Montenegrin courts step up activity related to the decisions of the Agency for Protection of Competition

Montenegrin courts have recently intensified their activities in the competition area. As is well known, the Montenegrin Agency for Protection of Competition ("Agency") does not have the authority to issue fines but may request from the competent misdemeanour court to do so. In the period from August to October this year, misdemeanour courts in Montenegro decided on two such requests from the Agency. In the proceedings against the company "Šafran" d.o.o. Bar, the Misdemeanour Court in Bar issued a warning to this undertaking and imposed a fine on its director in the amount of EUR 600. This is only the second time that a fine for breach of the Competition Act has been imposed in Montenegro since the legislation entered into force in 2012. In another proceedings, the Misdemeanour Court in Podgorica acquitted the undertaking "Montemedicom" d.o.o. even though the Agency found, and the Administrative Court confirmed, that this company had concluded a restrictive agreement. Finally, the Administrative Court confirmed the Agency's decision in which it found an abuse of dominance by a public utility company "Vodovod i kanalizacija" from Budva. 

Proceedings against "Šafran" d.o.o. (restrictive agreement)

In the proceedings instituted against Šafran d.o.o. Bar, the Agency issued a decision on 30 December 2014 in which it found that certain provisions of the "Agreement on use of a protected mark "ŠAFRAN" and protection of the buyer in resale", concluded between "Šafran" d.o.o. Bar as supplier, and "Obuća Minja" d.o.o. Berane, as buyer, were null and void. Unfortunately, as the Agency does not publish the reasoning of its decisions, we do not know which provisions in that Agreement were problematic, but one can infer from the published decision that the disputed provisions concerned resale price maintenance.

Pursuant to the Agency's request for initiation of misdemeanour proceedings, the Misdemeanour Court in Bar issued a warning to "Šafran", while it imposed a fine in the amount of EUR 600 on the company's director. As decisions of misdemeanour courts are not published, we remain deprived of the understanding of the court's decision not to impose a fine on the company but to fine only the company's director.

Proceedings against "URION" d.o.o. Podgorica and "Montemedicom" d.o.o. Podgorica

In a decision dated 24 November 2016, the Agency found that the undertakings "URION“ and "Montemedicom“ colluded on the relevant market for public procurement of certain medicinal equipment by concluding a restrictive agreement on joint bidding in response to a public tender organised by the Health Insurance Fund of Montenegro. The Agency determined that these undertakings concluded the joint bidding agreement with the aim of excluding competitors through market sharing, price-fixing, limitation and control of the market. The Administrative Court upheld this decision in judicial review. However, according to the Agency's press release of 23 October 2017, the Misdemeanour Court in Podgorica acquitted "Montemedicom" d.o.o. As the decision had not been made public, we do not know the reasons for the acquittal. The Agency's appeal is pending. It is unknown whether separate proceedings are pending against the other infringer.

Proceedings against "Vodovod i kanalizacija" d.o.o. Budva (abuse of dominance)

The Administrative Court of Montenegro upheld, in judicial review proceedings, the decision of 24 March 2016 in which the Agency found that the local public water supply company from Budva, "Vodovod i kanalizacija" d.o.o, abused its dominant position on the market for provision of services of water supply and waste water treatment and conduct in the Municipality of Budva. The Agency found two types of abuse: excessive pricing and illegal tying.  

Seized with a challenge to the Agency's decision, the Administrative Court found that the Agency correctly applied the relevant provisions of the Competition Act when it determined that the claimant has dominant position on the market for provision of services of water supply and waste water treatment and conduct on the relevant geographic market of the Municipality of Budva, given that the consumers in that area do not have an option to switch suppliers. The Administrative Court further upheld the finding of the Agency that the fee in the amount of approx. EUR 8 (VAT included) for the service of maintenance and reading of water meters is inadequately high, and thus represents abuse of dominant position in the form of excessive pricing. An additional form of abuse which the Agency identified, and the Administrative Court upheld, was reflected in the automatic inclusion of the said mandatory monthly fee for maintenance and reading of water meters into the users' monthly water bills. The Agency established that this service was illegally tied to the main service of water supply and waste water treatment and conduct, even though it was not related to the latter either by its nature or according to its commercial usage (one service can exist independently from the other). It remains to be seen whether the Agency has initiated misdemeanour proceedings against "Vodovod i kanalizacija" d.o.o. Budva, and if yes, whether the competent misdemeanour court will impose a fine.