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Competition Law and Policy
Competition policy and procedure is governed by the 1996 Antimonopoly Law. This law is wholly inadequate and cannot be applied in any meaningful way. Consisting of only four pages of broad concepts set forth in 15 substantive articles, the law is over-broad and under-developed. For example, the definition and impact of "dominant position" do not distinguish between dominance gained through anti-competitive acts and dominance gained through excellence in competition.
There is no reason to fear that the law will be misapplied in the immediate future, however because the Competition Agency is currently no better than the law it is responsible for enforcing. Formerly an agency for price and market control, the change in name has not changed the function. The Agency, to the extent it operates at all, attempts to set "fair" prices instead of policing unfair practices. In short, the Competition Law and its institutional framework need to be overhauled from scratch.
Basic foundations exist for Supporting Institutions. There are a number of economic and statistical research organizations that could do or learn to do the analysis necessary for economic impact, market domination, and other studies required to prosecute or defend actions for non-competitive behavior. Once a proper system is in place, it is likely that market demand for such services will be met by these institutions, although some technical assistance may be required to introduce new concepts and practices.
The market for change is less certain. As noted in the Executive Summary, there is much support for protecting local industry against foreign competition and even for government intervention in pricing. This is not surprising given that fact that even the most advanced economies of Europe and North America still struggle with protectionist leanings, but it is more problematic for FRY and Serbia because there is not yet any significant countervailing support for openness. Impetus for change may come from the community of foreign investors, but even this is not certain – many foreign investors seek monopolistic concessions and incentives for their particular investment, not an open, competitive environment. Effective reform in this area will require both strong leadership and public education on the benefits of competition.
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