the collection of regulations of the council of...

THE COLLECTION OF REGULATIONS

OF THE COUNCIL OF COMPETITION OF

BOSNIA AND HERZEGOVINA

-unofficial translation-

The Collection of Regulations of the Council of Competition of Bosnia and Herzegovina

The title of a book


-unofficial translation-

Publisher

The Council of Competition of Bosnia and Herzegovina

Radićeva 8/4, Sarajevo

www.bihkonk.gov.ba

Professional Editors

Members of the Council of Competition:

Gordan Raspudic

Dragisa Stankovic

Ibrica Lakisic

Sanja Bozic

Sena Hatibovic

Stjepo Pranjic

Editor

Dragana Lazetic

Tehnical Arrangement

Samir Bekto

Printed Copies

250

Internal Edition

The Council of Competition

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TABLE OF CONTENTS

Foreword by Mr. Raspudic ......................................................................................................5

The Council of Competition of Bosnia and Herzegovina ........................................................7

The Act on Competition.........................................................................................................11

Regulation on the Definition of a Relevant Market ...............................................................39

Regulation on Definition of a Dominant Position..................................................................47

Regulation on Agreements of Minor Importance...................................................................53

Regulation on Notification and Criteria for Assessment a Concentration of Undertakings...59

Regulation on the Procedure for Granting Immunity from Fines (Leniency Policy).............71

Regulation on Definition of the Periodic Fine Payment ........................................................79

Regulation on Block Exemptions Granted to Certain Categories of Horizontal Agreements

(between undertakings operating at the same level of production or distribution chain)

Relating Particularly to Research, Development and Specialization Agreements .................83

Regulation on Block Exemption Granted to Certain Categories of Vertical Agreements

(between undertakings operating at the difefrent levels of production or distribution) .........95

Regulation on Block Examption Granted to Insurance Agreements....................................105

Regulation on Block Exemption Granted to Agreements on Distribution and Servicing of

Motor Vehicles.....................................................................................................................117

Regulation on Block Exemption Granted to Certain Categories of Technology Transfer

Agreements (licence and know-how agreements)................................................................131

Regulation on the Amount of Administration Taxes Relating to the Practices Before the

Council of Competition........................................................................................................143


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FOREWORD

Dear,

Generally, the concept of the market competition in Bosnia and Herzegovina is absolutely a

new concept and therefore the Council of Competition permanently promotes it in public

(Competition Advocacy).

The Council of Competition, established in 2004, is an independent and autonomous body

with exclusive authority to decide on existence of prohibited competition activity in the

market of Bosnia and Herzegovina and it acts in protection and promotion of the market

competition.

On the basis of the Act on Competition, the Council of Competition has adopted twelve by-

laws published them during 2005/2006, and this Collection of Regulations provides an

insight into all adopted regulations.

Purpose of this Collection of Regulations is to inform the business community and relevant

authorities about the adopted regulations on market competition in Bosnia and Herzegovina,

including explanation of some terms used in a legislation and practice of the market

competition, in order to ensure consistent application of the regulations and to improve the

general knowledge in this field.

We hope that this shall ensure higher efficiency and transparency in application of the Act on

Competition and establish better cooperation with business community and relevant

authorities of Bosnia and Herzegovina.

This publication is available on our Internet page www.bihkonk.gov.ba

Gordan Raspudic

President of the Council of Competition

Sarajevo, February 2007


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THE COUNCIL OF COMPETITION OF BOSNIA AND HERZEGOVINA

The Council of Competition, established on 1st of May 2004, is an independent and

autonomous body headquartered in Sarajevo with exclusive competence to decide on

existence of the prohibited competing activities in the market of Bosnia and Herzegovina,

pursuant to the regulations of the Act on Competition.

The Council of Competition consists of six members and their status is equal to such of

administrative judges who are selected among recognized experts and they are appointed for

a six-year term of office with the possibility of one more reappointment. Three members of

the Council of Competition are appointed by the Council of Ministers of BH, two by the

Government of the Federation of BH and one by the Government of Republic of Srpska.

The Expert unit, which acts as a basic organizational unit, is established by the Rule Book on

Internal Organization and Systematization of the Council of Competition. The Expert unit

carries on the administration, expert and technical duties. There are Offices for Competition

in Mostar and Banja Luka which operates within the Expert unit as organizational units

placed outside of the seat of the Council of Competition.

The Act on Competition is based on the modern legislation and practice of the European

market competition. This Act is to the greatest extent harmonized with the rules and

regulations of the European Union in market competition field – Article 81 and 82 of the

Treaty Establishing the European Community, regulations adopted in 2003 and 2004 - acts

of the EC Council No. 172003, 139/2004, 773/2004, 802/2004 - which ensures more

efficiency and transparency in its implementation, reduces a duration of some phases of

proceedings and generally, reduces a level of the state intervention in this field.

The Act on Competition is being applied to all undertakings, to their activities aimed at and

resulted in prevention, restriction and distortion of the market competition in Bosnia and

Herzegovina including activities abroad it those activities affect the market of Bosnia and

Herzegovina.

The enforcement of the Act on Competition ensures the improvement of principals of the

free market competition and Council of Competition prevents by means of certain measures

and acts some undertakings to have unfair advantageous position comparing to others.

Considering the concept of the market competition policy, the implementation of the Act on

Competition shall be of benefit to end-users, primarily through better quality and reduced

prices of products/services in the market, which shall provide for long-term the prosperity of

citizens of Bosnia and Herzegovina.

The main task of the Council of Competition is to eliminate prohibited competitive activities

of undertakings in order to protect and maintain the market competition and set up equal and

transparent criteria for all undertakings and other entities in the market.

The main activities of the Council of Competition are:

• to prohibit conclusion of agreements which restrict the market competition (Article

4 of the Act on Competition);

• to eliminate the abuses of dominant position of undertakings (Article 9 of the Act

on Competition);

• to control acquisition, merger, taking over of undertakings (concentration) in the

relevant market (Article 12 of the Act on Competition);


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• to provide opinions and proposals on any aspect of competition, either ex-officio

and at the request of the state authority, undertakings or associations (Article 25 of

the Act on Competition);

• to make the market competition closer to the business community and to relevant

institutions through different forms of promotions (Competition Advocacy).

Initiation of the proceedings: The Council of Competition shall initiate proceedings if it finds

existence of any form of the prohibited competitive activity in order to determine

infringement of the Act. The Council of Competition shall initiate the proceedings upon

request submitted by:

• any legal or natural entity having a legal or economic interest;

• a chambers of commerce, associations of employers and entrepreneurs;

• a consumers associations;

• an executive authorities of Bosnia and Herzegovina.

Within the ordered time-period, the Council of Competition shall make a final decision

(Article 42 of the Act on Competition) which is to be delivered to undertakings concerned,

and published in Official Gazette of Bosnia and Herzegovina.

Fine: The Council of Competition, in a case of infringement of the Act on Competition, shall

impose a fine at 1-10% of the total annual income of the undertaking (Articles 48 and 49)

depending of the level of infringement of the Act. Also, the fine may be imposed at

15,000KM to 50,000KM to the responsible person of the undertaking.

The Council of Competition may impose to the parties to the proceedings the periodic

penalty payment (penalties) not exceeding 5% of the average daily income in the preceding

business year for each day of delay of the date set in the Regulation, in a case where they

failed to conform and implement the Ruling of the Council of Competition.

Additionally, the Council of Competition may consider reduction of a fine or grant immunity

from fine (leniency policy) for legal and/or natural entities if, in the course of the

proceedings, the entity willingly provides the decisive evidences important for finding an

infringement of the Act on Competition. This practice is applied to prohibited agreements

(cartels).

The market competition area is one of the important instruments and pillars which provide

establishment and reinforcement of the single economic market in Bosnia and Herzegovina

and the Council of Competition shall continue its activities to foster it.

THE ACT ON COMPETITION

“Official Gazette of BiH”, No. 48/05


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On the bases of the Article IV, paragraph (4), item a) of the Constitution of Bosnia and

Herzegovina, the Parliamentary Assembly of the Bosnia and Herzegovina, at the session of

the House of Peoples, held in June 29, 2005 and at the session of the House of

Representatives, held in June 29, 2005 has adopted

THE ACT ON COMPETITION

I GENERAL PROVISIONS

Article 1

Subject-matter and Scope

This Act regulates the rules, measures and procedures for the protection of market

competition, and regulates the power and duties of the Council of Competition entrusted with

the protection and promotion of market competition in Bosnia and Herzegovina.

Article 2

Application

(1) This Act shall apply to all legal and natural persons (hereinafter: undertakings) that,

directly or indirectly, participate in the trade of goods or services and that, through

their actions, prevent, restrict or distort market competition on the whole territory of

Bosnia and Herzegovina or its relevant part and, particularly to:

a) economic associations, enterprises, entrepreneurs, disregarding their form

of property, seat or permanent residence;

b) state and local self-government units directly or indirectly participating in

or decisive influence on the market;

c) other natural or legal persons such as associations, sports organizations,

institutions, cooperatives, intellectual property right holders etc. that

participate, indirectly or directly, permanently, temporary or single in the

market, disregarding their legal status, form of property, seat or permanent

residence.

(2) This Act shall also apply to any undertaking controlling another undertaking. A

controlled undertaking shall be deemed to be controlled if its management is

directly or indirectly, legally of factually, decisively impacted by another

undertaking, and especially if that controlling undertaking:

a) holds more than half of the shares capital or half of the shares;

b) may exercise more than half of the voting rights;

c) has the right to appoint more than half of the members of management

board or supervisory committee;

d) in any other way has the right to manage business operations of the

controlled economic subject.

(3) This Act shall also apply to all economic activities of the undertakings that have

their seat or permanent residence abroad, if their activities have substantial effect on

the market of Bosnia and Herzegovina or its relevant part.

The Act on Competition

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Article 3

Relevant Market

(1) Within the meaning of this Act, the relevant market is defined as a market of certain

products, which are the subject of the business operations preformed by the

undertakings in the specific geographic territory.

(2) A relevant product market comprises all products which consumers and/or users

consider mutually substitutable, under acceptable conditions, having in mind the

products′ characteristics, their quality, intended use, way of usage and the price and

sale conditions.

(3) Relevant geographic market comprises the whole territory or a significant part of

the territory of Bosnia and Herzegovina, where the undertakings operate in selling

and/or purchasing of a relevant product under equal or sufficiently homogeneous

conditions and which are significantly distinguished from the conditions of

competition in neighbouring geographic markets.

(4) As an exception to paragraph (3) of this Article, in specific cases, a relevant

geographic market may be defined on the international level.

(5) The Council of Competition shall prescribe by a by-law act detailed criteria and

procedures in defining the relevant market.

II PROHIBITED COMPETITION PRACTICES

Article 4

Agreements

(1) There shall be prohibited all agreements, contracts, single provision of agreements

or contracts, concerted practices, explicit and tacit agreements between the

undertakings, as well as decisions by associations of undertakings (hereinafter:

agreements) the object or effect of which is to prevent, restrict or distort market

competition in the relevant market, and in particular those which:

a) directly or indirectly fix purchase and selling prices or any other trading

conditions;

b) limit or control the production, markets, technical development or

investment;

c) share markets or sources of supply;

d) apply dissimilar conditions to equivalent transactions with other

undertakings, thereby placing them at a competitive disadvantage;

e) make the conclusion of contracts subject to acceptance by the other parties

of supplementary obligations which, by their nature or according to

commercial usage, have no connection with the subject of such contracts.

(2) Any agreements prohibited pursuant to paragraph (1) of this Article shall be null

and void.

(3) Agreements in terms of paragraph (1) of this Article shall not be prohibited if they

contribute to improving the production or distribution of goods and/or services

within Bosnia and Herzegovina or those which contribute the promotion of

technical or economic progress, while allowing consumers a fair share of the

resulting benefit, and which:


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a) impose only restrictions necessary to the achievement of these objectives;

b) shall not enable the elimination of competition in the substantial part of

products or services in question.

Article 5

Individual Exemptions

(1) The Council of Competition may, at the request of one or more of the parties to an

agreement take a decision granting individual exemption from the application of the

agreement prohibition referred to in Article 4, paragraph (1) of this Act, if that

particular agreement fulfils the conditions from Article 4, paragraph (3) of this Act.

(2) The Council of Competition shall decide upon the exemption from the application

of the agreement prohibition referred to in Article 4, paragraph (1) of this Act

within a four (4) months period.

(3) If the Council of Competition does not make such a decision within the stated time

period, the agreement in question is deemed to be exempted from the prohibition

laid down in Article 4, paragraph (1) of this Act.

(4) The Council of Competition may, ex officio or at a party’s request, re-examine the

already exempted agreement from paragraph (1) of this Article, when:

a) the decision is based on incomplete and incorrect data and information;

b) the material conditions and facts on the relevant market have been changed

substantially;

c) one of the parties in question acts contrary to its obligations defined by the

decision of the Council of Competition.

(5) If the Council of Competition finds out a violation pursuant to paragraph (4) of this

Article, its decision may be cancelled, annulated or amended.

Article 6

Content and Duration of an Individual Exemption

(1) An individual exemption by means of a decision may contain conditions and

prohibitions.

(2) An individual exemption has a limited period of time, which as a rule may not

exceed 5 (five) years.

(3) The time limit from paragraph (2) of this Article may, at a request of the parties to

the agreement, be additionally extended for no longer than 5 (five) years, if it can be

proved that the agreement continues to comply with the conditions set out in Article

4, paragraph (3) of this Act.

(4) The request for the extension of time limit of individual exception must be

submitted by the parties to the agreement to the Council of Competition at least in 4

(four) months before the expiry of the validity of the exemption.

(5) An individual exemption shall take effect from the day of the conclusion of the

agreement, or if it contains conditions and prohibitions, the exemption shall take

effect from the day on which the agreement is enacted or at least from the day on

which the conditions are fulfilled.


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Article 7

Block Exemptions

(1) The Council of Competition shall specify by decree the following block exemptions

for implementation of Article 4, paragraph (3) of this Act, in particular:

a) horizontal agreements, in particular the agreements on research and

development and specialization;

b) vertical agreements, in particular the agreements on exclusive distribution,

selective distribution, exclusive purchase and franchising;

c) agreements on transfer of technology, license and know how agreements;

d) agreements on distribution and servicing of motor vehicles;

e) insurance agreements.

(2) The Council of Competition shall more closely define the block exemptions from

paragraph (1) of this Article in by-laws, and in particular:

a) the restrictions or contractual provisions that such agreement may contain;

b) the contractual provisions that such agreement must contain;

c) their limit period and other conditions which must be fulfilled.

(3) Agreements fulfilling the conditions laid down in Article 4, paragraph (3) of this

Act do not need to be submitted to the Council of Competition for assessment in

respect of individual exemption pursuant to Article 5 of this Act.

(4) The Council of Competition may, ex officio or at the request of the third party,

initiate the proceedings to assess a particular agreement from paragraph (3) of this

Article, if it finds that the effects of such an agreement do not fulfil the conditions

laid down in Article 4, paragraph (3) of this Act.

Article 8

Minor Importance Agreements

(1) The provisions of Article 4, paragraph (1) of this Act shall not apply to minor

importance agreements.

(2) Agreements of minor importance are defined as agreements in which the parties to

the agreements and the controlled undertakings have an insignificant common

market share in the relevant market, under the condition that they do not contain

provisions that, in spite of the insignificant market share, lead to prevention,

restriction or distortion of competition.

(3) Minor importance agreements pursuant to this Act include the following:

a) if the total market share of the parties to an agreement in the relevant

market does not exceed 10 (ten) % in cases when the agreement is made

between the undertakings which are actual or potential competitors i.e.

when they operate on the same level of production or trade;

b) if the market share of the parties to an agreement in the relevant market

does not exceed 15 (fifteen) % in cases when the agreement is concluded

between the undertakings which are not competitors i.e. when they operate

on different levels of production or trade;

c) the agreements, where it is difficult to classify the agreement as either an

agreement between competitors or agreement between non-competitors

undertakings and where the threshold of 10 (ten) % share in the relevant

market shall apply.


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(4) The Council of Competition shall, in by-law act define more closely the conditions

and criteria which that minor importance agreements must comply.

Article 9

Dominant Position

(1) An undertaking has a dominant position in the relevant market of goods or services,

when due to its market power it can act in the relevant market considerably

independently of its actual or potential competitors, buyers, consumers or suppliers,

taking into account the market share of that undertaking in the relevant market,

market shares of its competitors in that market, as well as the legal and other

barriers to the entry of other undertakings in the market.

(2) An undertaking shall be presumed to be in a dominant position in the market of

goods or services, if it holds more than 40 (forty) % of the market share in the

relevant market of Bosnia and Herzegovina.

(3) More undertakings shall be presumed to be in a dominant position in the market of

goods or services, if the joint market share of two or more undertakings in the

relevant market of Bosnia and Herzegovina exceeds 60 (sixty) %.

(4) The Council of Competition shall, in a by-law act, define more closely a dominant

position category.

Article 10

Abuse of Dominant Position

(1) Any abuse of dominant position by one or more undertakings in the relevant market

shall be prohibited.

(2) The abuse of dominant position, in particular, relates to the following:

(a) direct or indirect imposition of unfair purchase or selling prices or other

trading conditions which restrict competition;

(b) limitation of production, markets or technical development to the prejudice

of consumers;

(c) application of dissimilar conditions to equivalent or similar transactions

with other parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of the contracts subject to acceptance by the other

party of supplementary obligations which, by their nature or according to

commercial usage, have not connection with subject of such contract.

Article 11

Decision on Abuse of a Dominant Position

(1) Pursuant to Articles 9 and 10 of this Act, the Council of Competition shall make a

decision which:

a) determine a dominant position and practices of the undertakings abusing

this dominant position and prevent, restrict or distort market competition,

as well as the duration of the abusive practices concerned;

b) forbids such abusive practices of the undertaking;

c) determine the terms and measures for the removal of adverse effects of

such practices;


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d) determines that the undertaking is to apply other appropriate measures and

the terms to ensuring competition among the undertakings in the relevant

market and deadlines for their implementation.

(2) The Council of Competition issues a decision from paragraph (1) of this Article

within a 4 (four) months period.

(3) If the Council of Competition does not issue such the decision within the time limit

stated in paragraph (2) of this Article and Article 41 of this Act, it shall be deemed

that there is no abuse of dominant position in the agreement in question.

