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Montenegrin Legal Landscape

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Montenegro's Competition Authority Identified Prohibited Agreement Among Key Players in Oil Derivatives Market

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Nemanja Radovic, Partner at KLO

In response to the announced changes to the Law on Protection of Competition, which would grant the Agency for Protection of Competition broader powers, most notably the ability to directly impose monetary fines instead of the current legal framework where the Agency initiates misdemeanor proceedings but the misdemeanor court decides on the penalties, news has emerged that the Agency has identified a collusive practice between two significant participants in the oil derivatives market – DOO INA Montenegro and Jugopetrol AD.

This decision confirms the proactive stance that the Agency has recently taken, expanding the scope of its activities to various fields within its jurisdiction. Notably, there has been stronger and more consistent control over state aid (identifying illegal state aid in the purchase of Željezara AD Niksic by EPCG), monitoring of supermarket chains in terms of compliance with market competition conditions amid increasing complaints about the realization of extra profits in this sector, and inspections of various industries regarding competition compliance, including this case.

This decision determined that the mentioned companies had reached a prohibited agreement on establishing and applying fixed retail prices for liquid petroleum gas during the period from 8 July 2019 to 31 December 2019.

The further application and implementation of this agreement have been banned, and the companies involved have been instructed to submit annual reports to the Agency on the monthly movements of the total quantities and values of liquid petroleum gas purchased and sold, in accordance with the Law on Protection of Competition.

The rationale for this decision is not publicly available, so we can only speculate how the Agency determined the existence of the prohibited agreement. However, even from the disposition of the decision, it can be inferred that the Agency had to deviate from its previous practices and engage in more extensive evidentiary actions to establish and prove the existence of the prohibited agreement from more than four years ago.

This decision also underscores the necessity of changes in the Agency’s powers, shifting the authority to impose monetary sanctions from the misdemeanor courts (which are neither organizationally nor professionally equipped to handle such types of proceedings, especially considering that they handle cases in the most diverse areas – from public order and peace to protection of competition) and transferring it to the Agency, which would undoubtedly strengthen its institutional authority.

The anticipated regulatory changes, along with the aforementioned changes in the Agency's operations, will undoubtedly lead to even more robust activities by the Agency, guaranteeing a very interesting period ahead, both for market participants and for legal advisors specializing in this field.

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