In the process of the drafting of the new Serbian Competition Act, apart from the merger filing thresholds, an issue drawing particular attention is how the individual exemption of restrictive agreements should be set up: whether the system of prior notification should be retained or whether self-assessment should be introduced. Actually, perhaps the best solution would be to have both – and (earlier) EU law offers a basis for that.
Current system: prior notification – Regulation 17/62 revisited
Serbia is among the countries in the region where for individual exemption the parties must turn to the competition authority in advance, i.e. before they start implementing the agreement. This system is comparable to the one which in the EU existed under the original text of Regulation 17/62, where an agreement had to be notified to the European Commission in advance in order to benefit from an exemption.
At some point the system became unsustainable, as the European Commission was flooded with exemption notifications. For instance, it has been reported that soon after the regulation had been adopted the Commission received notifications of more than 35,000 agreements during only one year. Eventually, this system was abandoned and made way to the currently applicable self-assessment, personified in Regulation 1/2003.
Notification and self-assessment do not exclude each other
What is sometimes overlooked is that the introduction of self-assessment does not necessarily mean that the notification system must be abandoned: provided that the number of notifications is reasonable, both can exist in parallel. And earlier EU law provides a basis for that.
Particularly interesting in that respect is the system which in the EU existed between 1999 and the introduction of Regulation 1/2003 – during that period it was possible for the parties to request that an agreement be exempted from prohibition even if it was not notified to the Commission in advance. And the notification system was still in place. As explained in the European Commission’s Vertical Guidelines from 2000:
‘Pursuant to Article 4(2) of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty, as last amended by Regulation (EC) No 1216/1999, vertical agreements can benefit from an exemption under Article 81(3) from their date of entry into force, even if notification occurs after that date. This means in practice that no precautionary notification needs to be made. If a dispute arises, an undertaking can still notify, in which case the Commission can exempt the vertical agreement with retroactive effect from the date of entry into force of the agreement if all four conditions of Article 81(3) are fulfilled. A notifying party does not have to explain why the agreement was not notified earlier and will not be denied retroactive exemption simply because it did not notify earlier. Any notification will be reviewed on its merits.’
And I personally do not see why something like that couldn’t be introduced in Serbia: on one hand, undertakings which prefer to have the certainty of notification could still notify the agreement to the Serbian Commission, while those who prefer self-assessment could rely on their own finding that the conditions for exemption are met.
This dual system makes sense in Serbia since the number of notifications is still manageable: for instance, in 2016 there were 24 notifications in total. And, if the parties would no longer have to notify their agreements in advance, this number would likely be further reduced, as it can be expected that at least some of those who are now forced to make a notification would rely on their self-assessment that the agreement satisfies the conditions for exemption.