(4) If the decision from paragraph (3) of this Article is not issued, upon a special

request of the undertakings, the Council of Competition shall, in accordance with

the procedure set by this Act, issue a decision stating that the agreement in question

does not abuse the dominant position

Article 12

Concentration

(1) Pursuant to this Act, a concentration shall be defined as:

a) Joining or merger of two or more previously independent undertakings or

parts of undertakings;

b) the acquisition of control or prevailing influence of one or more

undertakings over another undertaking, or over more undertakings or a part

of another undertaking, or the parts of another undertakings, in particular

by:

1) acquisition the majority of shares or share capital by means of purchase;

or

2) acquisition of the majority of voting rights; or

3) some other way, pursuant to the provisions of this Act which regulate

the establishment of economic subjects and their management.

c) the creation of a joint venture by two or more independent undertakings,

which operates on a long-term base as an independent undertaking.

(2) Acquiring control pursuant to paragraph (1) of this Article may be achieved by

holding rights, contracts or any other means by which one or more undertakings,

either solely or jointly, within the specific legal and factual circumstances, is

enabled the possibility to exercise predominant influence over one or more

undertakings.

(3) A concentration, pursuant to paragraph (1) of this Article, shall not be deemed to

arise when:

a) banks or other financial institutions or insurance companies, which, in their

ordinary activities of business, acquire shares on a temporary basis with a

view to resell them within 12 (twelve) months the latest, provided that they

within the above-mentioned time frame do not use shares for the purpose

of determining the competitive behaviour of that legal subject, i.e. do not

undertake the measures which distort, restrict or prohibit market

competition. The Council of Competition may, on party’s request, extend

the time limit if the aforesaid undertaking can prove that the transaction

concerned has not been reasonably possible within the period set;


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b) the control over an undertaking is acquired by an office-holder relating to

liquidation and insolvency practitioner, according to the laws on

bankruptcy and liquidation;

c) a joint venture is aimed to coordinate market activities between two or

more undertakings which remain independent; and therefore this joint

venture shall be assessed within the meaning of Article 4 of this Act.

Article 13

Prohibited Concentrations

There shall be prohibited the concentrations of undertakings that significantly impede

effective market competition, in the whole territory of Bosnia and Herzegovina or in a

relevant part of it, and particularly, that create a new or strengthen an existing dominant

position.

Article 14

Total Income for the Control of Concentration

(1) Pursuant to Article 12, paragraph (1) of this Act, the intended concentration is

obliged to be notified by parties to the concentration if the following conditions are

met:

a) the total income of all the undertakings-parties to the concentration, is

realized by the sale of goods and/or services in the global market amounts

to 100 (one hundred) million KM, according to balance sheet for the

financial year preceding concentration, and when at least one undertaking,

a party to the concentration, is registered in the territory of Bosnia and

Herzegovina (it acts in the domestic market of goods and/or services); or

b) the total income of each of at least 2 (two) parties to the concentration, is

realized by the sale of goods and/or services in the market of Bosnia and

Herzegovina amounts to at least 5 (five) million KM, according to balance

sheet for the financial year preceding the concentration, or if their common

share in the relevant market exceeds 40 (forty) %.

(2) The total income referred to in paragraph (1) of this Article shall not be calculated

taking into account the incomes of all the parties to the concentration realised in

their transactions.

(3) In case defined in Article 12, paragraph (1) of this Act, when the concentration

consists in association or merger of a part or parts of one or more undertakings,

irrespective whether or not those parts are constituted as legal entities, the

calculation of the income within the meaning of paragraph (1) of this Article, shall

include only the income deriving from the parts being the subject of the

concentration control.

(4) However, two or more transaction within the meaning of paragraph (3) of this

Article, conducted within two-year-period shall be considered to constitute one

concentration (more parts of an undertaking acquired successively) arising on the

date of the last transaction.


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Article 15

Total Income of Banks, Other Financial Institutions and the Insurance Companies

For the purpose of control of concentration in banks, other financial institutions and the

insurance companies, instead of the total turnover, the following shall be considered:

a) for legal persons which provide financial services, after deduction of the value

added and other taxes directly related to them, the sum of the following income

terms shall be used:

1) interest income and similar incomes;

2) income from securities:

2.1. income from shares and other variable yield securities whose profit is

changeable,

2.2. income from participating interests to undertakings;

2.3. income from shares in affiliated undertakings;

3) commissions receivable;

4) net profit on financial operations; and

5) other operating income.

b) for the insurance companies and the companies which perform re-insurance

activities, the value of gross premiums which shall comprise all amounts received

and receivable in respect of insurance contracts issued by or on behalf of the

insurance company, including also outgoing re-insurance premiums, and after

deduction of taxes and parafiscal contribution charged by reference to the amount of

individual premiums or the total volume of premiums.

Article 16

Notification of Concentration

(1) Any intended concentration, pursuant to Articles 12 and 14 of this Act, is obliged to

be notified by undertakings-parties to the concentration to the Council of

Competition within 8 (eight) days of the conclusion of the agreement, the

announcement of the public bid for shares or acquisition of controlling interest,

depending on what action takes place the first.

(2) A concentration in acquisition of control on the whole or parts of one or more

undertakings by another undertaking, shall be notified by the undertaking acquiring

control, and in all the other cases, the concentration shall be notified jointly.

(3) The Council of Competition may be published the data contained in the notification

on concentration in a daily newspaper and “Official Gazette of BiH”, containing

particularly the following:

a) names of the undertakings-parties to the concentration;

b) nature of the concentration; and

c) the economic sector within to which the concentration applies.

Article 17

Appraisal of Concentrations

In making the assessment of intended concentration, the Council of Competition shall

analyze the positive and negative effects, or whether that concentration creates or strengthens

dominant position which will result in the significant distortion of market competition, in

particular:

a) the structure of the relevant market;


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b) the effects of the concentration concerned on other actual and potential competitors;

c) the market position of parties in competition, their market shares, economic and

financial power;

d) alternatives available to suppliers and users;

e) economic, legal and other barriers to entry to the market;

f) level of internal and international competitiveness of the parties to concentration;

g) supply and demand trends for the relevant goods and/or services;

h) the trends of technical and economic progress;

i) consumer interests.

Article 18

Decision on Concentration

(1) When the Council of Competition finds that the implementation of the

concentration falls within the scope of Articles 12 and 14 of this Act, and raises

serious consequence in distortion of competition in the relevant market, it shall

make a decision on the initiation of proceedings.

(2) Following the completed proceedings, within the time limits laid down in Article 41

of this Act, the Council of Competition shall make one of the following decisions:

a) the concentration concerned is compatible;

b) the concentration concerned is incompatible;

c) the concentration concerned is conditionally compatible.

(3) By the decision from paragraph (2), item c) of this Article declaring a concentration

conditionally compatible, the Council of Competition shall impose the measures

and conditions and the time limits for the purpose of insuring their implementation.

(4) As a rule, the parties to the concentration of paragraph (2), item c) of this Article

may pursue the activities relating to the implementation of the concentration

concerned, as soon as the imposed measures, conditions and the time limits referred

to in paragraph (3) of this Article have been fulfilled, unless the Council of

Competition for a particularly legitimate reason decides otherwise.

(5) On the basis of information and documentation submitted with the notification on

intended concentration and the degree of probable infringement of competition rules

by such a concentration and the estimation that such a concentration does not have

negative effects, the Council of Competition may declare a decision within a 60

(sixty) days period.

(6) If the Council of Competition does not declare such a decision within the time

limits laid down in Article 41 of this Act, the concentration shall be deemed

compatible.

(7) Council of Competition may, ex officio or upon the request of a party, amend the

decision taken under paragraph (2) of this Article when the parties cannot fulfil

certain conditions imposed on them or if they infringe certain measures set forth in

the decision taken by the Council of Competition, owing to particular circumstances

which are not predicted or avoided and which are beyond their control.

(8) The implementation of concentration is not possible before the issuance of a

decision confirming the compatibility of the concentration concerned with rules laid

down in Articles 12 and 14 of this Act.


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(9) The provision of paragraph (8) of this Article shall not prevent the implementation

of public bid for shares which has been notified to the competent bodies, in

accordance with the legislation in force, as well as the activities related to the

acquisition of control over the undertakings which is regulated by other regulations.

Article 19

Measures Following the Implementation of Prohibited Concentration

(1) The Council of Competition shall, ex officio or upon the request of the third party

by means of a separate decision, propose all indispensable measures aimed to

restore free market competition in the relevant market and set the deadlines for their

implementation, in cases when:

a) the concentration concerned has been implemented contrary to the decision

of Council of Competition by which the concentration has been assessed as

incompatible with the means of Article 18, paragraph (2), item b) of this

Act;

b) the concentration concerned has been implemented without submittal of a

prior notification of concentration, and has as its effect the significant

impediment of market competition, pursuant to Article 13 of this Act.

(2) By a decision from paragraph (1) of this Article, the Council of Competition may,

in particular:

a) order for the shares or share capital acquired to be divested(transferred);

b) prohibit or restrict the realization of voting rights achieved by the shares or

share capital of the undertakings to the concentration, and end the joint

venture or any other form of control pursuant to Article 14 of this Act by

which a prohibited concentration has been put into effect.

III COMPETITION AUTORITY

Article 20


(1) The Council of Competition, as regards to this Act is an entity with a power to

implement the market competition protection.

(2) As a part of the Council of Competition, the Offices for Competition in Federation

of Bosnia and Herzegovina and Republic of Srpska act as the organizing units

outside the seat of the Council of Competition.

Article 21

Status of the Council of Competition

(1) The Council of Competition is an independent entity obliged to ensure consistent

implementation of this Act on the whole territory of Bosnia and Herzegovina and it

has the exclusive competence in making decisions on the presence of prohibited

competition activities in the market.

(2) The Council of Competition is a legal person and its seat is in Sarajevo.

(3) The funds for the duties and activities of competencies pursued by the Council of

Competition are provided from the Budget of institutions of Bosnia and

Herzegovina.


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Article 22

The Structure of the Council of Competition

(1) The Council of Competition consists of six members, and they are appointed for a

six-year term of office with the possibility of one more reappointment. The

members of the Council of Competition may not be relieved from the duty before

the term of office expired, except in cases set forth in Article 23 of this Act.

(2) Members of the Council of Competition shall be selected among recognized experts

in the certain professional fields and their status shall be equal to such of

administrative judges and incompatible with any direct or indirect, permanent or

periodical duty, with the exception of academic activities and the work in

professional and scientific bodies.

(3) The appointment of the members of the Council of Competition shall be as follows:

a) three members of the Council of Competition shall be appointed by

Council of Ministers of Bosnia and Herzegovina, with one member per

each of the three constituent nations;

b) two members shall be appointed by the Government of the Federation of

Bosnia and Herzegovina;

c) one member shall be appointed by the Government of the Republic of

Srpska.

(4) At the proposal of the Council of Competition, the Council of Ministers of Bosnia

and Herzegovina shall appoint one member as the President of the Council of

Competition for a one-year term without the possibility of reappointment during the

term of office of the member of the Council of Competition.

Article 23

Early Termination of the Term of Office

(1) The term of office of a member of the Council of Competition may terminate before

the end of the term only in the cases of:

a) death,

b) resignation,

c) revocation of the term at the proposal of the Council of Competition, for

the following reasons:

1) performance of an incompatible duty as set forth in Article 22,

paragraph (2) of this Act;

2) unexcused absence from three successive sessions of the Council of

Competition;

3) irresponsible, negligent or poor performance.

(2) In case of revocation of a member of the Council of Competition term of office

pursuant to the provisions of paragraph (1), item c) of this Article, the Council of

Competition shall make a decision without the vote of the member in question.

(3) In case of an early termination of the member of the Council of Competition term of

office, the bodies referred to in Article 22, paragraph (3) of this Act shall appoint

another member of the Council of Competition for the remaining term of office

period.


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Article 24

Functioning and Decision-making Methods of the Council of Competition

(1) Valid decisions of the Council of Competition shall be made only if minimum five

(5) members of the Council of Competition are present at the session.

(2) The Council of Competition takes decision with the consent of a majority of the

present members’ votes, whereby every decision must be voted upon by at least one

representative of each constituent nation. A member of the Council of Competition

may not abstain from voting.

(3) The President of the Council of Competition shall be authorized to:

a) manage the activities of the Council of Competition;

b) represent the Council of Competition;

c) convene and preside over the sessions of the Council of Competition, that

is to take place at least once a month;

d) draw up an agenda for every session which may be amended in a session at

the request of two members;

e) sign all decisions and other acts of the Council of Competition.

(4) The Council of Competition shall enact the Rule-book to define the working

methods, decision making process as well as the other issues related to the work of

the Council of Competition.

Article 25

Competence of the Council of Competition

(1) In the performance of its activities in accordance with this Act and the other

regulations which regulate the competition policy in Bosnia and Herzegovina, the

Council of Competition shall have the competence to:

a) make by-law acts based on the provisions of this Act and the other by-laws

necessary for its implementation;

b) regulate the definitions and calculation methods for specific activity areas,

such as banking, insurance, etc.;

c) regulate and provides interpretation of general and specific definitions of

the competition terms, as well as the calculation methods for the key

competition terms;

d) decide on requests for the initiation and conduct of proceedings;

e) make administrative acts to finalize a proceeding before the Council of

Competition;

f) provide opinions and recommendations on any aspect of competition,

either ex officio or at the request of the state authorities, undertakings or

associations;

g) make internal acts on the internal organization of the Council of

Competition, except for the Rule Book on the internal organization and

systematization which is being made with the consent of the Council of

Ministers of Bosnia and Herzegovina;

h) initiate the change and amendments to the Act on Competition;

i) propose to the Council of Ministers of Bosnia and Herzegovina the

decision on the amount of administrative taxes relating to the practices

before the Council of Competition.


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(2) In relation to the draft versions and the proposals of the act and the other regulations

in the areas which influence on the market competition and which are to be

submitted by the proposal makers, the Council of Competition shall provide opinion

on their consent to this Act.

(3) In the implementation of this Act and the other regulations in the field of

competition, the Council of Competition may establish the expert and advisory

bodies that may assist in the decision making process.

(4) The Council of Competition shall cooperate with international and national

organizations and institutions in the area of competition, and, on this basis, it may

provide and request all the data and information related to factual and legal issues,

also including confidential data. In relation to the exchange of confidential data,

legitimate business interests of the undertakings in question must be protected in

accordance with the regulations.

(5) The Council of Competition shall prepare the report on performance and the annual

report which is to be submitted to the Council of Ministers of Bosnia and

Herzegovina for approval. The Council of Competition shall publish the annual

report in public.

IV DECISION-MAKING PROCEDURE

Article 26

Application of Rules Regulating Proceedings

In the proceedings before the Council of Competition, unless regulated differently by this

Act, the Act on Administrative Procedure of Bosnia and Herzegovina (“Official Gazette

BIH”, No. 29/02) shall be applied.

Article 27

Initiation of the Proceedings

(1) The Council of Competition initiates proceedings pursuant to this Act, ex officio or

at a party's request.

(2) The Council of Competition shall initiate proceedings, ex officio if it finds that the

practice concerned is likely to cause considerable prevention, restriction or

distortion of competition.

(3) The request for initiation of the proceedings before the Council of Competition

may, in accordance with the provisions of this Act, be submitted by:

a) any legal and natural person having a legal or economic interest;

b) a chambers of commerce, associations of employers and entrepreneurs;

c) a consumer protection associations;

d) an executive power bodies in Bosnia and Herzegovina.

Article 28

Request for the Initiation of the Proceedings

(1) A request for initiation of the proceedings before the Council of Competition must

contain:


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a) the name of the seat of the legal person concerned, or the name and

surname and residence of the authorized natural person - the applicant;

b) relevant data by means of which it may be established against whom the

request is being made;

c) description of facts of the case, practice and circumstances which led to the

applicant’s request.

(2) Together with the request for initiation of the proceedings, the applicant may

enclose, in particular:

a) Relevant documents and other available evidence which prove the

allegations laid down in paragraph (1), item c) of this Article;

b) evaluation of the relevant market;

c) evaluation of the market share of the applicant and the market share of the

competitors in the relevant market;

d) court record certificate, work permit or the other relevant documents

proving the applicant’s registration ;

e) the annual report, financial reports and the other accounting documents of

the applicant for financial year the proceeding the submittal of the request.

(3) The day of the receipt of the request is the day on which the Council of Competition

receives the complete and adequate data referred to in paragraph (1) of this Article.

The Council of Competition shall, by delivering the confirmation in written form,

inform the applicant about the receipt of the complete and adequate request.

Article 29

Application for Individual Exemption of the Agreement

(1) Together with the application for individual exemption of the agreement, the

following documents are to be enclosed:

a) original or certified copy of the agreement, i.e. the certified translation of

an agreement, if the official text of the agreement is not written in the

official languages in use in Bosnia and Herzegovina;

b) court record certificate, work permit and the other relevant documents

proving the applicant’s registration;

c) the annual report, financial reports and the other accounting documents for

the financial year which proceeds the conclusion of the agreement

concerned(all of the parties to the agreement);

d) other relevant data which the Council of Competition shall deem

necessary.

(2) The following documents may be enclosed to the application for individual

exemption of the agreement:

a) evaluation of the relevant market;

b) evaluation of the market share of parties to the agreement and the market

share of their competitors in the market.

(3) The Council of Competition shall, by delivering the confirmation in written form,



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Article 30

Notification of Intended Concentration

(1) Together with the notification of the intended concentration, the documents to be

enclosed are:

a) the original or certified copy of the documents, proving the legal grounds

for the concentration; or certified translation, if the official text of the

agreement is not in the official languages in use in Bosnia and

Herzegovina,

b) annual financial reports for the parties to the concentration for the financial

year proceeding the concentration;

c) the other data regulated by the regulation on concentration.

(2) The notifying party shall obligatory state in the application whether she/he plans to

submit request for appraisal of concentration to some other body authorised to

assess concentration outside the territory of Bosnia and Herzegovina or whether the

notifying party has already submitted such a request, and deliver the decision of this

body if the decision thereof has already been rendered.

(3) The Council of Competition shall, by delivering the confirmation in written form,


Article 31

Amendment to the Request and Waiving the Request

(1) When the applicant requesting for the institution of the proceedings before the

Council of Competition does not enclose and submit all data pursuant to this Act,

the Council of Competition shall ask for additional relevant information from the

applicant.

