Serbian Competition Authority Imposes EUR 460,000 Fine For Formation Of A Consortium

• Published date: 10 November 2022
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Law Firm: Schoenherr Attorneys at Law
• Author: Mr Zoran 'oljaga

The Commission for Protection of Competition of the Republic of Serbia ("Commission") recently imposed a EUR 460,000 fine on companies in the hazardous waste management market for forming a consortium to participate in a public procurement procedure.

Investigation and conclusions of the Commission

Five companies - MITECO Knezevac, Yunirisk, Modekolo Brem and Kemeko - formed a consortium in order to submit a joint offer in the public procurement procedure announced by the Ministry of the Environment for the disposal of hazardous waste produced by Magnohrom d.o.o. The investigation was launched ex officio, and the Commission conducted a dawn raid and seized and copied electronic correspondence and other documentation related to the formation of the consortium.

The Commission found that the consortium restricted competition, because the members could form two, instead of one, groups of bidders. A key piece of evidence showing that a restrictive agreement existed is that the members divided the profit into five equal parts, even though not all members had the same costs related to the implementation of the public procurement contract. According to the decision, two participants did not incur any expenses and did not participate in the implementation of the public procurement contract, thus, their participation in the consortium was not necessary.

The Commission did not accept the consortium members' claims that they could not submit an offer independently and that is was necessary to form a consortium, nor their arguments that the consortium did not lead to negative effects (e.g. consortium members pointed out that the offered price was 17 % lower than the planned budget for the service in question). The Commission stated that it did not examine whether each member of the consortium could have participated independently, but whether two competing groups of bidders could have been formed from the existing consortium. The Commission took the position that this consortium represents a cartel agreement, i.e. the most serious form of competition infringement, and that its effects do not need to be analysed.

Rules for assessing a consortium in terms of the application of competition rules

In the Opinionfrom 2021, the Commission provided guidance on when a joint offer can be considered a restrictive agreement. According to the Opinion, a consortium will not constitute a restrictive agreement if:

1. the members of the consortium are not competitors;
2. the members of the...