The invisible judges of the market: how competition law shapes the fate of big and small players

In the business world, the drive for dominance is natural. However, when that drive crosses the line of what is permitted and becomes a threat to the free market, competition law comes into play. As lawyers, we see this branch of law not merely as a set of restrictions, but as the “rules of the game” ensuring that market success depends on quality and innovation, not on the strength of lobbies or secret agreements.

The foundations of the system: who sets the rules?

In Serbia, the “constitution” of market competition is the Law on Protection of Competition. Its application is not limited to what happens within our borders. Under Article 2 of the Law, it applies to all acts and actions that affect or could affect competition in the territory of the Republic of Serbia, even if those actions are taken outside it.

The main arbiter in this process is the Commission for Protection of Competition, a body with broad powers to investigate, sanction and regulate the conduct of market participants.

The four pillars of competition protection

To understand the risks to which modern business is exposed, you need to know the four basic subjects regulated by this Law:

Prohibition of restrictive agreements: these are popularly known as “cartels”. The Law strictly prohibits agreements between competitors on prices, market sharing or limiting production. Even non-binding arrangements may come under scrutiny if they distort competition.

Abuse of a dominant position: being big and powerful is not punishable. Using that power to drive out competitors or exploit consumers (for example, by imposing unfair purchase or selling prices) is.

Merger control: when two major players merge (mergers and acquisitions), the state must approve the process. The aim is to prevent the creation of monopolies that would subsequently stifle the market.

The best example of how competition law intervenes in the real world are decisions granting conditional approval of a concentration.

Slaviša Cincarević

State aid control: the state must not selectively help particular companies (through subsidies or tax breaks) in a way that distorts fair competition with others.

Anatomy of a concentration: the Agrokor / Mercator example

The best example of how competition law intervenes in the real world are decisions granting conditional approval of a concentration. When Agrokor was taking over Mercator, the Commission did not simply say “yes” or “no”.

A decision was issued with structural and behavioural remedies. What does this mean in practice? Agrokor was obliged to divest (sell) part of its retail outlets (IDEA and Mercator-S) so as not to become too dominant in certain cities. A ban on buying back those outlets for five years was also imposed. This shows that competition law does not stop capital, but channels it so that consumers still have a choice.

Risk classification: where do companies most often go wrong?

As legal advisers, we divide business activity into risk zones:

• Ordinary risks: these concern horizontal and vertical agreements. Any contract with a supplier or distributor may contain a clause that seems logical at first glance but is legally restrictive.
• Risks for participants with significant market power: the bigger the company, the greater its responsibility. What is permitted for a small company may be prohibited for a dominant player.

Prevention: compliance

In modern law, waiting for the Commission to open proceedings is the most expensive strategy. Fines in this area can reach up to 10% of a company's total annual turnover.

The key therefore lies in preventive measures:

• Analysis of the relevant market: you must know exactly where you compete and what your market share is.
• Employee training: do your sales staff know what they may and may not say to a competitor over coffee at a trade fair?
• Contract review: every restrictive element in a contract must be legally justified or removed.

Conclusion: competition law as a guarantee of progress

Without strict control of concentrations and abuses, the market would quickly become static and expensive for the end user. Competition law ensures that no one is above the laws of the market. As lawyers, we are here to ensure that your ambition for growth remains within a framework that guarantees the long-term stability and reputation of your business.

This text expresses the author's professional opinion and does not constitute legal advice for a specific case.