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Coffee industry leaders face EUR 2 million fine and secure a conditional merger before Serbian Competition Authority

March 2024 – On 29 February 2024, the Serbian Competition Authority (the “SCA”) published two detailed decisions involving two largest undertakings on the Serbian coffee market. The first one relates to concerted practices that resulted in a joint fine of approximately EUR 2 million, while the other one relates to the conditional approval of the acquisition of Strauss Adriatic by Atlantic Group. As per data released by the SCA, these two enterprises collectively h approximately 70% to 80% of the coffee market in Serbia, boasting a portfolio that includes the most significant coffee brands in the region.

In 2021, the SCA conducted a sectorial analysis encompassing various food markets, including a specific focus on the ground coffee market. Following this, the SCA suspected and later determined that Atlantic and Strauss had aligned and coordinated their business strategies, including exchanging information on pricing policies and future wholesale prices of ground coffee in Serbia. This practice led to a decision imposing fines of EUR 1.6 million on Atlantic and EUR 400,000 on Strauss, marking the second-highest fine ever imposed by the SCA (“Anti-Trust Decision”).

At the same time, the SCA rendered another decision related to the same entities, granting conditional approval for the merger, marking the fifth instance of its kind in Serbia. This decision contained a number of specific conditions with deadlines set by the SCA for the purpose of obtaining full clearance (“Merger Decision”).

What prompted this Anti-Trust investigation?

In its analysis of the coffee market, SCA focused on the evolution of the retail prices of ground coffee and their comparison with the global market prices. The SCA found a high degree of correlation between the ground coffee brands of the above-mentioned companies and disproportionate price increases when compared to global standards.

The SCA concluded that the coordination between the undertakings occurred due to the following:

  • the companies in question are major players on the coffee market having a combined market share of approx. 70%-80% for more than a decade,
  • the directors of these companies often publicly announced, i.e., signalled their price movements (increases) on the market,
  • there is a clear correlation between the movements in the prices, without any clear correlation to the global market’s prices,
  • the undertakings had both direct and indirect exchange of confidential information.

What can be taken from this Anti-Trust Decision?

The Anti-Trust Decision showed that the SCA closely monitors concerted practices, especially in FMCG industry, where the pricing is the main market driver, both from the suppliers’ and buyers’ perspective. The established infringement was a single and continuous breach lasting for approx. seven years (2014-2021), in various shapes and forms – from direct collusion to signalling through publicly available outlets.

Additional key highlights are the use of advanced economic analysis and model to support the SCA’s argumentation. Finally, the Anti-Trust Decision indicates that the SCA’s aligns its position towards competition infringements with the EU rules, however only with the respect to the material rules.

Merger decision details

Considering the combined market share exceeds 70% and the aforementioned Anti-Trust proceeding, it comes as no surprise that this merger underwent a comprehensive analysis. This resulted in a conditional approval, with behavioural and structural remedies.

The remedies include:

  • divesting their business operations, specifically the production facility of Strauss, with a prohibition on the reacquisition of the divested business.,
  • reporting obligations on its sales policy and production capacities including all other aspects of the business policy,
  • reporting obligations concerning the merged entity, its capacities, wholesale prices, etc., and
  • a five-year restriction on entering into new contracts for coffee production concerning private labels, including the renewal of existing private label contracts once they expire.

Please note: The content of this article is intended to provide general information on the subject matter. Specialist advice should be sought about your specific circumstances.

Stefan Savić Senior Associate
+381 3282 242
Dušan Đurić Junior Associate
+381 69 3282 806
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