Unnotified exclusive distributorship under scrutiny of the Competition Commission

Serbian Commission for the Protection of Competition ("Commission") has initiated proceedings against a Polish sports equipment producer Polanik and its exclusive distributor in Serbia GR SPORT doo on allegations that they failed to obtain individual exemption for their agreement. This is the first time the Commission is investigating a foreign company. It is also the first time that the Commission has initiated proceedings for a failure to obtain individual exemption of exclusive distribution agreement.

Unlike in the European Union, where businesses may self-assess compliance of their arrangements with competition law requirements, under Serbian competition law, any restrictive agreement, including exclusive distribution agreement, must receive a prior positive clearance from the Commission unless none of the parties has a market share above 25% market share on the relevant market. An agreement containing a "hard-core" restriction (such as, for example, resale price maintenance or single branding obligation) must receive individual exemption regardless of the market shares. Under this rigorous regime, parties to a restrictive agreement that does not enjoy the benefit of a block exemption and was not notified for individual exemption cannot validly defend themselves by alleging that the agreement fulfills the requirements for individual exemption.

New competition legislation is currently being drafted. The initial draft retains the procedure for mandatory individual exemption but there have been proposals for a shift to the self-assessment model. The outcome of this debate is yet uncertain.