorski Telekom“), One Crna Gora d.o.o. Podgorica (part of 4iG Group), (“One Crna Gora“) and Mtel d.o.o. Podgorica (part of Telekom Srbija Group) (“Mtel“), entered into a restrictive agreement because they all increased the minimum top-up amount for prepaid services to 5 EUR around the same time in February 2024, and made the increase effective as of the same date, 1 April 2024.
In line with its statutory obligation, the Agency published only the operative part of the decision. However, thanks to one of the operators who published the integral version of the decision on its website, the public and the professional community have gotten an opportunity to analyse the Agency’s reasoning.
Analysis of the decision
The existence of the agreement
The competition authority did not conduct a dawn raid or any subsequent inspection of the premises of any operator, nor did it order any of the operator to produce any documents. Accordingly, the Agency did not even try to obtain any evidence of the alleged cartel agreement. Its decision even falls short of specifying the form of such agreement. The finding of the restrictive agreement rests solely on the fact that all three operators increased the minimum prepaid top-up amount to EUR 5 around the same time and made the increase effective as of the same date.[1]
All three operators firmly maintained during the oral hearing that there has been no agreement between them on any business matter in whatever shape and form and that their decisions to increase the minimum prepaid top-up amount were made independently and were driven by economic logic.
All operators submitted that 1 April 2024 was chosen as the effective date for the decision on the minimum top-up amount increase because prepaid service is primarily used by tourists visiting Montenegro in summer, and they put forward the evidence that 1 April has been historically the effective date of for such decision. Mtel additionally explained that they generally implement increases, including this one, following the adoption of financial reports in March, while Crnogorski Telekom provided evidence that the internal decision to increase the minimum top-up amount was adopted in October 2023 as part of a package of measures aimed at reaching the revenue targets imposed by the parent Deutche Telecom. The operators also stressed that the EUR 5 minimum top-up applies only in the brick-and-mortal retail channel, while each of them requires a different minimum top-up amount in the online sales channel. One Crna Gora and Crnogorski Telekom explained that they applied the increases in the traditional retail channel to address growing distribution costs and influence the prepaid users to shift to the online channels, while One Crna Gora justified the increase with the increase in consumer price index. Crnogorski Telekom also submitted that the increase in the round amount of 1 EUR has proven not to cause terminations or complaints, and was tailored to the most price-sensitive users.
However, the Agency did not address any of the foregoing submissions of the parties. It invoked several decisions from the European Commission and one decision of the Court of First Instance in support of its implied position that the existence of the agreement is obvious. However, all invoked precedents are misplaced.
The Agency referred to the Decision no. 1999/210/EC[2], in which the European Commission determined that an agreement could be said to exist when the parties had reached a consensus, even in broad terms, as to the lines of their mutual action, or abstention from action, and that it sufficed that the undertakings in question should have had expressed their joint intention to conduct themselves on the market in a specific way, and that the agreement did not have to be made formally or in writing. However, in that case, there was ample evidence of “the systematic participation of all four parties at the regular meetings over a considerable period […] and the provision and receipt of information on industrial sugar prices between all four parties, as well as on retail sugar prices … at these meetings “. In the present case, the Agency had no evidence whatsoever of a contact or a signal between the telecom operators.
The Agency also invoked BAI and Commission v. Bayer (C-2/01 P and C-3/01 P), stating that “the form in which the agreement is concluded is unimportant for determining the concurrence of wills between the parties as long as the agreement confirms the agreed intention of the parties“. While this is correct, it does not, however, release the authority from the burden of proving the existence of the agreement whatever its form may be. The reliance on this case is even more misplaced knowing that the Court of Frist Instance annulled the Commission’s decision because it did not find sufficient evidence of the restrictive agreement.
The Agency also relied on the European Commission’s Decision 1999/60/EC[3] for the position that “it is not necessary, for the existence of an agreement, that every alleged participant participated in, gave its express consent to or was even aware of each and every individual aspect or manifestation of the cartel throughout its adherence to the common scheme”. However, this decision is not an authority for dispensing with the requirement to prove the existence of an agreement. It merely states that while all participants to a restrictive agreement must be aware of the agreement, they do not have to be fully aware of all aspects of the agreement and of all participants.
Restriction of competition
The Agency’s decision does not address at all either the object or the effects of the alleged agreement to fix the minimum top-up amount. The operators argued that the minimum top-up amount is not the price of prepaid service but an instrument for the provision of the prepaid service. They insisted that the contents of the prepaid packages (the number of minutes, SMSs, and GBs available within the package) and thus the actual prices of prepaid services, as well as the validity of the package, remain different.
The Agency dismissed the foregoing arguments with a non-sequitur that the user is forced to pay the minimum top-up price, which is identical at all three operators. It did not address at all the fact that the EUR 5 minimum top-up amount requirement applies only in the traditional sales channel.
Effects of the decision
The Agency declared the agreement between Crnogorski Telekom, One Crna Gora, and Mtel prohibited and null and void. Over the next four years, the operators will be required to individually notify the Agency in writing of any changes to the minimum prepaid top-up prices, including detailed calculation methodologies, within seven days of implementing such changes.
At the same time, the Agency, which does not have the competence to impose fines, initiated misdemeanour proceedings before the competent court in Podgorica. In a unique and inefficient institutional setup, the misdemeanour court now conducts its own independent proceedings in which it will have to establish de nuovo whether an infringement in the form of restrictive agreement has been committed and, if so, what fine it will impose.
While the court proceedings which may result in the imposition of the monetary fines are pending, the three operators are expected to challenge the Agency’s decision in judicial accountancy proceedings. These proceedings may result in the annulment of the Agency’s decision, but such hypothetical annulment may not have impact on the pending misdemeanour proceedings. It is therefore possible that the undertakings get fined by the misdemeanour court even if the Agency’s decision ends up being annulled.
This conundrum is expected to become the past in the course of 2025, when the new competition act, which intends to vest the Agency with both declaratory and condemnatory power, is scheduled to be submitted to the parliament.
[1] In similar circumstances, the Serbian Commission for Protection of Competition earlier this year dismissed the initiative for the launch of investigation, finding no sufficient basis to suspect the existence of a cartel agreement.
[2] Commission Decision of 14 October 1998 relating to a proceeding pursuant to Article 85 of the EC Treaty Case IV/F-3/33.708 – British Sugar plc, Case IV/F-3/33.709 – Tate & Lyle plc, Case IV/F-3/33.710 – Napier Brown & Company Ltd, Case IV/F-3/33.711 – James Budgett Sugars Ltd
[3] Commission’s Decision 1999/60/EC of 21 October 1998 relating to a proceeding under Article 85 of the EC Treaty (Case No IV/35.691/E-4: – Pre-Insulated Pipe Cartel)
