The National Assembly of the Republic of Serbia adopts a new Law on State Aid Control

On 10 October 2019, the National Assembly of the Republic of the Serbia adopted the Law on State Aid Control (the “Law”), published in the Official Gazette No. 73/2019 dated 11 October, 2019, effective eight days after publishing in the Official Gazette on 18 October 2019. The law will enter into force on January 1, 2020.

The new Law defines in a very clear way the term of state aid, as well as state aid schemes that are the basis for granting state aid to beneficiaries. The concepts of State aid and State aid schemes are fully in line with the terms used in EU regulations. The Law also lists the instruments through which state aid can be granted, all with a goal to eliminate any ambiguities. The Law also introduces the concept of compatible state aid, which may affect competition in the market, but is still exempt from the general prohibition on State aid. State aid of a social character is particularly emphasized as an example of harmonized state aid, which is a consequence of alignment with the provisions of the European Union. The same provision also provides conditions which state aid must fulfill in order to obtain the status of harmonized state aid and to be exempt from the prohibition. These rules will be further regulated by a by-law of the Government. The Law also introduces the legal term of de minimis aid as aid that has no significant effect on the distortion of competition. The Commission for State Aid Control (“the Commission”) is defined by the new Law as an independent organization. In order to achieve greater transparency in the work of the Commission, it is envisaged for the Commission to submit a report on its work to the National Assembly, and the report is also published on the Commission’s website. The Law prescribes more detailed and stricter conditions for the election of Commission bodies, and their election is now entrusted to the National Assembly, in order to ensure its independence. By prescribing conditions, the Law pays special attention to the expertise of the members, which is a significant novelty. The Law also prescribes the incompatibility of some function with the function of the chairman of the Commission, and members of the commission bodies. The Law regulates in detail the procedure before the Commission, which is also a novelty; these provisions regulate a special administrative procedure, and in addition, the Law on General Administrative Procedure applies subsidiary. In order to ensure transparency in the Commission’s decision-making, its decisions and conclusions are published in full on the Commission’s website. The Commission shall carry out preliminary and ex post controls. The law also prescribes the types of administrative measures that the Commission may impose in the ex post control procedure, which may as well be initiated ex officio. An administrative dispute may also be initiated against the final decision of the Commission. An important provision of the Law is the statute of limitations, which provides that the Commission may not claim repayment of state aid beyond the period of ten years, counting from the date of the granting of state aid. This provision is copied from the Regulation of the Council of the European Union.

The implementation of the Law will start on January 1, 2020.

The Law was enacted because many of the issues that had been regulated by the previous Law on State Aid Control had to be regulated not only in a different but more complete manner. Certain provisions required an amendment, and it was necessary to introduce new legal terms, which resulted in the adoption of a new Law. In addition, in its annual progress reports on Serbia, the European Commission cited the need for further alignment of Serbian law with EU regulations in this area as a condition for opening Chapter 8 on competition policy. It also highlighted the need for the work of the Commission to be strengthened, which was one of the goals the new Law seeks to achieve. The Law should also ensure transparency in the granting of state aid by prescribing rules on publicity in work. In addition, the Law was harmonized with the new Law on General Administrative Procedure. The aim of the Law is to prevent the placement of certain business entities in a privileged position, that is, to make sure that all market participants enjoy the same position. The legislator believes that the adoption of the Law will achieve this goal, through control and transparency of state aid. The adoption of the Law strengthens free competition and creates better business conditions, which ensures the economic development of the Republic of Serbia, its market, of which consumers directly benefit.