The month of November was particularly eventful in the region regarding competition law, with Bosnia and Herzegovina, Serbia, and Montenegro imposing penalties on major companies. This article, featured in the November edition of the IA Law Firm newsletter, aims to clarify the potential penalties and consequences under Bosnia and Herzegovina’s competition law.
Severe Financial Penalties
Violations of competition rules can lead to fines of up to 10% of a company’s total revenue, sometimes applying to an entire business group depending on the case. These fines represent some of the most stringent financial penalties imposed on businesses.
Criminal and Civil Consequences
In addition to monetary fines, competition law violations can result in criminal penalties, including imprisonment for responsible individuals. Such breaches also constitute civil offenses, allowing injured parties to seek damages through lawsuits. Furthermore, any contract, agreement, or clause that violates competition rules is automatically null and void under the law.
Reputational Damage
Beyond legal and financial repercussions, breaching competition rules can severely harm a company’s reputation, often causing long-term negative impacts on business operations.
Regional Trends: Increased Activity by Competition Authorities
Serbia
The Serbian Commission for Protection of Competition recently initiated proceedings against several major retail chains (Delhaize, Mercator, Univerexport, and DIS) for alleged price-fixing. To date, 120 cases involving abuse of dominant positions or restrictive agreements have been initiated in Serbia, with fines reaching several million euros.
Montenegro
The Montenegrin Agency for Protection of Competition identified a cartel agreement between mobile operators (M:tel, Crnogorski Telekom, and One Crna Gora). The potential fine, amounting to 10% of cumulative revenue, could range from €2.7 million to €27 million.
Bosnia and Herzegovina
The Competition Council imposed fines totaling BAM 284,927.98 for prohibited agreements. Recently, Bingo, a major company, was fined BAM 450,000 for failing to timely report a merger, even though it did not negatively affect the market or create a dominant position. The penalty highlights the importance of procedural compliance.
What Should Entrepreneurs Know?
Both intentional violations and unintentional errors, such as failing to report a merger, can result in significant fines. Activities like entering commercial agreements, abusing dominant positions, or acquiring stakes in companies may lead to competition law violations.
Given the seriousness of potential consequences, businesses must exercise caution in all activities that might involve competition law. Interestingly, the Competition Council’s 2023 report reveals that only 34 competition-related cases were submitted despite high economic activity in Bosnia and Herzegovina. This indicates a lack of awareness among businesses about their obligation to report mergers.
Key Takeaway
Consulting competition law experts promptly can help prevent potential violations and avoid substantial fines that could reach 10% of a company’s revenue, as well as criminal penalties.
The IA Law Firm team specializes in competition law and provides comprehensive advice and support across all business stages to ensure compliance with applicable regulations.
Learn more about our services: IA Law Firm – Competition Law
Explore competition law in Bosnia and Herzegovina: BiH Competition Authority
