The Serbian Commission for Protection of Competition publishes Instruction on Individual Exemptions

Restrictive agreements i.e. agreements which have as their object or effect the significant prevention, restriction or distortion of competition, can be exempted from the prohibition if they fall within one of “group”, or as the nomenclature of the EU has it, “block” exemptions (exemptions which are applicable to certain categories of agreements). If an agreement is not covered by a block exemption, either because there is no block exemption applicable to that specific category of agreements or because the specific agreement does not fulfill the requirements of the relevant existing block exemption, such an agreement can still eschew the prohibition provided that it satisfies the criteria for an individual exemption. In Serbia, like in the EU, parties to an agreement conduct self-assessments in order to determine whether an agreement is restrictive and, in case that it is, whether it qualifies for a block exemption. However, Serbia and the EU differ considerably when it comes to individual exemptions. Since the entry into force of EU Regulation 1/2003, the system of self-assessment has been extended in the EU to include individual exemptions. Contracting parties thus evaluate not only if their restrictive agreement is covered by a block exemption, but also whether it is eligible for an individual exemption. If the European Commission initiates proceedings against the contracting undertakings for having allegedly entered into a restrictive agreement, the accused undertakings can raise a defense that all the requirements for an individual exemption have been met. In this regard, Serbian competition law is radically different to its EU counterpart. In Serbia, where the relevant precepts on individual exemptions are based on EU Regulation 17/62, the predecessor of EU Regulation 1/2003, the undertakings that are parties to a restrictive agreement are under the obligation to file a request for an individual exemption before the Commission for Protection of Competition (“Commission“). After close examination of the agreement, the Commission issues a decision exempting it from the general prohibition of restrictive agreements (provided that all relevant criteria are met).

Against this backdrop, the Commission has recently published on its website a Instruction –currently available only in Serbian- concerning requests for individual exemptions (“Instruction“).

In its Instruction, the Commission reiterates that where the Commission initiates an investigation into an allegedly restrictive agreement that was not notified to it, such agreement will be, if found restrictive, declared null and void even if the contracting undertakings succeed in proving that the conditions for an individual exemption have been met. The fulfillment of such conditions can only constitute a mitigating factor in setting the amount of the fine.

The Instruction proceeds to remind undertakings that while the direct application of the EU competition law legal norms constituting acquis in that area is not possible in Serbia, the Commission has a duty, pursuant to Article 73 of the Stabilization and association agreement (“SAA“), to apply the “criteria arising from the application of the competition rules applicable in the EU, in particular from Articles 101 and 102 of the Treaty on the functioning of the European Union (“TFEU“) and interpretative instruments adopted by the EU institutions”. We note that the difference between the “EU competition law legal norms constituting acquis” and the “criteria arising from the application of the competition rules applicable in the EU, in particular from Articles 101 and 102 of the TFEU and interpretative instruments adopted by the EU institutions” is unclear. It should be also noted that the precepts of the SAA are applicable only where trade between Serbia and the EU is affected (a criterion that will be met in most cases due to the broadness of the “effect on trade” concept).

The Commission further states that, in applying for an individual exemption, contracting undertakings needn’t submit a final, signed version of the agreement. Draft agreements, or even mere descriptions of the restrictive clauses, are also acceptable. In the latter case, however, any provisions not included in the application, as well as any provisions which may have a different meaning when read in the context of the entire agreement, will not be covered by the individual exemption.

Next, and since the Serbian Act on Protection of Competition (“Competition Act“) is silent on the moment in time as of which an individual exemption applies, the Commission informs the undertakings that it will in the future grant individual exemptions with the validity as of the date of submission of complete application for an individual exemption, and not as of the date of the conclusion of the restrictive agreement. The Commission warns that it will “not be sympathetic” towards undertakings who start to implement a restrictive agreement prior to applying for an individual exemption. Consequently, undertakings looking to benefit from complete legal certainty can only do so if they make the validity of the agreement conditional on receiving individual exemption from the Commission through a suspensory clause.

Last but not least, the Commission is adamant that its role is not to advise contracting undertakings on whether a certain provision is restrictive or not and how to make a restrictive clause compliant with the Competition Act. Nonetheless, the Commission did take the opportunity to promise the issuance of guidelines which are to aid the undertakings in carrying out a self-assessment on whether a specific restrictive agreement fulfills the criteria for a block exemption, or an application for an individual exemption is necessary.

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