(2) If the applicant fails to act in accordance with request of the Council of Competition

stated in the paragraph (1) of this Article, within eight (8) days, it shall be deemed

that the applicant has waived the request. In specific circumstances, in the case of

justifiable reason, at the party’s request, the Council of Competition may extend the

time limit for additional 15 (fifteen) days.

Article 32

Initiation of the Proceedings

(1) The Council of Competition shall make the resolution on instituting the proceedings

ex officio or upon the receipt of request pursuant to the provisions of this Act. The

resolution on institution of the proceedings shall contains in particular:

a) reference to the related case;

b) provisions of this Act pursuant to which the proceedings have been

instituted;

c) the request for submittal of the relevant documentation.

(2) The Council of Competition is obliged to made the resolution on instituting the

proceedings within 15 (fifteen) days upon the receipt of complete and orderly

request.

(3) The appeal against the resolution on instituting the proceedings is not allowed.


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Article 33

Response to a Request

(1) With the exception of the data which is considered to be a business secret pursuant

to Article 38 of this Act, the Council of Competition shall deliver copies of the

resolution on the institution of the proceedings and the request for the institution of

the proceedings referred to in Articles 27 and 28 of this Act, to the party against

which the procedure has been made and to the persons established to have the status

of a party in the proceedings.

(2) The response shall be provided within a time limit set by the Council of

Competition in each individual case, which may neither be shorter than 8 (eight)

days nor exceed 30 (thirty) days.

(3) Within the determined time limit, a party is obliged to supply the Council of

Competition with the required response and the other information and documents

relating to the request.

(4) Without prejudice to paragraphs (2) and (3) of this Article, in the case of justifiable

reasons, a party may make a request for the time limit to be extended for submitting

its response. The Council of Competition may approve the extension of the time

limit which may not exceed 30 (thirty) days.

(5) If a party does not act according to the request and the time limit set by the Council

of Competition, or if it declares that it is not able to act according to the request, the

Council of Competition shall take all necessary measures pursuant to Chapter V of

this Act whereas the facts and circumstances relevant to the proceedings shall be

established ex officio on the ground of the Council of Competition own findings,

data and documents available.

Article 34

Carry out a Proceedings

(1) After the resolution on instituting the proceedings is made, the Council of

Competition shall appoint a responsible member of the Council of Competition for

managing the proceedings and a responsible official for carrying out the

proceedings (hereinafter: an official).

(2) An official shall be obliged to follow the instructions of a responsible member of

the Council of Competition pursuant to paragraph (1) of this Article and to submit

regularly the information and the documents collected in the course of the

proceedings.

(3) Responsible member of the Council of Competition, an official and the other staff

who provide professional support in the course of the proceedings, perform official

duties on the basis of written authority or ordinance of the Council of Competition.

The ordinance shall contain, in particular, the subject and the purpose of the

proceedings and the fines provided for in case of the obstruction or in case of

intentional delivery of false, incorrect and misleading information.

(4) Responsible member of the Council of Competition, an official person and the other

staffs are obliged to show written authorization or ordinance, issued by the Council

of Competition, before they start with the carrying out of their official activities.


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Article 35

Collection of Data

(1) In the course of the proceedings, at the request of the Council of Competition, the

official person, parties and other legal and natural persons are obliged to:

a) submit all the required date such as written statements and documents,

disregarding the media they are announced in;

b) ensure direct access to all business premises, movable and immovable

property, business books, databases and other documents, without being

obstructed by business, state or technical secret;

c) submit all the necessary data from the other persons which could

contribute to solving and explaining certain issues on prevention,

limitation or distortion of market competition;

d) ensure the carrying out of all other duties considered necessary for the

purpose of stating all the relevant facts to the procedure.

(2) If there is a reasonable doubt that any of the parties to the proceeding or other

persons hold in possession documents or other instruments relevant to the

establishing of the substantive facts in the proceedings, and they do not want to

produce these documents for inspection, the competent court shall be requested to

issue a written warrant ordering the search of an apartment or premises and the

other persons as well as the seizure of items and documents in possession of the

parties or other persons.

(3) The request from paragraph (1) of this Article must contain the legal basis, subject

matter and purpose of the request, limitation period for implementation of the

request and the penalties for refusal to act according to this request which are

regulated by this Act.

Article 36

Burden of Proof

(1) In any request related to the application of the provisions on competition stated in

this Act, the burden of proof shall rest on the party which submits the request for

initiation of the proceedings.

(2) An undertaking or association of undertakings having the operating profit or

exempted by Article 4, paragraph (3) or Articles 5 and 7 of this Act, shall bear the

burden of proving.

Article 37

Rights of Access to Document

(1) Parties to the proceedings carrying out before the Council of Competition have the

right of access to case files.

(2) At a party's request, the Council of Competition shall make a copy of record or

single documents delivered by the other parties.

(3) Request for access to the documents stated in paragraph (1) of this Article shall be

submitted in written form to the Council of Competition. The Council of

Competition shall set the date for the inspection of documents within eight (8) days

period from the day when the request was received.


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(4) Without prejudice to paragraph (1) or (2) of this Article, the documents or draft of

the decisions of the Council of Competition, official statement and protocols from

the sessions of the Council of Competition, internal instructions and notes on the

case, as well as the other documents considered an official secret pursuant to Article

38 of this Act may neither be inspected nor photocopied.

Article 38

Professional/Official Secrecy

(1) The members of the Council of Competition, the official persons and the other staff

are obliged to keep official secret, irrespective of the way they come to know it, and

the obligation of the official secret shall also continue to be in effect after expiry of

their engagement with the Council of Competition.

(2) Pursuant to paragraph (1) of this Article, official secret is particularly considered to

be:

a) all which is defined to be an official secret by the Act or other regulations;

b) all which is defined, on the basis of the law and other documents to be an

official secret or business secret of parties in the procedure or other

persons;

c) all which is particularly defined by the parties in the procedure or other

persons as business secret;

(3) Without prejudice to paragraph (1) and (2) of this Article, data and documents

which have been made accessible to the general public in any way, or published to

be available to the general public pursuant to specific regulations, shall not be

considered an official secret.

Article 39

Oral Hearing

(1) It is obligatory to hold the oral hearing in all cases with parties of contrary interest.

The oral hearing is, as a rule, public.

(2) Without prejudice to the paragraph (1) of this Article, if the Council of Competition,

after it has received the written statement of the party against which it has started

the proceedings, decides that the facts of the case between the parties are beyond

dispute and that there are no other hindrances preventing the decision to be made,

and if it is in the public interest, the Council of Competition may make a decision

without calling for the oral hearing.

(3) An oral hearing is to be conducted in each case when it is deemed useful.

(4) If any of the summoned parties, or their attorneys, fails to appear at the first oral

hearing in the proceedings, as a rule, the oral hearing shall be postponed and a new

one shall be called.

(5) If any of the summoned parties in the proceedings, or the person authorized by the

parties, fails to appear at the following oral hearing convened in accordance with

the provisions of paragraph (4) of this Article, as a rule, the Council of Competition

shall not convene another oral hearing, but shall make its decision on the basis of its

findings, available data and documents.


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Article 40

Interim Measures

(1) The Council of Competition may decide on interim measures on the basis of the

preliminary determined infringements where it deems that particular activities of

restriction, prevention or distortion of competition, with the meaning of this Act,

represent a risk by creating a direct restraining influence on individual undertakings,

or on particular sectors of the economy or consumers′ interests.

(2) In its decision on interim measures referred to in paragraph (1) of this Article, the

Council of Competition shall suspend all activities, insist on meeting of particular

conditions or impose other measure reasonably necessary to eliminate prevention,

restriction or distortion of market competition. As a rule, the duration of the interim

measures may not exceed the period of 3 (three) months, but may be prolonged if

this proves to be necessary and reasonable.

Article 41

Time Limits Period

(1) The Council of Competition is obliged to issue a final decision within the time limit

of a 6 (six) months following the day when the resolution authorizing the institution

of the proceedings is adopted.

(2) The Council of Competition may extend the time limit for making the final decision

referred to in the paragraph (1) of this Article and Articles 5 and 11, for a

subsequent period of three (3) months in cases where it is necessary to carry out

additional expertise or analyses defining the state of facts and examination of

evidences, or where delicate economic branches or markets are concerned, about

which the Council of Competition is obliged to inform in written form the parties to

the proceedings.

Article 42

Administrative Acts

Within the meaning of Article 25 of this Act, the Council of Competition shall, in particular,

make decisions in which it:

a) assesses the compliance of the agreement with the provisions of this Act;

b) authorizes the exemption of an agreement pursuant to Article 5 of this Act;

c) determines the existence of abuse of a dominant position pursuant to Articles 10 and

11 of this Act;

d) estimates the compatibility of concentration pursuant to Article 18 of this Act;

e) orders interim measures pursuant to Article 40 of this Act;

f) determines particular measures to be taken in order to restore efficient competition

in cases of prohibited concentrations, pursuant to Article 18 of this Act;

g) makes other decisions and resolutions pursuant to the provisions of this Act.

Article 43

Final Decisions of the Council of Competition

(1) Upon the completion of the proceeding, a responsible member of the Council of

Competition shall submit to the Council of Competition a report on the

implemented proceeding together with the proposals to the decision.


30

(2) At a session, the Council of Competition makes the final decision on whether an

infringement of this Act has been committed.

(3) The final decision referred to in paragraph (2) of this Article includes

recommendations and/or sanctions and other measures to the parties in proceedings.

(4) Before the final decision making, the Council of Competition may inform the

parties in written form on the content of the decision which shall be made.

(5) At the request of a party or ex officio, the Council of Competition may re-examine

its final decision in the following cases:

a) where there has been a material change in any of the facts on the basis of

which the decision was made and which significantly have influence on the

market competition;

b) where the parties concerned act contrary to the obligations determined by

the Council of Competition;

c) where the decision was based on incomplete, incorrect and misleading

information provided by the parties.

(6) The final decision of the Council of Competition shall be issued without prejudice

to potential criminal and/or civic responsibility as to which a decision is taken by

the competent courts.

(7) In favour of the assessment of the case in question, the Council of Competition may

apply the practice of the European Court of Justice and the decisions of the

European Commission.

Article 44

Publication of Decision

(1) Decision of the Council of Competition shall be delivered to the parties to the

proceedings and it shall be published in the Official Gazettes of Bosnia and

Herzegovina, in the official gazettes of the entities and Brčko District Bosnia and

Herzegovina.

(2) The decisions laid down in paragraph (1) of this Article shall contain the names of

the parties to the proceedings and the main decision content, including the set

penalties. The Council of Competition shall take account of the legitimate interests

of undertakings in relation to the protection of their business secrets.

Article 45

Implementation of Decisions

Decisions made by the Council of Competition are legally binding throughout the territory of

Bosnia and Herzegovina and effective following the day of their publication.

Article 46

Judicial Protection

(1) The decision of the Council of Competition is final.


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(2) The injured party to the proceedings may file an administrative dispute before the

Court of Bosnia and Herzegovina, within 30 (thirty) days from the date of receipt or

the publication of such decision.

Article 47

Enforced Execution of Decisions

(1) The Council of Competition may request the legal assistance from the competent

bodies as to the enforced execution of such decision if the parties to a proceeding

fail to implement or execute a decision.

(2) When requesting the assistance, the Council of Competition has to specify the type

of the measures required for such enforced execution.

(3) When implementing the enforced measures, the competent bodies are obliged to act

in conformity with the request of the Council of Competition and adhere to the

measures indicated in the request.

V PENALTY PROVISIONS

Article 48

Fines for Severe Infringements of this Act

(1) The undertakings or natural person, shall be fined at most 10 (ten) % of value of its

total annual income earned in the financial year preceding the year when the

infringement is committed, if it:

a) concludes a prohibited agreement or participate in any other way in an

agreement that caused prevention, restriction or distortion of the

competition in the sense of Article 4 of this Act;

b) abuses a dominant position as regulated in the provisions laid down in

Article 10 of this Act;

c) participates in the prohibited concentration of undertakings, pursuant to the

provisions of Article 13 of this Act;

d) fails to comply with the decisions made by the Council of Competition

pursuant to Article 42 of this Act.

(2) The responsible persons of the undertakings shall be fined pursuant to paragraph (1)

of this Article, an amount ranging from 15,000 KM to 50,000 KM.

Article 49

Fines for Other Infringements of this Act

(1) An undertaking shall be fined at most 1 (one) % of the value of its total annual

income earned in the preceding business year , if it:

a) acts contrary to the request, in sense of Articles 33 and 35 of this Act, by

delivering incorrect and misleading information or not providing the

necessary information within the set time limit ;

b) fails to notify on the proposed concentration pursuant to Article 16 of this

Act;

c) submits incorrect and misleading information in the process of

concentration appraisal, pursuant to Articles 16, 17 and 18 of this Act;


32

d) fails to comply with the decision or resolution of the Council of

Competition pursuant to Article 42, paragraph (1), item g) of this Act or

fails to act according to the written order of the competent court.

(2) The responsible parties of the undertakings concerned shall be fined pursuant to

paragraph (1) of this Article, an amount ranging from 5,000 KM to 15,000 KM.

Article 50

Periodic Penalty Payment

(1) The Council of Competition may impose on the parties the periodic penalty

payments not exceeding 5 (five) % of the average daily income in the preceding

year.

(2) The forms of periodic penalty payment shall be more closely define in by-law act of

the Council of Competition.

Article 51

Fines for Persons not Parties to the Proceedings

The Council of Competition may impose fines on legal and /or natural persons that are not

parties to the proceedings, in case they fail to act upon the request or order of the Council of

Competition pursuant to Articles 33 and 35 of this Act, and in particular:

a) for legal persons, an amount ranging from 5,000 KM and 15,000 KM;

b) for responsible persons of the legal persons, an amount ranging from 1,500 KM to

3,000 KM;

c) for natural persons, an amount ranging from 1,500 KM and 3,000 KM.

Article 52

Fixing of the Amount of the Fine

In fixing the amount of the fine, the Council of Competition shall take into consideration

both the gravity and the duration of the infringement of this Act.

Article 53

Payment of Fines

(1) Fines pursuant to Articles 48 and 49 of this Act relate to the associations of

undertakings.

(2) When a fine is imposed on an association of undertakings, taking account of the

income of its members, and the association is not solvent, the association is obliged

to call for contributions from its members to cover the amount of the fine.

(3) When such contributions have not been made to the association within a time-limit

defined by the Council of Competition, any of the undertaking-member of the

association may be required to pay the fine.


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Article 54

Leniency Policy

(1) The Council of Competition may grant immunity from any fine or reduce of a fine

to an undertaking for the violation of the provisions of Article 4 of this Act, if, in

the course of proceedings, an undertaking willingly provides the decisive evidence

important for finding an infringement, or if it ends its involvement in the prohibited

activities at the time of submitting of evidences.

(2) If an undertaking realizes voluntary cooperation pursuant to paragraph (1) of this

Article, the Council of Competition may, fully or partially, grant the undertaking

immunity from any fine.

(3) Immunity from any fine or reduce of a fine pursuant to paragraphs (1) and (2) of

this Article shall be granted by the Council of Competitions on the condition when:

a) submitting of evidence happens at the time when the Council of

Competition has no information required for the institution of proceedings

ex officio;

b) an undertaking effectively cooperates to the Council of Competition during

the whole time of the proceedings;

c) at the time of submitting of evidence, an economic subject ends its

participation in an agreement, decision or concerted practice and does not

compel other economic subjects to participate therein.

(4) Further procedure of granting immunity from any fine or reduce of a fine shall be

more closely defined in the by-law act issued by the Council of Competition.

Article 55

Limitation Periods for the Imposition of Penalties

(1) The limitation period for the imposition of fines pursuant to Article 48 of this Act

shall begin to run after the expiry of a 5 (five) year period, while the limitation

period for the imposition of fines pursuant to Articles 49 and 50 of this Act shall

begin to run after the expiry of a 3 (three) year period.

(2) The limitation period shall also begin to run on the day on which the infringement is

committed. In the case of continuing or repeated infringements of the Act,

limitation time shall begin to run on the day on which the infringement ceases.

(3) Any action taken by the Council of Competition for the purpose of carrying out

investigation or proceedings in respect of an infringement shall interrupt the

limitation period for the imposition of fines or periodic penalty payments. The

limitation period shall be interrupted with effect from the date when at least one

undertaking or association of undertakings–parties to the infringement is notified on

the action. Actions which interrupt the running of the limitation period shall include

in particular the following:

a) written requests for information from the Council of Competition;

b) written authorizations to conduct proceedings issued to its official by the

Council of Competition;

c) the initiation of proceedings by the Council of Competition;

d) notification on resolution of the Council of Competition authorizing the

initiate of the proceedings.


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(4) The interruption of the limitation period shall relate to all the undertakings which

have participated in the infringement.

(5) The limitation period concerned shall be restarted after any interruption. The

limitation period shall expire at the latest on the day when the double time elapse

without imposed a fine or a periodic penalty payment by the Council of

Competition.

Article 56

Limitation Period for the Enforcement of Penalties

(1) The limitation period for the enforcement of fines pursuant to Articles 48, 49 and 50

of this Act shall begin to run after the expiry of a 5 (five) year period.

(2) The limitation period shall begin to run on the day on which the decision becomes

final.

(3) The limitation period for the enforcement of penalties shall be interrupted:

a) by notification of a decision on adjustment of the original amount of the

fine or periodic penalty payment or rejection of the request for adjustment;

b) by any action of the Council of Competition designed to enforce payment

of the fine or periodic penalty payment.

(4) After any interruption of the limitation period, the time shall be restarted.

(5) The limitation period for the enforcement of penalties shall be suspended for as long

as:

a) the time to pay is allowed;

b) the enforcement of payment is suspended pursuant to a decision of the

competent court.

VI TRANSITIONAL AND FINAL PROVISIONS

Article 57

Transitional Period

(1) Offices for Competition and Consumer Protection (hereinafter: OCCP) established

on the basis of the Act on Competition (Official Gazette BIH, No 30/01) shall

perform the tasks of the Office for Competition established by this Act, until 31st

December 2005.

(2) As of January 1st 2006, the competencies of the Offices for Competition and

Consumer Protection (OCCP) within the scope of consumer protection shall start to

be exercised within the Council of Competition, pursuant to Article 20 of this Act.

(3) As of January 1st 2006, the competencies of the Offices for Competition and

Consumer Protection (OCCP) within the scope of consumer protection shall start to

be exercised by the respective bodies established by the regulations on consumer

protection.

