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Serbia: Athletics Equipment Distributors Under Investigation for Failure to Notify Exclusivity

June 2018

Following a tip, the Serbian Competition Commission (the "Commission") recently started investigating the business relationship between GR Sport and Polanik, a Polish company, concerning an alleged infringement of competition – the conclusion of a restrictive agreement which was not notified for prior exemption under the applicable legal framework.

During the preliminary inquiry, the Commission gathered data from both of the mentioned undertakings and established the following – GR Sport was an exclusive distributor of Polanik for the territory of Serbia continuously in the period between 2005 and 2016, originating with a 2005 contract, and renewed, from time to time, with certificates issued by Polanik.

Unlike the EU's self-assessment rule, in Serbia, restrictive agreements which do not fall under block exemption have to undergo a specific administrative procedure before the Commission prior to implementation. This is the case in other jurisdictions in the region as well (e.g. Montenegro or Bosnia and Herzegovina). There may also be other specific rules applicable – as an example, the market share threshold for vertical agreements is set at 25%. As GR Sport and Polanik did not file for individual exemption during their exclusive relationship, this potentially puts them in breach of law and they might suffer a fine of up to 10% of the total annual turnover generated in Serbia.

This the first time that the Commission tackled a failure to notify agreements for individual exemption, which demonstrates its willingness to fully apply the toolbox available under the existing legal framework. One of the hot topics in drafting the new competition law concerns the possibility of abolishing individual exemption and moving to a self-assessment system, further harmonizing the Serbian framework with the EU. It remains to be seen whether these changes will make it into the legislation, but in the meanwhile, companies should apply extra care when considering restrictive agreements affecting the local market.  

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