In the last few months we could see that the Serbian Competition Commission (the “Commission”) was active in the area of public utility services, which are usually operated by a local public enterprise, traditionally a monopolist.
The Commission’s focus on this market was probably stimulated by the ongoing work of the Ministry for Construction, Transport and Infrastructure (the “Ministry”) on the amendments of the Public Utility Services Act (the “Act”).
Under the current provisions of the Act, certain public utility services (such as funeral services and cemetery management) can be performed either by a public enterprise or a company with majority stake of a (local) government. In addition to this barrier, the Ministry, in the first draft of the amendments of the Act, provided that an undertaking, in order to compete for delegation of public utility service(s), would be obliged to acquire a special permission on the fulfillment of mandatory conditions for the performance of such service(s), issued by the Chamber of Commerce and Industry of Serbia (the “Chamber”).
In order to boost the competition on the market of public utility services, the Commission issued an opinion stating that the present restriction of the (local) government majority stake and envisaged permission of the Chamber represent unnecessary additional barriers for an undertaking to enter into the market of these services. Unexpectedly, the Ministry accepted to amend the provisions of the Act in accordance with the Commission’s opinion.
It seems that the ratio behind the Commission’s entanglement with the amendment of the Act and the public utility services was the improvement of economic efficiency, economic growth, and development and consumer welfare, by creating an optimal legal framework in compliance with the competition law, which is a welcome development.
By Nikola Kasagic, Senior Associate, and Branislav Radovic, Associate, SOG / Samardzic, Oreski & Grbovic