(4) As of January 1st 2006, the Council of Competition shall take over the employees of

the Offices for Competition and Consumer Protection (OCCP) who are carrying out

duties within the scope of competition, pursuant to the Law on Civil Service in the

institutions of Bosnia and Herzegovina (Official Gazette BIH, No 19/02, 35/03,


35

4/04, 17/04, 26/04 and 37/04), as well as the equipment and the other means

pertaining to them.

(5) The status of the employees of the Offices for Competition and Consumer

Protection (OCCP) who are carrying out the duties within the scope of consumer

protection shall be defined by the regulations regulating the duties within the scope

of the consumer protection.

(6) The number of employees in the Offices for Competition and Consumer Protection

(OCCP), who are carrying out the duties within the scope of competition until 31st

December 2005, may not be increased without the consent of the Council of

Competition.

Article 58

Enactment of By-laws

The Council of Competition shall adopt the regulations and other by-law acts related to the

implementation of the provisions of this Act within six (6) months starting from the entry

into force of this Act.

Article 59

Previously Initiated Proceedings

The proceedings initiated before the Council of Competition pursuant to the provisions of the

Act on Competition (“Official Gazette BIH”, No 30/01) and not completed until the day of

entry into force of this Act, shall be continued pursuant to the provisions of this Act.

Article 60

Income from Taxes and Fines

Taxes and fines imposed under the decisions of the Council of Competition represent the

income of the Budget of Bosnia and Herzegovina institutions.

Article 61

Announcement

The Act on Competition (“Official Gazette BIH”, No 30/01) shall cease to be in effect on the

first day of application of this Act, except the provisions related to the competencies of the

Offices for Competition and Consumer Protection which are to be applied until 31st

December 2005.

Article 62

Entry into Force

This Act shall enter into force on the eighth day after the publication in the “Official Gazette

Bosnia and Herzegovina” and shall also be published in the official gazettes of the Entities

and Brčko District of Bosnia and Herzegovina.

Chairman Chairman

of the House of Representatives of the House of Peoples

of BIH Parliamentary Assembly of BIH Parliamentary Assembly

Sefik Dzaferovic Goran Milojevic

REGULATION ON THE DEFINITION OF

A RELEVANT MARKET



39

Pursuant to Article 25, paragraph (1), item a) and Article 3, paragraph (5) of the Act on

Competition (“Official Gazette of BiH”, No. 48/05), the Competition Council, in its 22nd

session held on 24 January 2006, has adopted

REGULATION ON THE DEFINITION OF A RELEVANT MARKET


Article 1

Subject Matter

This Regulation shall determine the method, criteria and the procedures for defining the

relevant market, pursuant to Article 3 of the Act on Competition (hereinafter: the Act), as the

basis for the calculation of market shares of undertakings in the market, for the purpose of

enforcing the Act.

Article 2

Relevant Market

(1) A relevant market is defined as a market of certain products which are the subject of

business operations, performed by the undertakings in a defined geographic

territory.

(2) A relevant market shall be defined separately for each case concerned.

Article 3

Definition of a Product

According to this Regulation, the term “product”, in broader sense, comprises products

and/or services, intellectual property rights, technological and other forms (hereinafter: a

product) that become available at a market.

II RELEVANT PRODUCT MARKET AND RELEVANT GEOGRAPHIC MARKET

Article 4

Relevant Product Market

A relevant product market comprises all products which consumers and/or users consider

mutually interchangeable, under acceptable conditions, having in mind the product’s main

characteristics, quality, general use, method of use, conditions for sale and prices.

Article 5

Relevant Geographic Market

(1) The relevant geographic market comprises the whole or a significant part of the

territory of Bosnia and Herzegovina, in which the undertakings are involved in the

sales and/or purchase of relevant product under equal or sufficiently homogeneous

conditions and which can be distinguished from neighbouring geographic markets

because the conditions of competition are appreciably different in those areas.

(2) As an exception from paragraph (1) of this Article, in special cases, a relevant

geographic market may be defined at the international level.

Regulation on the Definition of a Relevant Market

40

(3) Geographic areas, in which the conditions of the market competition are extremely

different, shall not be taken into consideration in defining the relevant geographic

market.

Article 6

Criteria for Definition of a Relevant Market

(1) For the purpose of the relevant market definition, the following criteria are to be

particularly taken into account:

a) demand substitutability for the particular product,

b) supply substitutability for the particular product,

c) existence of potential market competitions, and

d) barriers to entry into the relevant market.

III CRITERIA FOR ASSESSMENT OF DEMAND SUBSTITUTION

Article 7

Criteria for Assessment of Demand Substitution

(1) The assessment of demand substitutability of specific product shall refer to the

determination of products which are viewed by customers as mutually

interchangeable, pursuant to Article 4 of this Regulation.

(2) To determine whether demand substitutability for the specific product exists the

time period that suppliers need to adjust to normal supplying the market with a

substitute product shall be taken into account.

(3) The prevailing market price of the particular product shall be taken into account in

the process of the relevant market assessment, except in case when the prevailing

market price is determined in absence of effective competition.

In case when a market price is determined in absence of another competitive

product, it shall be taken into account the fact whether the price has already been

increased due to lack of competition.

(4) In assessment of the demand substitutability of certain product, the consumers

(buyers) who are not able, despite of the change in the price of relevant product, to

accept the substitute product (substitute) shall be taken into consideration.

Article 8

Substitutable Product (Substitute)

(1) Substitute product is a product which, due to its characteristics, price, intended use

and customers′ (buyers′) habits, may substitute another (relevant) product and

therefore satisfy the equivalent needs of a consumer (buyer).

(2) The substitutability of the certain product (substitute) can be foreseen logically

when a significant number of consumers (buyers) of the relevant product switch to

another product, or another supplier of the equal (similar) product, in response to a

hypothetically small, in the range from 5% to 10%, but permanent price increase of

the relevant product.


41

(3) The assessment that one product is viewed as a substitute product (substitute) is

taken from the consumer’s/ buyer’s point of view.

(4) Information given by real or potential buyers (consumers) or other relevant

institutions may be considered within assessment of the possible substitutability of

the certain product.

(5) Information about specific product substitutability may be, particularly, required

from interested market participants, their actual and potential competitors, and

business associations in the relevant market, institutions for consumer protection

and other institutions.

IV SUPPLY SUBSTITUTABILITY

Article 9

Supply Substitutability for the Specific Product

Supply substitutability for a specific product means the ability of the producer (distributor)

to, in a case of increase in price of the relevant market, switch to production or distribution of

a substitute product in a short time, without incurring significant additional costs or risks.

Article 10

Assessment of the Potential Competition

(1) To estimate the existence of potential market competition, it is necessary to

determine its level and conditions in the relevant market under which the new

market participants, that is the undertakings may enter into the relevant market.

(2) The existence of potential competition pursuant to paragraph (1) of this Article,

shall be determined on the basis of foreseeable changes of the existing market

conditions, particularly taking into account the following criteria:

a) structure of relevant market;

b) behaviour of existing participants in a relevant market and influence on

other actual and potential market participants;

c) economic and financial powers of the market participants and their ability

to choose suppliers and users;

d) economic, legal and other barriers to entry into the relevant market;

e) trends in the market in respect of supply, demand, economic and technical

development of a relevant product;

f) the market share indicators among market participants (national and

international);

g) analysis of price changes and price discrepancies at national and

international level.

(3) In special cases, some other objectives for entry into the relevant market (e.g.

humanitarian goals and similar) may be considered.

Article 11

Barriers to Entry into the Relevant Market

(1) Barriers to entry into the relevant market (relevant product market, relevant

geographic market) comprise all obstacles which limit and restrict free access to the

market to potential market participants (undertakings).


42

(2) Barriers to entry into the relevant market are in particular:

a) legal barriers, law regulations, by-law acts and administrative regulations

(e.g. duty and other import taxes, quantitative and value restrictions, policy

on taxes and prices, state monopoly, technical regulations, norms and

standards, and likewise);

b) economic barriers, especially:

1) structural barriers (initial capital, capital investments, patents, know-

how, economy of scale, transportation costs, product differentiation,

supply and demand level, and similar barriers);

2) strategic barriers for access to a relevant market created by the existing

participants, whose behaviour and activities preclude and prevent the

other potential market participants to enter to the relevant market.

Article 12

Definition of Relevant Market in Specific Cases

(1) A relevant product market may be defined for a specific product or a group of

products, depending on the structure of the relevant market, customers' habits and

needs of the specific analysis.

(2) In order to define a relevant market pursuant to paragraph (1) of this Article, the

markets of complementary products may be analyzed, especially when the price

rising of any of the product (secondary product, that is a secondary market), which

is the constituent of the complementary product, directly affects the price rising of

the relevant product (primary product, that is a primary market).

Article 13

Definition of Relevant Geographic Market in Specific Cases

In reference to Article 5, paragraph (2) of this Regulation, the relevant geographic market

shall be defined particularly as it follows:

a) when one product is being bought by particular group of buyers (consumers) or

undertakings with their residence or seat in Bosnia and Herzegovina from natural or

legal persons or their associations or undertakings with their residence or seat

outside the territory of Bosnia and Herzegovina (e.g. when, due to the transportation

costs, the relevant products in the final borders of the market determined in the

Article 5, paragraph (1) of this Regulation, are not mutually interchangeable),

and/or

b) when undertakings from Bosnia and Herzegovina sell the products to buyers,

natural or legal persons or their associations with their residence or seat outside the

territory of Bosnia and Herzegovina (e.g. when undertakings from Bosnia and

Herzegovina express interest in international public bids).

Article 14

Market Share

(1) The market share for the undertakings operating in a particular relevant market shall

be calculated on the basis of the market share of production and/or sales of the

relevant product in the relevant market within a determined period of time.


43

The market share is a corresponding size standard of each individual undertaking in

the relevant market.

(2) The market share under paragraph (1) of this Article, shall be calculated on the basis

of total value and production and/or sales volume (expressed in the total amount of

corresponding units and value measures) of relevant product.

Additional calculation criteria shall be the utilization of data on production

capacities of an individual undertaking in comparison with total capacities utilized

in production of a relevant product.

(3) Other indicators (quantity and market value of natural resources reserves possessed

or controlled by undertaking) are used for determination of market share of the

participants or undertaking in the market.

(4) The time period referred to in paragraph (1) of this Article, is determined on annual

basis or, according to needs, it may be determined for a shorter or a longer time

period (monthly, quarterly) depending on the products and on data that is to be

collected.

(5) The total time limit for collection of the market share data, in a sense of this Article,

may not exceed 5 (five) years.

(6) The selection of methods and criteria for determination of a market share for each

case concerned depends on the availability, accuracy and reliability of existing data.

Article 15

Calculation of Market Shares

(1) For the purpose of calculating the market shares, all available data and

documentation shall be used, and in particular: data and information supplied by

undertakings-parties to the proceedings and others, different associations,

employers' associations, agencies for statistics, the Central Bank of Bosnia and

Herzegovina, banking agencies, respective ministries and other state administration

authorities, regulatory bodies, independent institutions involved in market

researches, local and regional self-government units and data collected by the

Competition Council.

(2) When it appears to be necessary, the data may be collected through the responses to

surveys done among customers and/or undertakings.

Article 16

Total Annual Income

(1) The total annual income of an undertaking shall be calculated on the basis of sales

of products as presented in the final account in the last completed year.

(2) The total annual income shall not include turnover realized within specific

undertaking or within the group of undertakings under the joint control.

(3) The calculation of total annual income accomplished by sales of a relevant product

in a geographic market includes the undertakings that directly or indirectly, legally

or factually, have decisive influence on management, particularly if they:


44

a) posses more than half of shares in shares capital or stocks;

b) can exercise more than half of voting rights;

c) have the right to appoint more than half of total number of members of

managers and members of directors and supervisors board;

d) have, in any other way, the right to manage business operations of

controlled undertaking.

(4) For the purpose of determination of total income in banks, other financial

institutions and insurance companies, instead of total annual income the following

parameters shall be taken into account:

a) as for the legal persons that provide financial services, after the deduction

of direct taxes related to them, the following sum of incomes shall be

added up:

1) interest income and similar income;

2) securities income;

3) claims for commission;

4) net profit generated from financial operations;

5) other income generated from business operations.

b) as for insurance and re-insurance companies, the value of gross premiums

that includes amounts paid and outstanding amounts related to insurance

contracts concluded by or on behalf of the insurance companies, including

re-insurance premiums, after deduction of taxes and parafiscal levies that

are collected on the basis of individual premiums or in comparison with

total amount of premiums.

Article 17

Additional Data

The Competition Council may use EC Regulations, EU legislation and European Court case

law for the purpose of defining a relevant market in specific cases.

Article 18

Termination of the Previous Regulation

On the day when this Regulation enters into force, the Regulation on the definition of a

relevant market (“Official Gazette of BiH”, No. 01/05) terminates.

Article 19

Publication and Entry into Force

This Regulation shall enter into force on the eighth day following its publication in the

Official Gazette of Bosnia and Herzegovina and shall be published in official gazettes of

Entities and Brčko District of Bosnia and Herzegovina.

C.C. No. 01-01-26-101-I/06 President

Sarajevo, 24 January 2006 Sena Hatibovic

REGULATION ON THE DEFINITION OF A

DOMINANT POSITION



47

Pursuant to Article 25, paragraph (1), item i) and Article 9 of the Act on Competition

(“Official Gazette of BiH”, No. 48/05), the Council of Competition in its 23rd session, held

on 14 February 2006, has adopted

REGULATION ON THE DEFINITION OF A DOMINANT POSITION


Article 1

Subject Matter

This Regulation defines the categories, conditions and principles of determination of a

dominant position of undertakings, and criteria on abuse of a dominant position in the

relevant market of products and services of Bosnia and Herzegovina, within the meaning of

Articles 9 and 10 of the Act on Competition.

Article 2

Dominant Position of Undertakings

(1) An undertaking is in dominant position where it is, due to its market power, able to

behave and operate in the relevant market of products and services sufficiently

independently of actual or potential competitors, buyers, consumers or suppliers,

whereby efficient competition in the market is restricted and impeded.

(2) An undertaking is in dominant position in the relevant market of products and

services where it faces no competition or insignificant existing competition.

II ASSESSMENT OF THE MARKET POWER AND DOMINANT POSITION

Article 3

Assessment of the Market Power

(1) An undertaking is not dominant in the relevant market of products and services if its

market power is not significant.

(2) Significant market power of an undertaking in the relevant market shall be

determined relating to the existing or potential competitors, and particularly

considering the following criteria:

a) the market share (sale and purchase volume in the relevant market of

products and services; financial standing or production capacities);

b) structure of the relevant market and economic relation with competitors;

c) ability to keep prices above the competitive level (to limit production and

quality);

d) access to supply resources (assets) and distribution channels;

e) levels of vertical integration in the relevant market;

f) economic regulators, investment barriers for potential undertakings to

enter/exit the relevant market;

g) technological advantages, patents, intellectual and industrial property

rights and other similar rights.

Regulation on the Definition of a Dominant Position

48

Article 4

Abuses of dominant position

(1) As a rule a dominant position of an undertaking in the relevant market is not

prohibited.

(2) Any abuse of dominant position in the relevant market shall be prohibited in terms

of undertakings` operations having as their object and result the exclusion of

competitors from the market or “closing” the market to potential competitors, and

restriction and distortion of the effective market competition.

(3) Abuse of a dominant position in the relevant market within the meaning of

paragraphs (1) and (2) of this Article exists solely in a case where an undertaking

initiates unilateral decisive operations.

(4) Two and more undertakings may be dominant (collective dominance) in the

relevant market (ex. structural connections, joint policy).

III ASSESSMENT OF A DOMINANT POSITION AND MARKET SHARE

Article 5

Assessment of a Dominant Position

(1) Dominant position of an undertaking, on a case-by-case basis, may be determined

on the whole market of Bosnia and Herzegovina or on its significant part.

(2) The determination of a dominant position referred to in paragraph (1) of this

Article, shall include also the following :

a) definition of the relevant market (and supply and demand terms of

products and services, and substitutes in that market);

b) the market share of undertakings operating in the relevant market

(considering all changes within the particular period of time)

Article 6

Market Share of an Undertaking

(1) It assumes that an undertaking is dominant in the relevant market of products and

services where it holds a market share exceeding forty per cent (40%).

(2) An undertaking may be dominant if it holds a market share less than forty per cent

(40%) if other indicators (ex. bad position and small market share of the existing

competitors, serious barriers to enter the relevant market to other undertakings)

prove its dominant position.

Article 7

Market Share of two or more Undertakings

It assumes that two (2) or more undertakings may be dominant in the relevant market of

products and services if their market share jointly accounts more than sixty per cent (60%).


49

Article 8

Market Share of four or more Undertakings

It assumes that four (4) or more undertakings may be dominant in the relevant market of

products and services if their market share jointly accounts more than eighty per cent (80%).

IV ABUSE OF DOMINANT POSITION

Article 9

Abuse of Dominant Position

For the purpose of determination of abuse of a dominant position by one or more

undertakings (collective dominance) besides the criteria set out in Article 10 of the Act on

Competition, the following shall be also taken into consideration:

a) price discrimination (different prices) of the certain product or service in the

different relative geographic markets;

b) permanent supply and sale of products and services to buyers at law prices which

diverting the buyers to purchase similar products or services from competing

supplier (“loyal”-targeted sale discounts or secret discounts);

c) fixing a price of the product or service below the production costs with the view to

eliminate the competitors;

d) unjustifiable cancellation or reducing of the production or sale of products or

services having negative consequences for consumers;

e) the limitation of production and market as result of exclusively made contracts

(special rebates, discounts, financial accounts);

f) forcing the consumers to purchase additional product or service together with the

marketed product or service;

g) the undertakings ability to determine operating terms of supply and demand in the

relevant market, providing to it unjustifiable increase of profit;

h) refuse the access of other undertakings, by providing them a reasonable financial

fee charging, to facilities, equipment, relocated network or other infrastructure

facilitates, possessed or used by the dominant undertaking in a case when other

undertakings are not able, due to legal or other reasons, to operate in the same

market (where the dominant undertaking operates) without possibility to use the

same capacities/equipment and in a case when the dominant undertaking does not

prove that the common use is not practicable due to operative, technical or other

reasons or that such a use may not be asked from them.

V FINAL PROVISIONS

Article 10

Application of European Regulations and Practice

The Council of Competition may use EC decisions, EU legislation and European Court case

law for the purpose of determination of a dominant position in specific cases.

