Case ECS-18/16: Serbia / competition

summary of the case

registered ex officio 2016

In its Opening Letter, the Secretariat addressed the 2012 Agreement between the government of the Republic of Serbia and the government of the Russian Federation for the supply of natural gas from the Russian Federation to the Republic of Serbia. The Agreement concerns the supply of up to a maximum of 5 Bcm of natural gas per year from the Russian Federation to the Republic of Serbia from 2012 to 2021. Article 4(3) of the Agreement provides that the natural gas supplied on this basis is intended for use in the Serbian market. The Agreement is implemented through the conclusion of a contract between Gazprom Export and Yugorosgaz.

Article 18(1)(a) of the Treaty, which is addressed to undertakings, contains a prohibition of anti-competitive agreements which according to Article 19 of the Treaty also applies to public undertakings and undertakings to which special or exclusive rights have been granted. Article 6 of the Treaty imposes a duty on the Contracting Parties not to adopt or maintain in force any measure, even of a legislative nature, which could deprive the competition rules applicable to undertakings of their effectiveness. Such would be the case if a Contracting Party were to require or favour the adoption of agreements or concerted practices contrary to Article 18(1)(a) of the Treaty or to reinforce their effects. 

The Secretariat preliminarily found that Article 4(3) of the Agreement constitutes a destination clause which according to settled case-law infringes Article 18(1)(a) of the Treaty. It follows that the Republic of Serbia, by ratifying the Agreement, in particular Article 4(3) thereof, required the adoption of an agreement contrary to Article 18(1)(a) of the Treaty, namely a contract with direct territorial restrictions. Therefore, the Secretariat came to the preliminary conclusion that by ratifying an agreement requiring undertakings to adopt a contract contrary to Article 18(1)(a) of the Treaty, the Republic of Serbia deprived Article 18(1)(a) of the Treaty of its effectiveness and thereby infringed its obligations under the Treaty, namely Article 6 thereof read in conjunction with Article 18(1)(a) and 19.