Regulation on the Definition of a Dominant Position

50

Article 11

Notification

This Regulation shall enter into force on the eighth day following its publication in the

Official Gazette of Bosnia and Herzegovina and shall be published in official gazettes of


C.C. No. 01-01-26-102-I/06 President

Sarajevo, 14 February 2006 Sena Hatibovic

REGULATION ON AGREEMENTS OF MINOR

IMPORTANCE



53

Pursuant to Article 8, paragraph (3) and Article 25, paragraph (1), item (a) of the Act on

Competition (“Official Gazette of BiH”, No. 48/05), the Competition Council, in its 18th

session held on 4 October 2005, has adopted

REGULATION ON AGREEMENTS OF MINOR IMPORTANCE

Article 1

Subject Matter of the Regulation

This Regulation shall define the agreements of minor importance as permitted forms of

cooperation between undertakings, whose effects have insignificant influence on the

infringements of the Act on Competition (hereinafter: the Act), the conditions that

agreements of minor importance must fulfil and restrictions that such agreements may not

contain.

Article 2

Definition of Agreements of Minor Importance

An agreement shall be deemed to be an agreement of minor importance where the joint

market share of parties to the agreement and their controlled undertakings in the relevant

market concerned is insignificant, provided that such agreement has no provisions which, in

spite of insignificant market share, prevent, restrict or distort competition.

Article 3

Insignificant Market Share

Pursuant to Article 2 of this Regulation, an insignificant market share shall be considered to

be:

a) the aggregate market share of the parties to the agreement and their controlled

undertakings does not exceed ten per cent (10%) on any of the relevant markets

affected by the agreement, where the agreement is concluded between undertakings

which are actual or potential market competitors on any of those relevant markets

(hereinafter: competing undertakings),

b) the market share of each of the parties to the agreement or their controlled

undertakings does not exceed fifteen per cent (15%) on the relevant market affected

by the agreement, where the agreement is concluded between undertakings which

are not actual or potential competitors on any of those relevant markets (hereinafter:

non-competing undertakings),

c) the market share of any of the parties to the agreement or their controlled

undertakings that does not exceed ten per cent (10%) on the relevant market

affected by the agreement, in cases where it is not possible to determine whether the

agreement is concluded between competing undertakings or between non-

competing undertakings.

Article 4

Market Share Relating to Parallel Network of Agreements

In cases where competition on the relevant market is restricted or infringed by the

cumulative effect of agreements on the sale of products or services (hereinafter: products)

concluded between different suppliers or distributors, that is to say, in the cases where

parallel networks of agreements have similar effects on the market, the insignificant market

Regulation on Agreements of Minor Importance

54

share of each of the parties to the agreement or their controlled undertakings, as defined by

Article 3 of this Regulation, shall be deemed a market share of up to five per cent (5%), for

agreements concluded between competing undertakings and for agreements concluded

between non-competing undertakings.

If the relevant market is covered by parallel network of agreements which market share is

less than thirty per cent (30%), it means that a cumulative effect of a parallel network of

agreements does not restrict or distort market competition.

Article 5

Permitted Increase of Market Share

It shall be assumed that agreements do not prevent, restrict or distort market competition, if

the market shares of the parties to the agreement and their associated undertakings, as

defined by Articles 3 and 4 of this Regulation do not exceed by more than two per cent (2%)

during two successive calendar years.

Article 6

Hard Core Restrictions

Although having the insignificant market share pursuant to Articles 3 and 4 of this

Regulation, the agreements between parties to the agreement and their connected

undertakings which have as their object the prevention, restriction or distortion of market

competition pursuant to Articles 7 and 8 of this Regulation shall not be deemed to be the

agreements of minor importance.

Article 7

Hard Core Restrictions in the Agreements between Competitors

(Horizontal Agreements)

Hard core restrictions of the market competition in agreements concluded between

competing undertakings which may not be defined as agreements of minor importance

though fulfilling the conditions set out in Articles 2 and 3, paragraph (1), item a) of this

Regulation, are considered as restrictions which directly or indirectly, solely or in

combination with other undertakings controlled by the parties to the agreement have as their

object:

a) the fixing of prices when selling the products to third parties;

b) the limitation of production or sales;

c) the allocation of markets or customers.

Article 8

Hard Core Restrictions in the Agreements between Non-Competitors

(Vertical Agreements)

Hard core restrictions of the market competition in agreements concluded between non-

competing undertakings which may not be defined as agreements of minor importance,

though fulfilling the conditions pursuant to Articles 2 and 3, paragraph (1), items b) and c)

hereof, are considered as restrictions which directly or indirectly, solely or in combination

with other undertakings controlled by the parties to the agreement have as their object:

a) the restriction of the buyer's ability to determine its sale price, irrespective of the

supplier’s ability to impose a maximum sale price or recommend a sale price,

provided that the prices are not amount to a fixed or minimum sale price that are a

result of pressure from, or incentives offered by any of the parties to the agreement;


55

b) the restriction of the territory into which, or the customers to whom the buyer may

sell the contract products, except for the following cases:

- active sales into the exclusively allocated territory or to an exclusively

allocated customer group reserved to the supplier, that is to say, which are

allocated by the supplier to another buyer, provided that such a restriction

does not disable further sales by indirect buyer;

- sales to end users by a buyer operating at the wholesale level of trade;

- sales of products imposed to unauthorized distributors by the members of a

selective distribution system;

- the buyer’s ability to sell components, supplied for the purposes of

implementation, to other customers who would use them to produce the

same type of products as those produced by the supplier.

c) the restriction of active or passive sales to end-users by members of a selective

distribution system operating at the retail level of trade, not excluding the possibility

of prohibiting a member of the distribution system from operating through

unauthorized undertaking;

d) the restriction of cross-supplies of products between distributors within a selective

distribution system, including the distributions between distributors operating at

different levels of trade;

e) the restriction agreed between a supplier of components and a buyer who

implements those components, which limits the supplier’s ability to sell the

components as spare parts to end-users or to repairers or other service providers not

entrusted by the buyer with the repair or servicing of its products.

Article 9

Active and Passive Sales

(1) Active sales pursuant to Article 8 of this Regulation means sales made by active

searching or accessing to particular customers group inside another distributor's

exclusive territory, conclusion of individual agreements or taking measures to

present the products to those customers, and establishing, branches, warehouse or

organizing of distribution networks and advertising in another distributor's exclusive

territory. Active access includes visits, direct and electronic mail, advertising in the

media or other promotions in media specifically targeted at that customers group or

customers in another distributor’s exclusive territory.

(2) Passive sales pursuant to Article 8 of this Regulation mean response to requests of

individual customers, including the delivery of products to such customers, to the

extent that such responding must not be the result of active sales operations. Passive

sales in general advertising or promotion in the media or on the internet that reaches

customers in other distributors' exclusive territories or customers groups, as a result

of the technological development and easy access, and therefore it is deemed to be a

reasonable method of approaching the customers or groups of customers.

Article 10

Compliance of Concluded Agreement with this Regulation

All agreements with insignificant market share as defined by the provisions of this

Regulation, which have been concluded before this Regulation enters into force, must be

Regulation on Agreements of Minor Importance

56

brought in compliance with this Regulation within the time period of six (6) months as of the

day of its entry into force.

Article 11

Entry into Force

This Regulation shall enter into force on the eighth day following the day of publication in

the Official Gazette of Bosnia and Herzegovina and shall be published in Official Gazettes of


C.C. No. 01-01-26-506/05 President

Sarajevo, 04 October 2005 Sena Hatibovic

REGULATION ON NOTIFICATION AND

CRITERIA FOR ASSESSMENT A

CONCENTRATION OF UNDERTAKINGS



59

Pursuant to Article 25, paragraph (1), item a) of the Act on Competition (“Official Gazette of

BiH”, No. 48/05), the Council of Competition in its 34th session held on 12 October 2006 has

adopted

REGULATION ON NOTIFICATION AND CRITERIA FOR ASSESSMENT A

CONCENTRATION OF UNDERTAKINGS


Article 1

Subject Matter

This Regulation shall stipulate the applicants obliged to submit a prior notification of

concentration of undertakings, the method of submission, the contents and form of the

notification, the documentation and data which are to be enclosed to the notification, the

form and contents of the announcement on acquisition of shares or share capital of the

undertakings and the assessment criteria of the compatibility of concentrations of

undertakings in the proceedings carried out by the Council of Competition within the

meaning of the provisions stipulated by the Act on Competition (hereinafter: the Act).

II SUBMISSION OF NOTIFICATION

Article 2

Notifying Party

(1) The notification is to be submitted, in a case when the conditions laid down in

Article 14 of the Act are fulfilled, by the following party:

a) the acquiring undertaking participating in the merger or joint undertakings

participating in the merger;

b) the one or more undertakings (acquirer) acquiring a control or decisive

influence on one or more undertakings, or on more another undertaking or

on a part of another undertaking or on parts of another undertakings;

c) acquirer of the majority of shares or share capital or voting rights, or any

other way within the meaning of the provisions stipulated by the law;

d) all the participants in the joint venture on a long-term basis or a participant

in the joint venture appointed by the other participants as their joint

representative in a case of creation of a joint venture on long-term basis

(joint venture);

e) the bidder, in a case of acquiring a control or decisive influence on the

basis of a public bid (particularly in the case of acquisition of the majority

of shares or share capital or voting rights).

(2) In cases not covered by paragraph (1) of this Article the obligation to notify shall

fall on all parties to the concentration submitting a joint notification or on their

commonly appointed party to the concentration.

Article 3

Time Limit for Notification

The undertakings-parties to the concentration are obliged to notify the intended concentration

to the Council of Competition in compliance with the provisions of this Regulation within

the time limit not longer than 8 (eight) days of the conclusion of the agreement, the

Regulation on Notification and Criteria for Assessment a Concentration of Undertakings

60

announcement of a public bid or acquisition of controlling interest, depending on what action

takes place the firs, pursuant Article 16, paragraph (1) of the Act t.

III THE FORM OF NOTIFICATION

Article 4

How to Notify-Form and Way

(1) The notification, submitted in writing on an A4-sheet of paper, shall be

accompanied by both by electronic version of the notification and the supporting

documentation.

(2) The notifying party shall notify in the following way:

a) all required data as stated in Articles 8 and 9 of this Regulation shall be

written on a separate sheet of paper, providing for the possibility of adding

as many sheets as necessary for a comprehensive and complete

presentation;

b) the ordinal number and exact name of each data, according to the sequence

provided for in Articles 8 and 9 of this Regulation, shall be entered clearly

on the top of the page;

c) after the ordinal number and the name of the data, the following shall be

entered:

- the data, i.e. a comprehensive and complete description of the

circumstances relating to the concentration in question;

- a statement that the data is failed to be relevant for the assessment of

the intended concentration, indicating the reasons thereof;

- in the case laid down in Article 14, paragraph (2) of this Regulation,

state when and where the data were required, and name the reasons if

they were not available, indicating where the missing data may be

obtained by the Council of Competition.

d) following the text referring to particular information, the notifying party

shall state documentation, evidence, analyses, diagrams and other

documents proving the listed statements, which are to be supplied in the

supplement to the notification;

e) as the case may be, the notifying party shall supply other information and

descriptions, which it finds may be of assistance to the Council of

Competition in the assessment procedure;

f) at the end of the notification “Supporting documentation” shall be clearly

listed on a separate sheet of paper, followed by the list of all supporting

evidence, analyses and diagram enclosed.

Article 5

Burden of Proof

The notifying party shall be obliged to collect and submit all relevant data, documentation

and evidences necessary for the assessment of the notified concentration within the meaning

of the provisions of the Act and this Regulation.

Article 6

Language of the Notification and Number of Copies

(1) The notification, supporting and other documentation shall be submitted in one of

the official languages of Bosnia and Herzegovina and in one copy.


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(2) If the original notification, the supporting documentation and other documentation

are submitted in a foreign language, the notifying party is obliged to submit the

certified translation in one of the official languages in use in Bosnia and

Herzegovina, enclosed to the original copy or a certified photocopy of the original

document.

(3) The Council of Competition may, in particular cases, request for the original

notification and its supporting documentation to be submitted accompanied by any

number of photocopies of whole notification and all supporting documentation that

do not to be certified.

Article 7

Accuracy of Data and Official Secret

(1) The data stated in the notification must be true and complete.

(2) The notifying party is obliged to clearly point out any data in the notification,

supporting documentation and other evidences where the provisions on the business

secrecy under Article 51, paragraph (2) of the Act shall apply.

(3) The data in the notification which are not pointed out in the way described in

paragraph (2) of this Article and all data which are pointed out in the notification as

business secret and confidential in a sense of paragraph (2) of this Article but for

which the Council of Competition has established that they had been previously

published and accessible to the general public shall not be considered a business

secret.

IV CONTENTS OF THE NOTIFICATION

Article 8

Obligatory Contents of Notification

The notification must contain the following data:

a) the name (or undertaking), address and business activity of the notifying party;

b) the name (or undertaking), address and business activity of all parties to the

concentration;

c) the name and authority of the agent or representative who represents the notifying

party in submitting the notification;

d) the name, address, telephone and fax number and e-mail address of the contact

person appointed by the notifying party for the contacts and cooperation with the

Council of Competition, if this person is different from the notifying person;

e) the detailed description of the legal form of the concentration;

f) the legal basis for the concentration (the name of the document, class number, the

name or company of the parties engaged in the legal transaction in question, the

place and date of the legal transaction) such as for example:

- merger contract/agreement


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- merger contract/agreement or the corresponding decisions of the relevant

bodies of the undertakings;

- the contract/agreement by means of which the shares or share capital is

acquired;

- the contract/agreement on management;

- the contract/agreement on the profit transfer;

- decisions on amendments on the statute, decision (or contract) on

foundation of the undertaking or any other act that gives the decisive

influence to any of the parties;

- the contract/agreement on the lease of property which gives the decisive

influence to any party;

- the takeover public bid;

- the contract/agreement on the joint- venture.

g) the annual financial report for the year preceding the concentration (balance sheet,

profit/loss account, cash-flow statement, statement on changes of shareholder’s

equality, accounting policies and notes to the annual accounts, for the insurance

companies the value of total premiums paid) as well as other reports giving an

insight into the financial state of the parities to the concentration;

h) the total annual income (operational revenues, financial revenues, extraordinary

revenues) of the parties to the concentration after the deduction of the value added

tax, other taxes directly relating to the turnover and discounts, within the meaning

of Articles 14 and 15 of the Act, calculated separately for each party to the

concentration:

- worldwide level,

- in the market of Bosnia and Herzegovina;

i) the definition of the relevant market in which the parties to the concentration and

the controlled undertakings or the controlling undertakings operate, as well as the

estimates of their market shares, before and after the implementation of the

concentration;

j) the list and estimates of the market shares of the main competitors of the parties to

the concentration in the relevant market;

k) the structure of shareholders and/or share in the undertaking over which the control

or decisive influence is acquired, before and after the implementation of the

concentration (expressed in percentage);

l) the list of other undertakings in the relevant market in which the parties to the

concentration solely or jointly hold 10% or more of the share capital, or 10% or

more voting rights, accompanied by a brief description of the prevailing business

activity of the undertakings in question (connected associations);

m) the list of all undertakings in the relevant market in which the members of the

management or the supervisory board of the parties to the concentration are at the

same time the members of the management or the supervisory board, accompanied

by the brief description of the prevailing business activity of the undertakings in

question;

n) the record containing the other authorities competent for assessment of

concentrations outside of the territory of Bosnia and Herzegovina which have been


63

submitted the request for assessment of the concentration concerned or to which the

notification is intended to be submitted;

o) the detailed description of the distribution and retail network structure of the

products and/or services in the relevant market, accompanied by the separate

description of the distribution and retail network used by the parties to the

concentration (own, contractual and alike);

p) the description of the realized or intended research and development investments of

the parties to the concentration (the form and the nature of the investment or

research, their influence on the production and distribution of the products and/or

services in the relevant market, the amount of the investments in question realized

or planned and alike);

r) the description of the legitimate and economic reasons of the concentration;

s) the detailed description and argumentation of the resulting benefits for the

consumers directly derived from the implementation of concentration, particularly:

- decrease in prices of products and/or services,

- increase in quality of products and/or services,

- innovative features introduced,

- increase in the selection and the range of products and/or services for

consumers;

t) the signature of the authorized person responsible for the accuracy and authenticity

of the information in the notification;

u) the place and date of the submission of the notification.

Article 9

Other Data in the Notification

(1) Apart from the obligatory contents of the notification laid down under Article 8 of

this Regulation, the Council of Competition may request the submission of other

data which is considered relevant in the assessment of the concentration and in

particular:

a) the number of employees in the undertakings – parties to the concentration

and the number of employees in all undertakings members of the concern,

the members of which take part in the concentration;

b) the list of five main suppliers and/or five main buyers of each party to the

concentration, including the supply value;

c) the figures on sales value and sales volume calculated in convertible

marks, that is the number of units or other measure, realized in the sale of

products and/or services by the parties to the concentration in the relevant

market;

(2) All submitted data laid down under paragraph (1) of this Article are to relate to the

year preceding that of the concentration.


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Article 10

Obligatory Supporting Documentation

The notifying party is obliged to provide accompanied to the notification a copy of the

original document or certified photocopy of particular documents/identifications and other

written evidences, and particularly:

a) the excerpt from the court register or other register supplying the evidence on the

name, address and the business activity of the notifying party;

b) the excerpt from the court register or other register supplying the evidence on the

name, address and the business activity of all parties to the concentration;

c) a valid authorization if the notification is submitted by the authorized person;

d) a copy of the original or certified photocopy of the legal basis for the concentration

laid down under Article 8 of this Regulation, enclosed to the certified translation in

one of the official languages in use in Bosnia and Herzegovina, in case when the

original document is in foreign language;

e) principal annual financial reports of the parties to the concentration for the financial

year preceding the year of implementation of the concentration, consisting of the

data on the total income of all the parties to the concentration realized in the sales of

products and/or services after deduction of the value added tax, other taxes directly

relating to the turnover and rebate:

- worldwide level;

- in the market of Bosnia and Herzegovina.

f) all available analyses and studies, presentations or other reports prepared for any

member of the management, supervisory board or the chairman and/or members of

the shareholders` meeting, dealing with estimation and analysis of the concentration

from the viewpoint on the market position, market conditions and the existence of

any actual and potential competitors in the relevant market;

g) the graphic presentation (diagram) of the organizational structure of the parties to

the concentration and connected associations, where it can be seen

- the relations between the parties to the concentration and connected associations;

- the shares hold by the controlling companies in the share capital of the controlled

companies, that is the shares hold by the daughter companies within the group or

concern (expressed as percentages);

h) the report of the management giving the legal and economic explanation for the

concentration;

i) the decision of the authorities competent for assessment of concentration outside the

territory of Bosnia and Herzegovina (when it has been already made) or to note on

obligatory whether it has already submitted or shall submit the request for

assessment of the concentration;

j) the receipt on the paid administration taxes (Regulation on Amount of

Administration Taxes relating to the Practices before the Council of Competition -

“Official Gazette of BiH”, No.30/06).


65

Article 11

Other Supporting Documentation

Beside the supporting documentation stated under Article 10 of this Regulation, the Council

of Competition may request the submission of other supplements containing the information

which it considers relevant in the assessment of the notified concentration, particularly such

as:

a) principal annual financial reports for the parties to the concentration in the period of

three subsequent years preceding the year when the concentration is being

implemented, accompanied by the data on the total income of all the parties to the

concentration realized by the sales of products and/or services after the deduction of

the value added tax, other taxes directly relating to the turnover and rebates:

- worldwide level;

- in the market of Bosnia and Herzegovina.

b) the production and /or sale value and production and /or sales volume, calculated in

convertible marks, i.e. the number of units or other measures, realized in the sales of

products and/or services by the parties to the concentration in the relevant market in

the period of three subsequent years proceeding the year when the concentration is

implemented.

V SEPARATE PROVISIONS STIPULATING THE ACQUISITION OF STOCKS OR

SHARES IN THE BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL

INSTITUTIONS

Article 12

Form and Contents of the Notice

(1) The banks, insurance companies and other financial institutions, referring to the

cases under Article 12, paragraph (3) of the Act, are obliged to notify in writing of

the acquisition of the stocks or shares in other undertakings acquired in the normal

course of business of those institutions, including the securities transaction and

brokerage services for their own account or for the account of third parties

(hereinafter: the notifying party).

(2) The notice in writing shall consist of the following data, in particular:

a) the company and address of the notifying party;

b) the company, address and business activity, or the name and address of the

person for the account of which the notifying party has acquired the stocks

or shares;

c) the company name, address and business activity of the undertakings

whose stocks or shares the notifying party has acquired;

d) the structure of stocks or the structure of the business shares of the

undertakings whose shares or business shares the notifying party has

acquired (after the acquisition concerned);

e) the time limit foreseen by the notifying party to resell the acquired stocks

or shares.

(3) The notice shall be accompanied by:

a) the statement of the notifying parties confirming that they shall hold the

acquired stocks or shares on a temporary basis with the view of reselling

them;


66

b) the statement of the notifying party confirming that it shall not use the

acquired stocks or shares in any way that could make it possible to

influence the competitive behaviour of the undertaking, the stocks or

business shares of which it has acquired;

c) the statement of the notifying party confirming that it shall exercise the

voting rights for the sole purpose of sale of the whole undertaking, the

stocks or business shares of which it has acquired, or the sale of the part of

the undertaking in question (in the case it exercises the voting rights);

d) the statement of the notifying party confirming that it shall neither exercise

the rights originating from the acquired stocks or shares in any way that

could prevent, restrict or distort the competition, nor undertake any

operation with this objective.

Article 13

Extension of Period

(1) The request for extension of the period set out in Article 12, paragraph (3), item a)

of the Act shall be submitted by the notifying party at least fifteen (15) days before

the period indicated in the notice expired (Article 12, paragraph (2), item e) of this

Regulation).

(2) The request shall be submitted in writing and it shall contain:

a) the reason why the transaction of stocks or share capital has not been

possible within the period set;

b) the period for which the period set should be extended for transaction in

question to be carried out, which cannot be extended for more than six (6)

months.

(3) The Council of Competition shall pass a separate resolution as response to the

request for extension of the period.

VI EXAMINATION OF THE NOTIFICATION

Article 14

Examination of the Completeness of the Notification

(1) Upon receiving the notification the Council of Competition shall make sure whether

the notification has been submitted by the authorized person, whether it contains all

original data and supporting documentation as regulated, certified photocopies and

certified translations in one of the official languages of Bosnia and Herzegovina.

(2) In the case that the notifying party for a justifiable reasons and despite the efforts

involved, fails to collect certain data or documents which have been stipulated by

the provisions to constitute the obligatory contents of the notification, it shall be

stated so in the appropriate part of the notification, stating:

a) who from and when the notifying party tried to collect the data concerned;

b) the reasons why the relevant data were not collected;

c) where the Council of Competition should collect the missing data.

(3) In the case described under paragraph (2) of this Article, the Council of

Competition may request from the notifying party to supply in writing its own

analysis and estimations of the conditions and situation relating to the missing data.


67

(4) The notification of concentration consisting of the data laid down under Article 8 of

this Regulation and the supporting documentation as stipulated under Article 10 of

this Regulation shall be considered a complete notification.

Article 15

Receipt for the Notification

(1) The Council of Competition, when establishes the completeness of the notification,

shall issue a receipt within the meaning of Article 30, paragraph (3) of the Act.

(2) The receipt under paragraph (1) of this Article shall particularly contain:

a) register number and the date of the issuance of the receipt;

b) the name (company) or name of the notifying party, that is the authorized

person;

c) the name (company) or names of the parties to the concentration;

d) the date of submission of the notification to the Council of Competition;

e) the instruction, within the meaning of Article 18, paragraph (8) of the Act,

that the concentration may not be implemented as long as the Council of

Competition takes its final decision declaring the concentration compatible

in the sense of Articles 12 and 14 of the Act;

f) the notice informing that the time limits start pursuant to Articles 18 and

41 of the Act;

g) the signature of the president of the Council of Competition.

VII THE CRITERIA FOR ASSESSMENT OF CONCENTRATION

Article 16

Criteria for the Assessment of Concentration

In the course of the assessment of the intended concentration, the Council of Competition

shall primarily analyze the positive and negative effects, that is to say whether the

concentration concerned creates or strengthens a dominant position which will result in the

significant prevention, restriction and distortion of the market competition.

VIII DECISION ON CONCENTRATION

Article 17

Decision on Concentration

In the case when the Council of Competition does not pass a Resolution on initiation of the

assessment procedure within sixty (60) days starting from the date of the receipt issuance,

within the meaning of Article 18, paragraph (5) of the Act, the concentration shall be deemed

compatible.

Article 18

Decision on the Request

In the case when a decision on the Notification of intended concentration is not issued within

the time limits laid down in Article 18, paragraph (5) and Article 41 of the Act, the Council

of Competition shall upon the request of the notifying party issue a decision declaring the

concentration concerned compatible.


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IX FINAL PROVISIONS

Article 19

Scope of the Application

This Regulation shall apply to all concentrations defined in Article 12 of the Act.

Article 20

Entry into Force

This Regulation shall enter into force on the day of adoption, and it shall be published in the

“Official Gazette of BiH” and in official gazettes of Entities and Brcko District of Bosnia

and Herzegovina.

C.C. No.: 01-01-50-858-I/06 President

Sarajevo, 12 October 2006 Gordan Raspudic

REGULATION ON THE PROCEDURE FOR

GRANTING IMMUNITY FROM FINES

(LENIENCY POLICY)



71

Pursuant to Article 25 paragraph (1) item a) and Article 54 paragraph (4) of the Act on

Competition (Official Gazette of BH, No 48/05), the Council of Competition, in its 22nd

session, held on 24 January 2006 has adopted

REGULATION ON THE PROCEDURE FOR GRANTING IMMUNITY FROM

FINES (LENIENCY POLICY)

Article 1

(1) This Regulation shall define the procedure and conditions for granting immunity

from fines or reducing the fines in cases when an undertaking participates in an

agreement from Article 4 paragraph (1) of the Act on Competition (hereinafter: the

Act).

(2) This Regulation is applied to undertakings defined by Article 2 of the Act which

cooperate voluntarily with the Council of Competition and provide it with evidences

necessary for making a decision on infringement of the provisions defined in Article

4 paragraph (1) of the Act.

I IMMUNITY FROM FINES

Article 2

The Council of Competition shall grant to an undertaking immunity from fines which may be

otherwise imposed to the undertaking, provided that the undertaking submits evidences,

unknown to the Council of Competition at the moment of submission, relating to an

agreement defined by Article 4 paragraph (1) of the Act, which would enable issuing a

specific resolution authorizing an initiation of proceeding.

Article 3

(1) An undertaking , an applicant for immunity from fines must fulfil the following

conditions at the moment of submission of application to the Council of

Competition:

a) to end all its activities related to the agreement that violates competition;

b) the undertaking must not inform other parties to the agreement concerned

on its application;

c) the undertaking must cooperate fully, on a continuous basis and

expeditiously throughout the proceedings and provide the evidences and

information in its possession or under its control, including all forms of

information which prove the existence of infringement of Article 4

paragraph (1) of the Act.

(2) Any oral, written or electronic communication with the Council of Competition

shall be considered as the application for immunity from fines.

Article 4

(1) If the first undertaking, the applicant for granting immunity from fines, in the same

case, fails to meet the requirements as defined within Article 3 of this Regulation,

the next subsequent applicant for immunity from fines which fulfils the conditions

from Articles 2 and 3 of this Regulation shall be taken into consideration in the

leniency procedure.

Regulation on the Procedure for Granting Immunity from Fines (Leniency Policy)

72

(2) The Council of Competition shall not take into consideration the application for

immunity from fines of another applicant, in the same case, until it makes a

decision on the application for immunity from fines submitted by the first applicant.

II THE PROCEDURE FOR GRANTING IMMUNITY FROM FINES

Article 5

An undertaking as an applicant for immunity from fines must provide the Council of

Competition with the facts in draft form of the case concerned. In the initial stage, an

undertaking may use general information in order to protect its anonymity.

Article 6

If, during the initial contact, the Council of Competition decides that conditions defined by

Articles 2 and 3 of this Regulation are failed to be met, the undertaking interested to obtain

the immunity from fines, will be informed that immunity is not available.

Article 7

A joint application for immunity from fines submitted by two or more undertakings shall not

be taken into consideration.

Article 8

If the Council of Competition decides that an undertaking seeking to obtain immunity from

fines meets the conditions from Article 5 of this Regulation and if that undertaking is willing

to continue the cooperation delivering compulsorily a full description of the illegal activities,

as appropriate, the Council of Competition shall, on the basis of findings in the said

description, grant the undertaking conditional immunity from fines in its relevant decision.

Article 9

(1) Upon receiving a decision on granted conditional immunity from fines, an

undertaking is obliged to provide the Council of Competition with all evidences in

its possession.

(2) The Council of Competition may not use the evidence from paragraph (1) of this

Article against the undertaking that is the applicant for immunity from fines.

Article 10

(1) In case that the Council of Competition does not make a decision on granting

conditional immunity from fines, the undertaking that is applicant may withdraw all

evidences disclosed for the purpose of its immunity application or request that the

application for immunity from fines may be considered as a request for reduction of

a fine.

(2) The Council of Competition may not use information received in the proceedings

for immunity from fines if the undertaking withdraws such information in

accordance with paragraph (1) of this Article.


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Article 11

The Council of Competition may abolish a conditional immunity from fines imposed to an

undertaking which is applicant for immunity from fines, if:

a) that undertaking does not cooperate fully, on continuous basis and expeditiously;

b) that undertaking did not disclose all infringements of the Act relating to the case in

which it was involved;

c) that undertaking does not provide full and true evidences and information in its

possession or under its control.

Article 12

If upon completion of the proceedings, the undertaking meets all conditions defined in

Article 3 of this Regulation, the Council of Competition shall grant it immunity from fines in

the final decision.

III REDUCTION OF A FINE

Article 13

An undertaking which does not meet the conditions for immunity from fines as defined in

Chapter I of this Regulation, can apply for reduction of a fine, which otherwise may be

imposed.

Article 14

In order to ensure that the application for reduction of fines shall be taken in consideration,

an undertaking is obliged to:

a) provide the Council of Competition with information that supports the evidences

already in possession of the Council of Competition regarding the character or

completeness of the evidences; and

b) terminate all further participation in illegal activities that are under investigation,

according the conditions set by the Council of Competition.

Article 15

Among others, in its final decision, the Council of Competition shall determine:

a) whether the evidence provided by an undertaking, at the time of submission,

significantly contributes to the establishment of infringement of the Act on

Competition;

b) the level of reduction of a fine for an undertaking, in proportion to the fine which

may be otherwise imposed at the end of the proceedings, as follows:

1) a reduction of a fine of 30-50% will be granted to the first undertaking

which meets the conditions defined in Article 13 of this Regulation;

2) a reduction of a fine of 20-30% will be granted to the second undertaking

which meets the conditions defined by Article 13 of this Regulation;

3) a reduction of a fine up to 20% will be granted to any other subsequent

undertaking which meets the conditions defined by Article 13 of this

Regulation.

Regulation on the Procedure for Granting Immunity from Fines (Leniency Policy)

74

Article 16

In order to determine the level of reduction of a fine, as defined by Article 14, item b) of this

Regulation, the Council of Competition shall take into account the following facts:

a) the time when the evidences were provided and added value of those evidences; and

b) the level and continuity of cooperation provided by the undertaking during the

proceedings and after the submission of evidences.

IV THE PROCEDURE FOR REDUCTION OF A FINE

Article 17

The Council of Competition shall give to the undertaking a receipt on submission of

evidences, confirming the date and time of submission of each relevant evidence.

Article 18

The Council of Competition will not consider any request for a reduction of a fine if a

conditional decision on granting immunity from fines has already been granted to an

applicant, as defined by Article 8 of this Regulation, in relation to the same alleged

infringement of the Act.

Article 19

The Council of Competition shall, in a case when it comes to the preliminary conclusion that

the evidences submitted by the undertaking meet the conditions from Article 14, paragraph

(1), item a) of this Regulation, inform the undertaking in writing of its intention to include

the undertaking in procedure for reduction of a fine with a specified category as defined in

Article 14, paragraph (1), item b) of this Regulation.

Article 20

The Council of Competition will determine the final reduction category as defined in Article

14, paragraph (1), item b) of this Regulation for each undertaking-an applicant for a

reduction of a fine upon completion of proceedings and before making final decision from

Article 43 of the Act.

V FINAL PROVISIONS

Article 21

(1) In its final decision, the Council of Competition shall state every kind of

cooperation provided by an undertaking during the proceedings so as to explain the

grounds for granting the immunity from or reduction of a fine to that undertaking.

(2) This part of the final decision shall not be published due to the infringement of the

Act.


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Article 22

(1) Any written statement and information made or delivered on the basis of this

Regulation will be included in the file of the Council of Competition.

(2) Statements and information under paragraph (1) of this Article will not be revealed

to the undertakings that are under investigation due to the infringement of the Act.

Article 23

The provisions of this Regulation shall be applied also to the responsible persons in the

undertakings under Article 48, paragraph (2) of the Act.

Article 24

This Regulation enters into force 8 days after its publication in the “Official Gazette of BiH”,

and it shall be published in official gazettes of the Entities and Brcko District of Bosnia and

Herzegovina.

CC No. 01-01-26-090-I/06 President

Sarajevo, 17 February 2006 Sena Hatibovic

REGULATION ON THE DEFINITION OF THE

PERIODIC FINE PAYMENT



79

Pursuant to Article 50 paragraph (2) and Article 25 paragraph (1) item a) of the Act on

Competition (“Official Gazette of BiH”, No. 48/05) the Council of Competition on its 24th

session, held on 23 February 2006, has adopted

REGULATION ON THE DEFINITION OF THE PERIODIC FINE PAYMENT


Article 1

Subject Matter

This Regulation defines the periodic penalty payment that may be imposed on the

undertakings by the Council of Competition.

II AMOUNT OF PERIODICAL PENALTY AND THE WAY OF IMPOSITION THE

PENALTY

Article 2

Amount of Periodical Penalty

The Council of Competition may adopt a Regulation to force undertakings to pay periodic

fines (penalties) not exceeding 5% of the average daily aggregate income in the preceding

business year, for each day of delay the date set in the Regulation, in a case of non-

fulfillment with or failure to carry out a Regulation of the Council of Competition, in order to

force them to:

a) end infringements of stipulations referred to in Article 4 of the Act on Competition,

in accordance with the Regulation adopted pursuant to the Article 11 of the Act,

b) comply with a Regulation on defined temporary measures adopted pursuant to the

Article 40 of the Act on Competition,

c) comply with the obligations imposed by the Regulation adopted pursuant to the

Article 11 and Article 18 of the Act on Competition,

d) submit complete and correct information requested by the Council of Competition

pursuant to the Article 35 of the Act on competition,

e) fulfill procedural requirements of the Council of Competition, adopted pursuant to

the Article 33 and 35 of the Act on Competition.

Article 3

The Way of Imposition the Penalty

In fixing the amount of periodical penalty payments on undertakings, the Council of

Competition will take into consideration the gravity of the infringement, the duration of the

infringement, mitigating and aggravating circumstances of the undertakings, influences of all

undertakings on the infringement, in a case when more undertakings are involved in the

infringement.

Regulation on the Definition of the Periodic Fine Payment

80

III FINAL PROVISIONS

Article 4

Entry into Force

This Regulation shall enter into force on the eighth day after its publication in the “Official

Gazette Bosnia and Herzegovina” and shall also be published in the official gazettes of the


C.C. number 01-01-26-231-I/06 President

Sarajevo, 29 March 2006 Sena Hatibovic

REGULATION ON BLOCK EXEMPTIONS

GRANTED TO CERTAIN CATEGORIES OF

HORIZONTAL AGREEMENTS (BETWEEN

UNDERTAKINGS OPERATING AT THE SAME

LEVEL OF PRODUCTION OR DISTRIBUTION

CHAIN) RELATING PARTICULARLY TO

RESEARCH, DEVELOPMENT AND

SPECIALIZATION AGREEMENTS



83

Pursuant to Article 7, paragraph (1), item a) and Article 25, paragraph (1), item a) of the Act

on Competition (“Official Gazette of BiH”, No. 48/05), the Council of Competition in its

20th session, held in 27 December 2005, has adopted

REGULATION ON BLOCK EXEMPTIONS GRANTED TO CERTAIN

CATEGORIES OF HORIZONTAL AGREEMENTS (BETWEEN UNDERTAKINGS

OPERATING AT THE SAME LEVEL OF PRODUCTION OR DISTRIBUTION

CHAIN) RELATING PARTICULARLY TO RESEARCH, DEVELOPMENT AND

SPECIALIZATION AGREEMENTS


Article 1


This Regulaton shall stipulate the conditions for block exemptions granted to certain

categoties of horizontal agreements, i.e. agreements between undertakings which operate on

the same level of production or distribution chain (hereinafter: horizontal agreements)

relating particularly to research, development and specialization agreements, set out the

restrictions and conditions which such agreements may not contain, and other conditions

which must be fulfilled in order to satisfy the conditions for exemption from application of

the provisions on prohibited agreements set out in Article 4 of the Act on Competition

(hereinafter: the Act).

Article 2

Applicability of the Block Exemptions

(1) Block exemption shall apply to horizontal agreements entered into between two or

more indepedent undertakings which for the purpose of the agreement operate at

the same level of production or distribution chain, and particularly to:

a) research and development agreements;

b) specialization agreements.

(2) Research and development agreements from paragraph (1), item a) of this Article

are horizontal agreements entered into between two or more indepedent

undertakings which relate to the conditions under which those undertakings pursue:

a) joint research and development of products or processes and joint

exploitation of the results of those researches and developments; or

b) joint exploitation of the results of research and development of products or

processes jointly carried out pursuant to a prior agreement between the

same undertakings; or

c) joint research and development of products or processes which excludes

joint exploitation of the results of those researches and developments.

(3) The block exemption granted to research and development agreements provided for

in paragraph (1), item a) of this Article shall also apply to provisions contained in

those agreements which do not constitute the primary object of such agreements,

but are directly related to and necessary for their implementation, such as an

obligation not to carry out, independently or together with third parties, research

and development in the field to which the agreement relates or in a closely

connected field during the execution of the agreement.

Regulation on Horizontal Agreements

84

(4) Specialization agreements from paragraph (1), item b) of this Article are horizontal

agreements entered into between two or more independent undertakings which sets

the conditions under which those undertakings specialize in the production of

products, and such agreements shall be considered:

a) unilateral specialization agreements, by virtue of which one party to the

agreement agrees to cease production of certain products or to refrain from

producing those products and to purchase them from a competing

undertaking, while the competing undertaking agrees to produce and

deliver those products; or

b) mutual (reciprocal) specialization agreements, by virtue of which two or

more parties to the agreement on a reciprocal basis agree to cease or refrain

from producing certain but different products and to purchase these

products from the other parties to the agreement, who deliver those

products; or

c) joint production agreements, by virtue of which two or more parties to the

agreement agree to produce certain products jointly.

(5) The block exemption granted to specialization agreements provided for in

paragraph (1), item b) of this Article shall also apply to provisions contained in

those agreements, which do not constitute the primary object of such agreements,

but are directly related to and necessary for their implementation, such as provisions

concerning the assignment or use of intelectual property rights.

(6) Intellectual property rights within the meaning of paragraph (5) of this Article

include industrial property rights, copyright and neighbouring rigts.

(7) Participating undertakings under paragraphs (1) and (2) of this Article are

undertakings that are parties to the agreement and undertakings that are connected

to them.

(8) Competing undertakng under paragraph (4), item a) of this Article means an

undertaking that is active at the same relevant market as an acual competitor or a

potential competitor, that is to say an undertaking that would, on eralistic grounds,

undertake the necesary additional investments or other necessary switching cost

structure so that it could enter the relevant market in response to a small but

permanent incerease in prices.

Article 3

Inapplicability of Block Exemptions

According to the stipulations of this Regulation, the block exemption shall not apply to:

a) Horizontal agreements which do not fulfill the cumulative conditions laid down

under Article 4, paragraph (3) of the Act and which are not brought into compliance

with this Regulation;

b) Horizontal agreements which fall within the scope of any other regulation pursuant

to the provisions under Article 7 of the Act.


85

II CONDITIONS THAT AGREEMENT MUST CONTAIN AND OTHER

CONDITIONS WHICH MUST BE MET

Article 4

Conditions that Research and Development Agreements Must Contain

(1) The block exemption for research and development agreements provided for in

Article 2, paragraph (1), item a) of this Regulation shall apply if the following

conditions are met:

a) All participants must have access to the results of the joint research and

development for the purpose of further research or exploitation of results.

Exceptionally, research institutes, academic bodies or undertakings which

supply research and development as a commercial service without

normally being active in the exploitation of results may agree to confine

their use of the results for the purpose of further research.

b) Each party must be free independently to exploit the results of the joint

research and development and any pre-existing know-how necessary for

the purpose of such exploitation, when a research and development

agreement ensure only joint research and development. Such right to

exploitation may be limited to one or more technical fields of application,

where the parties are not competing undertakings at the time the research

and development agreement is concluded.

c) Any joint exploitation must relate to results which are protected by

intellectual property rights or constitute know-how, which substantially

contribute to technical or economic progress, and those results must be

decisive for the manufacture of the contract products or the application of

the contract processes.

d) Undertakings charged with manufacture by way of specialization in

production must fulfill orders for supplies from all parties to the

agreement, except when the research and development agreements at the

same time provide for the joint distribution.

(2) Within the meaning of paragraph (1), item b) of this Article, research and

development means the acquisition of know-how relating to products or processes

and the carry out of theoretical analysis, systematic studies or experimentations,

including experimental production, technical testing of products or processes, and

the establishment of the necessary facilities and the acquisition of intellectual

property right for the results.

(3) Within the meaning of paragraph (1), item c) of this Article, exploitation of results

means the production or distribution of the contract products or the application of

the contract processes or the assignment or licensing of intellectual property rights

or the transfer of know-how required for such manufacture of the contract products

or application of contract processes.

(4) Within the meaning of paragraphs (2) and (3) of this Article, research and

development or exploitation of the research and development are carried out jointly

where the work involved is carried out by a joint team, organization or undertaking,

or jointly entrusted to a third party, or allocated between the parties to the

agreement by way of specialization in research, development, production or

distribution.


86

(5) Within the meaning of paragraph (1), items b) and c), and paragraphs (3) and (4) of

this Article, know-how means a package of non-patented practical information,

resulting from experience and testing, which is secret, substantial and identified. In

this context, “secret” means that the know-how as a body or in the precise

configuration and assembly of its components is not generally known or easily

accessible. “Substantial” means that the know-how includes data and information

which are indispensable for the manufacture of the contract products or the

application of the contract processes. “Identified” means that the know-how must be

described in a sufficiently comprehensive manner so as to make it possible to verify

that it fulfills the criteria of secrecy and substantiality.

(6) Within the meaning of paragraph 1), item c) of this Article, contract product means

a product which is the subject of the agreement arising out of the joint research and

development or manufactured or provided applying the contract processes.

(7) Within the meaning of paragraph (1), item c) and paragraph (6) of this Article,

contract process means a technology or process arising out of the joint research and

development.

Article 5

Duration of Block Exemption and Market Share for Research and

Development Agreements

(1) When the participating undertakings are not competing undertakings, the block

exemptions for research and development agreements provided for in Article 2,

paragraph (2) of this Regulation shall apply for the duration of the research and

development. When the results are jointly exploited, the exemption shall continue to

apply for seven years from the time the contract products are first put on the

relevant market.

(2) When two or more of the participating undertakings are competing undertakings,

the block exemption for research and development agreements shall apply for the

period referred to in paragraph (1) of this Article, if, at the time when the research

and development agreement is entered into, the combined market share of the

participating undertakings does not exceed twenty five per cent (25%) of the

relevant market for the products capable of being improved or that are substitutes

for the contract products.

(3) After the period referred to in paragraph (2) of this Article is ended, the block

exemption shall continue to apply as long as the combined market share of the

participating undertakings does not exceed 25% of the relevant market for the

contract products.

(4) If the market share referred to in paragraph (2) of this Article is, on the moment of

signing the agreement, not more than 25% but subsequently rises above this level

without exceeding 30% the block exemption shall continue to apply for a period of

two consecutive calendar years following the year in which 25% of the market share

is first exceeded.

(5) If the market share referred to in paragraph (2) of this Article, on the moment of

signing the agreement, not more than 25% but subsequently rises above 30% the

block exemption shall continue to apply for one calendar year following the year in

which the level 30% of the market share is first exceeded.


87

The benefit of block exemption within the meaning of paragraphs (4) and (5) of this Article

may not be combined so as to exceed a period of two years.

Article 6

Calculation of the Market Share for Research and Development Agreements

(1) Within the meaning of Article 6 of this Regulation, the market share of the

participating undertakings to research and development agreements shall be

calculated on the basis of the sales value of the contract products and their

substitutes in the market. If the sales value data of the contract products and their

substitutes in the market are not available, estimates based on other reliable market

information, including the sales volume of the contract products and their

substitutes in the relevant market may be used to establish the market share of the

undertaking concerned.

(2) The market share under paragraph (1) of this Article shall be calculated on the basis

of data relating to calendar year preceding the conclusion of the agreement.

(3) The market share under paragraph (1) of this Article shall be increased by the

market share of the undertakings connected to the parties to the agreement realized

as provided for under paragraphs (1) and (2) of this Article.

Article 7

Conditions that Specialization Agreements Must Contain

(1) The block exemption for specialization agreements provided for in Article 2,

paragraph (4) of this Regulation shall apply when:

a) the parties to the agreement accept an exclusive purchase and/or exclusive

supply obligation in the context of an unilateral or reciprocal specialization

agreement or a joint production agreement; or

b) the parties to the agreement do not sell independently the products which

are the object of the specialization agreement but they take part in joint

distribution or agree to appoint a third party to be distributor on an

exclusive or non-exclusive basis in the context of a joint production

agreement provided that the third party is not a competing undertaking.

(2) Within the meaning of paragraph (1) of this Article production means the

manufacture of goods or the provision of services and includes production by way

of cooperatives-subcontractors.

(3) Within the meaning of paragraph (1) of this Article exclusive distribution obligation

means an obligation to supply exclusively the contract products relating to

specialization agreement to the parties to the agreement, i.e. such obligation

excludes the possibility of supplying its competing undertaking.

(4) Within the meaning of paragraph (1) of this Article exclusive purchase obligation

means an obligation to purchase the products to which the specialization agreements

relate only from the party to the agreement which agrees to supply those products.


88

Article 8

Market Share for Specialization Agreements

(1) The block exemption for specialization agreements provided for in Article 2,

paragraph (4) of this Regulation, shall apply on condition that the combined market

share of the participating undertakings does not exceed 20% on the relevant market.

(2) If the market share of the participating undertakings is, on the moment of signing

the agreement, not more than 20% but subsequently rises above that level without

exceeding 25%, the block exemption shall continue to apply for a period of two

consecutive calendar years following the year in which 20% of the market share is

first exceeded.

(3) If the market share of the participating undertakings is, on the moment of signing

the agreement, not more than 20% but subsequently rises above 25%, the block

exemption shall continue to apply for one calendar year following the year in which

the level of 25% market share is first exceeded.

(4) The benefit of block exemption within the meaning of paragraphs (2) and (3) of this

Article may not be combined so as to exceed a period of two calendar years.

Article 9

Calculation of the Market Share for Specialization Agreements

(1) Within the meaning of the Article 8 of this Regulation the market share of the

participating undertakings to specialization agreements shall be calculated on the

basis of the sales value of the contract products and their substitutes. If the sales

value data of the contract products and their substitutes in the market are not

available, estimates based on other reliable market information, including market

sales volumes of the contract products and their substitutes in the relevant market

may be used to establish the market share of the undertakings concerned.


of data relating to the calendar year preceding the signing of the agreement.


market share of the undertakings connected to the parties to the agreement realized

as provided for under paragraphs (1) and (2) of this Article.

III RESTRICTIONS OR CONDITIONS WHICH AGREEMENTS MAY NOT

CONTAIN

Article 10

Hard Core Restrictions within Research and Development Agreements

(1) The block exemption shall not apply to research and development agreements

which, directly or indirectly, in isolation or in combination with other factors under

the control of the parties to the agreement, have as their object:

a) the restriction of the freedom of the participating undertakings to carry out

research and development independently or in cooperation with third

parties in a field not connected with the field to which the research and

development relates or in the cognate field;


89

b) the prohibition to deny the validity of intellectual property rights which are

relevant to the research and development when the research and

development is completed or the validity of intellectual property rights

which protect the results of the research and development, when the

research and development agreement expired, without prejudice to the

possibility to provide for the termination of the research and development

agreement in the case when one of the party to the agreement denies the

validity of such intellectual property rights;

c) limitation of the manufacture or sale;

d) fixing prices when selling the contract product to third parties;

e) the restriction of the customers to whom the participating undertakings

may sell the contract products, when the period of seven years ends,

starting from the time the contract products are first put on the market;

f) the prohibition to make passive sale of the contract products in territories

reserved for other parties to the agreement;

g) the prohibition to put the contract products on the market or to pursue an

active sales policy of those products in territories reserved for other parties,

when the period seven years ends, starting from the time the contract

products are first put on the market;

h) setting the conditions under which the third parties shall not be granted the

licenses to manufacture the contract products or to apply the contract

processes, if the exploitation of the result of the joint research and

development by at least one of the party to the agreement is not provided

for or does not take place;

i) setting the conditions under which the demand from users or sellers in their

respective territories shall be refused, if they sell the contract products in

other territories; or

j) setting of conditions under which it is difficult for the users or sellers to

obtain the contract products from other sellers and in particular, to exercise

intellectual property rights, or taking measures so as to prevent users or

sellers from obtaining, or from putting on the market, the products which

have been lawfully put on the market by another party to the agreement or

within its consent.

(2) Within the meaning of paragraph (1) of this Article, the following provisions

contained in research and development agreements shall not be considered as

prohibited competition restrictions:

a) setting of production targets in a case when the exploitation of the results

includes the joint production of the contract products;

b) setting of sales targets and fixing of prices charged to immediate customers

when the exploitation of the results includes the joint distribution of the

contract products.

(3) Passive sales within the meaning of paragraph (1), item f) of this Article shall mean

sales in response to requests from individual customers in other parties´ exclusive

territories, including delivery of products to such customers, but such responding

must not be the result of active sales operations. Passive sales means also the

general advertising or promotion in the media or on the Internet that reaches

customers in other parties´ exclusive territories and customers in the respective

territories, which is a result of the development in the technology and easy access,

and therefore it is considered to be a reasonable method of approaching these

customers.


90

(4) Active sales within the meaning of paragraph (1), item g) of this Article mean sales

made by actively searching for or approaching individual customers or particular

customers group inside another parties´ exclusive territory, conclusion of individual

agreements, taking measures of general presentation of products to those customers,

establishing branches, warehouse or organizing of distribution networks and

promotions in that territory. Active approach includes visits, direct and electronic

mail to customers, advertisement in the media or other promotions, specifically

targeted at those customers or customer group in the other parties´ exclusive

territory.

Article 11

Hard Core Restrictions with Specialization Agreements

(1) The block exemption shall not apply to specialization agreements which, directly or

indirectly, in isolation or in combination with other factors under the control of the

parties to the agreement, have restrictions with the aim of:

a) fixing prices when selling the products to third parties;

b) limitation of manufacture or sales; or

c) allocation of markets or customers.

(2) Within the meaning of paragraph (1) of this Article the following provisions

contained in specialization agreements shall not be considered as prohibited

competition restrictions:

a) Provisions on the agreed amount of products in the context of unilateral or

reciprocal specialization agreements or setting of the capacity and

production volume of joint production (joint venture) in the context of a

joint production agreement; and

b) The setting of sales targets and the fixing of prices that a production joint

venture charges to its immediate customers in the context of Article 7,

paragraph (1), item b) of this Regulation..

IV WITHDRAWAL OF BLOCK EXEMPTIONS AND INDIVIDUAL EXEMPTION

Article 12

Conditions for Withdrawal of Block Exemptions

(1) Pursuant to Article 7, paragraph (4) of the Act the Council of Competition may ex-

officio initiate the proceedings for assessment of compatibility of a particular

agreement under Article 2 of this Regulation with the provisions laid down in

Article 4, paragraph (3) of the Act and this Regulation, if such agreements have

effects in the relevant market which do not fulfill the conditions for block

exemption.

(2) Within the meaning of paragraph (1) of this Article the Council of Competition may

initiate the proceedings for assessment of a research and development agreement, in

particular when:

a) the existence of the research and development agreement substantially

restricts the scope for third parties to carry out research and development

on the particular field because of the limited research capacity available

elsewhere;

b) the existence of the research and development agreement, because of the

particular structure of supply, research substantially restricts the access of

third parties to the market for contract products;


91

c) without objectively valid reason, the parties to the agreement do not exploit

the results of the joint research and development;

d) the contract products are not subject to effective market competition from

identical products or products considered by users as substitutes in view of

their characteristics, price, intended use and customs of the customers;

e) the existence of the research and development agreement can prevent,

restrict or distort the effective market competition in research and

development on a particular market.

(3) Within the meaning of paragraph (1) of this Article the Council of Competition may

initiate the proceedings for assessment of specialization agreements, in particular

when:

a) the agreement is not yielding significant results in terms of rationalization

or the consumers are not receiving a fair share of the resulting benefits, or

b) the products which are the subject of the specialization are not subject to

the effective market competition in relation to identical products or

products considered by users to be substitutes in a view of their

characteristics, price, intended use and customs of the customers.

(4) If the Council of Competition, in the course of the assessment procedure on

compliance of an agreement with the provisions of the Act and this Regulation,

proves that there are no grounds for the applicability of block exemption, it shall by

means of a decision withdraw the application of block exemption granted to a

particular agreement.

Article 13

Individual Exemption

Pursuant to Article 5 of the Act the undertakings-parties to the horizontal agreement may

submit to the Council of Competition a request for individual exemption, if the agreement

concerned does not fall under applicability of block exemption within the meaning of this

Regulation, or if it, by its nature, does not fall under any other regulation within he meaning

of Article 3, item b) of this Regulation.

Article 14

Non-compulsory Notification

The parties to the horizontal agreement that satisfy the conditions of block exemption laid

down in this Regulation, within the meaning of Article 7,paragraph (3) of the Act, are not

obliged to submitted such agreements to the Council of Competition for assessment with

respect to individual exemption.

V TRANSITIONAL AND FINAL PROVISIONS

Article 15

(1) Horizontal agreements, under Article 2 of this Regulation, concluded before this

Regulation enters into force, must be brought in compliance with the provisions of

this Regulation by December 31, 2006.

(2) As regards the horizontal agreements, concluded before this Regulation enter into

force, on condition that they are brought in compliance with the provisions of this

Regulation within the time period set out under paragraph (1) of this Article, the


92

market share, excluding Article 6, paragraph (2) and Article 9, paragraph (2) of this

Regulation, shall be calculated on the basis of the market sales data relating to the

calendar year preceding the year this Regulation enters into force.

Article 16

Entry into Force

This Regulation shall enter into force on the eight day of its publication in the “Official

Gazette of Bosnia and Herzegovina”, and it will be published in official gazettes of Entities

and Brčko District.

C.C., Number: 01-01-26-627/05 President

Sarajevo, 30 December 2005 Sena Hatibovic

REGULATION ON BLOCK EXEMPTION


VERTICAL AGREEMENTS (BETWEEN

UNDERTAKINGS OPERATING AT THE

DIFFERENT LEVELS OF PRODUCTION OR

DISTRIBUTION)



95

Pursuant to Article 25, paragraph (1), item a) and Article 7, paragraph (2) of the Act on

Competition (“Official Gazette of BiH”, No. 48/05), the Council of Competition on its 22nd

session held on 24 January 2006 has adopted

REGULATION ON BLOCK EXEMPTION GRANTED TO CERTAIN

CATEGORIES OF VERTICAL AGREEMENTS (BETWEEN UNDERTAKINGS

OPERATING AT THE DIFFERENT LEVELS OF PRODUCTION OR

DISTRIBUTION)


Article 1


This Regulation shall stipulate the conditions for block exemption granted to certain

categories of agreements between undertakings which operate аt the different levels of

production or distribution (hereinafter: vertical agreements), restrictions or conditions which

may be and must be contained herein and other conditions in a line with the provisions of

Article 7 of the Act on Competition (hereinafter: the Act).

Article 2

Definition

Vertical agreements include those agreements or a joint venture between two or more

undertakings which operate at the different levels of production and distribution chain,

relating to the conditions under which the undertakings may purchase, sell or resell particular

products or services.

II VERTICAL AGREEMENTS FOR BLOCK EXEMPTION

Article 3 Vertical Agreements for Block Exemption

Block exemption shall apply to vertical agreements laid down in Article 7, paragraph (1),

item b) of the Act, and particularly to:

a) Exclusive distribution agreements - where the supplier undertakes to limit the sale

of contract products and/or services to only one selected distributor in a particular

territory or to particular group of customers which is exclusively allocated to that

distributor.

b) Selective distribution agreements - where the supplier undertakes to sell the contract

products, either directly or indirectly, only to distributors selected on the basis of

transparent, specified criteria and where the distributors undertake not to sell such

products to unauthorized distributors.

c) Exclusive purchase agreements - where the buyer undertakes to purchase the

contract products only from one particular supplier.

d) Exclusive supply agreements - where the supplier undertakes to sell the contract

products, either directly or indirectly, only to one buyer in the territory of the

Bosnia and Herzegovina for the purpose of a specific use or for resale.

Regulation on Vertical Agreements

96

e) Franchise means agreements - where one undertaking (franchisor) provides the

other party (franchisee), in return for a direct or indirect finance reimbursement,

with the right to use the franchise, i.e. the package of intellectual or industrial

property rights for manufacture and/or sale purposes of particular products or

provision of services. Intellectual or industrial property rights package relates to a

trade name and trade mark or signs, know-how, models, designs, copyright,

technology knowledge or patents which shall be used for further sale of contract

products or services to end users.

Franchise agreements are not applied on industrial (technology) franchise

agreements relating to manufacture of products or technological process in the

manufacture of such products.

f) Agreements containing provisions which relate to the assignment of intellectual

property rights to the buyer or exercise of those rights by the buyer, provided that

those provisions do not constitute the primary object of such agreements and that

they are directly related to the use, sale or resale of contract products or services by

the buyer or its customers.

Article 4


Block exemption shall apply to vertical agreements laid down in Article 3 of this Regulation

if they satisfy all requirements laid down in Article 4, paragraph (3) of the Act.

Article 5

Total Annual Income

The block exemption, within the meaning of Articles 3 and 4 of this Regulation shall apply

to vertical agreements entered into between an association of undertakings and its members,

or between such association and its suppliers, exclusively if all members of such association

are practicing retail sale and if no individual member of such association together with its

connected undertakings has a total annual income exceeding 4,000,000 KM.

Article 6

Vertical Agreements between Competing Undertakings

(1) The Block exemption, within the meaning of Articles 3 and 4 of this Regulation,

shall not apply to vertical agreements entered into between mutually competing

undertakings.

(2) The block exemption, within the meaning of paragraph (1) of this Article, shall

apply to vertical agreements entered into between mutually competing undertakings

which do not grant equivalent rights and obligations to each of the parties (non-

reciprocal vertical agreements), and if :

a) The buyer does not have a total annual income exceeding 4,000,000KM; or

b) The supplier is at the same time a manufacturer and a distributor of

products, while the buyer is a distributor of contract products and does not

manufacture the competing (contract) products; or

c) The supplier is a provider of services at several levels of trade, while the

buyer does not provide competing services at the level of trade where it

purchases the contract services.


97

III RESTRICTIONS AND CONDITIONS THAT VERTICAL AGREEMENTS MAY

NOT CONTAIN

Article 7

Restrictions that Vertical Agreements May Not Contain

The block exemption shall not apply to vertical agreements which, directly or indirectly, in

isolation or in combination with other factors under the control of the parties to the

agreement, have as their object:

a) The restriction of the buyer’s ability to determine freely its sale price of products

and services, without prejudice to the possibility of the supplier imposing a

maximum sale price or recommending a sale price, provided that they do not

amount to a fixed or minimum sale price as a result of pressure from or incentive

offered by any of the parties to agreement;

b) The restriction of the territory into which or of the group of customers (consumers)

to whom the buyer may sell the contract products or services, with the exemption

of:

1) when the buyer’s active sales is restricted into the exclusive territory or to

an exclusive customers group reserved to the supplier or allocated by the

supplier to another buyer, where such restriction is not used to limit the

sales allowed to the buyer’s client (indirect buyers);

2) when the buyer operating at the wholesale level of trade is restricted in

selling (active and passive sales) the products to end-users;

3) when the members of a selective distribution system are restricted in

selling (active and passive sales) the products to unauthorized distributors

in the markets where such systems operate;

4) the restrictions of the buyer’s right to sell (active or passive sales) spare

parts (components), supplied for the purposes of incorporation into new

product, to end-users (competing suppliers) who use them to manufacture

the same type of products as those produced by the supplier.

c) The restriction of active or passive sale to end-users, members of a selective

distribution system operating at the retail level of trade, without prejudice to the

possibility of prohibiting a member of that selective distribution system from

operating out of an authorized place of business;

d) The restriction of cross-supplies between distributors within a selective distribution

system, and between distributors operating at a different levels of trade;

e) The restrictions agreed between a supplier of components and a buyer of those

components who incorporates them in new product, which limits the supplier to sell

the components as spare parts to end-users or to repairers or other service providers

not entrusted by the buyer with the repair or servicing its products.

Article 8

Active and Passive Sales

(1) Active sale within the meaning of Article 7 of this Regulation, shall mean sale made

by active access to buyers (customers) or exclusive customer group inside another

distributor’s exclusive territory, conclusion of individual agreements and taking

measures for general presentation of products to that customers, the establishment

of branches, warehouses or distribution networks and advertising in another


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distributor’s exclusive territory, visits, direct mail and by internet, advertisements in

media and other promotions specifically targeted at that customers group or

customers in another distributor’s exclusive territory.

(2) Passive sale within the meaning of Article 7 of this Regulation shall mean sale in

response to requirements from individual buyers (customers), including delivery of

products or services to such customers (consumers), to the extent that such

responding is not the result of active sales operations. General advertising or

promotion in the media or on the Internet which reaches customers or a group of

customers outside of another distributor’s exclusive territories and which is

considered to be, as a result of the development in the technology, a reasonable

method of access to the customers or group of customers outside of such territories

is a passive sale.

Article 9

Conditions that Vertical Agreement May Not Contain

The block exemption shall not apply to any of the following obligations contained in vertical

agreements:

a) Any direct or indirect non-compete obligation, the duration of which is unlimited or

exceeds a period of five years. Non-compete obligation which is tacitly renewable

and its duration exceeds a period of five years is deemed to be concluded for an

indefinite period;

b) Any direct or indirect obligation causing the buyer, after termination of the

agreement, not to manufacture, purchase, sell or resell products or services, unless

such obligation :

1) relates to products or services which compete with the contract products or

services (substitutes); and

2) is limited to the premises and location from which the buyer has operated

during the contract period; and

3) is indispensable to protect know-how transferred by supplier to the buyer,

and

4) provided that the duration of non-compete obligation is limited to a period

of one year after termination of the agreement and without prejudice to the

possibility of imposing a restriction which is unlimited in time and relates

on the use, transfer or disclosure of know-how, provided that the know-

how is not accessible publicly, i.e. is not announced.

c) Any direct or indirect obligation causing the members of a selective distribution

system not to distribute (resell) competitive trade marks of products of the particular

suppliers (competitors).

IV NON-COMPETE OBLIGATIONS AND KNOW-HOW

Article 10

Non-Compete Obligations and Know-how

(1) The non-compete obligation, within the meaning of Article 9, paragraph a) of this

Regulation, shall mean any direct or indirect obligation causing the buyer not to

manufacture, sell or resell the substitute products which compete with the contract

products, or any direct or indirect obligation on the buyer to purchase from supplier


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or from another undertaking designated by the supplier more than eighty per cent

(80%) of the buyer’s total purchases of the contract products or services and their

substitutes on the relevant market, calculated on the basis of the value of its

purchases in the preceding financial year.

(2) Pursuant to Article 9, paragraph a) of this Regulation the non-compete obligation,

the duration of which is five years, shall not be considered as a prohibited vertical

restriction where the contract products or services are sold by the buyer within the

premises or location owned by the supplier or leased by the supplier from the third

parties non connected with the buyer, provided that the duration of non-compete

obligation does not exceed the period of occupancy of the supplier’s premises or

location.

(3) Know-how within the meaning of Article 9, paragraph b) of this Regulation means

a package of non-patented, technical information, resulting from experience and

testing by the supplier, and which is :

a) Secret - means that the know-how package as a body, or in a precise

configuration and assembly of its components, is not generally known or

easily accessible;

b) Substantial - means that the know-how includes information which are

indispensable to the buyer for the use, sale or resale of the contract

products, and especially for the presentation of the products while selling

them, methods of influencing users, technically skilled staff and finance

management;

c) Identified - means that the know-how must be presented in a sufficiently

comprehensive manner, as to make it possible to verify whether it satisfies

the criteria of secrecy and significance.

V MARKET SHARE AND TOTAL INCOME

Article 11

Market Share

(1) The block exemption shall apply to the agreements laid down in Articles 3 and 4 of

this Regulation, provided that the market share of the supplier does not exceed

thirty per cent (30 %) of the relevant market on which it sells the contract products

and/or services.

(2) Where vertical agreements contain, exclusive supply obligations, the block

exemption provided for in Articles 3 and 4 of this Regulation, shall apply on

condition that the market share of the buyer does not exceed thirty per cent (30%) of

the relevant market on which it purchases the contract products or services.

Article 12

Calculation of the Market Share

(1) The market share on the relevant market, defined in Article 11 of this Regulation,

shall be calculated on the basis of the market sales value of the contract products or

services and other products and services offered for sale by the supplier, which are

regarded as interchangeable by the buyers, by reasons of the products’

characteristics, price and use.


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(2) If the market share value data of an undertaking are not available, the estimations

based on other reliable information, applying the market purchase value or the

estimations of that value, may be used to establish the buyer’s market share in the

relevant market where the contract products or services are purchased; this shall not

apply if the undertaking had no activity on the relevant market in the financial year

preceding the conclusion of the agreement.

(3) For the purpose of calculation of the market share laid down in Article 11 of this

Regulation, the following rules are applied:

a) the market share is calculated on the basis of the data relating to the

preceding calendar year;

b) the market share includes all products granted to integrated distributors for

the purpose of the sale;

c) if the market share of the undertakings is not more than thirty per cent

(30%) on the moment of the agreement conclusion, but subsequently rises

above that level without exceeding thirty five per cent (35%), the

exemption shall continue to apply for a period of two consecutive calendar

years following the year in which the thirty per cent (30%) of the market

share was first exceeded;

d) if the market, on the moment of the agreement conclusion, is not more than

thirty per cent (30%) but subsequently rises above thirty five per cent

(35%), the exemption shall continue to apply for one calendar year

following the year in which the level of thirty five per cent (35%) was first

exceeded.

e) the benefits of block exemption within the meaning of items (c) and (d) of

this Article may not be combined so as to exceed a period of two calendar

years.

Article 13

Calculation of Total Annual Income

(1) For the purpose of calculating total annual income within the meaning of Articles 5

and 6 of this Regulation, the income achieved by the relevant undertaking - a party

to the vertical agreement by selling the products and/or services during the financial

year preceding the conclusion of the agreement and the income achieved by its

connected undertakings shall be added together.

(2) For the purpose of calculating total annual income laid down in paragraph (1) of

this Article, no total annual income shall be taken of dealings between the relevant

undertaking-parties to the vertical agreement and undertakings connected to them,

or of dealings between connected undertakings.

(3) The total annual income calculated pursuant to paragraphs (1) and (2) of this Article

does not include the custom duties value, value added and excise duty taxes and

rebates.

(4) The block exemption provided for in this Regulation shall remain applicable where,

for a period of two consecutive financial years, the total annual income is exceeded

no more than ten per cent (10%).


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Article 14

Other Criteria for Granted Block Exemption

In the assessment of vertical agreements relating to the conditions which must be satisfied

for block exemption, apart from the conditions provided for under Article 4, paragraph (3) of

the Act and this Regulation, the following criteria is to be taken into account

a) The relative market structure relating to supply and purchase side;

b) The existence of parallel networks of vertical agreements;

c) The market position of competing undertakings on the relevant market;

VI NOTIFICATION OF AGREEMENTS FOR THE INDIVIDUAL EXEMPTION

AND CONDITIONS

Article 15


(1) Vertical agreement, which satisfies the conditions for block exemption laid down in

this Regulation, within the meaning of Article 7, paragraph (3) of the Act, need not

to be submitted to the Council of Competition for assessment in respect of

individual exemption, laid down in Article 5 of the Act.

(2) A request for individual exemption of the vertical agreement may be submitted,

pursuant to Article 5 of the Act, if the agreement concerned does not fall under

applicability of block exemption within the meaning of this Regulation.

Article 16


(1) Pursuant to Article 7, paragraph (4) of the Act, the Council of Competition may, ex-

officio, initiate the proceedings to assess the compatibility of a particular agreement

as laid down in Article 3 of this Regulation, if the effects of such agreement

(individually or due to their cumulative effects) with other similar agreements in the

relevant market, do not fulfill the conditions for block exemption, laid down in

Article 4, paragraph (3) of the Act, and particularly where:

a) access to the relevant market or competition therein is significantly

restricted by the cumulative effect of the parallel networks of vertical

agreements (of similar vertical restrains) formed by the competitive

suppliers or customers who cover together more than fifty per cent (50%)

of the relevant market

b) considering the exclusive supply or distribution, the buyer have no

alternative sources of supply of the contract products or services in the

relevant market;

(2) If the assessment results on compliance of the agreement with the provisions of the

Act and this Regulation prove that there are no grounds for the applicability of the

block exemption, the Council of Competition shall by means of a decision withdraw

the application of block exemption to individual or more vertical agreements.


102

Article 17


This Regulation shall not apply to vertical agreements a matter and content of which fall

under competence of other regulations on block exemptions pursuant to Article 7 of the Act.

VII TRANSITIONAL AND FINAL PROVISIONS

Article 18

Transitional Provisions

(1) Vertical agreements of this Regulation which have been concluded before this

Regulation enters into force must be brought in compliance with the provisions of

this Regulation until 31st December 2006.

(2) The market share and total annual income resulting from the vertical agreement

from paragraph (1) of this Article shall be calculated in line with the provisions of

this Regulation.

Article 19

Entry into Force

This Regulation shall enter into force on the eight day following the day of publication in the

“Official Gazette of BiH” and it shall be published in official gazettes of Entities and Brčko

District of Bosnia and Herzegovina.

C.C. Number: 01-01-26-103-I /06 President


REGULATION ON BLOCK EXEMPTION GRANTED TO

INSURANCE AGREEMENTS



105

Pursuant to Article 7, paragraph (1), item e) and Article 25, paragraph (1), item a) of the Act

on Competition (“Official Gazette BiH”, No. 48/05), the Council of Competition in its 20th

session held on 27 December 2005, has adopted

REGULATION ON BLOCK EXEMPTION GRANTED TO INSURANCE

AGREEMENTS


Article 1

Subject Matter

This Regulation shall stipulate the conditions for block exemption granted to insurance

agreements, set out conditions which such agreements must contain, the restrictions or

conditions which such agreements may not contain, and other conditions which must be

fulfilled in order to meet the conditions for block exemptions from application of the

provisions on prohibited agreements set out pursuant to Article 4 of the Act on Competition

(hereinafter: Act).

Article 2


(1) Block exemption shall apply to insurance agreements laid down in Article 7,

paragraph (1), item e) of the Act, entered into between two or more insurance

undertakings within the insurance business, with respect to:

a) the joint establishment and distribution of calculations of the average cover

costs of a specified risk in the past (hereinafter: calculations), the joint

establishment and distribution of mortality tables, and tables showing the

frequency of illness, accident and invalidity within the insurance sector

involving an element of capitalization (hereinafter: tables);

b) the joint carrying out of studies on the probable impact of general external

circumstances on which the participating undertakings have no influence,

relating to the frequency or number of future claims for reimbursement of

a given risk or risk category or on the profitability of different types of

investment (hereinafter: studies), that is, the distribution of the results of

such studies;

c) the joint establishment and distribution of non-binding standard policy

conditions for direct insurance (hereinafter: standard policy conditions);

d) the joint establishment and distribution of non-biding insurance types or

models illustrating the profit which is to be realized from an insurance

policy involving an element of capitalization (hereinafter: models);

e) the setting-up and operation of groups of insurance undertakings

(hereinafter: coinsurance groups) or groups of insurance undertakings and

reinsurance undertakings (hereinafter: co-reinsurance groups) for the joint

coverage of a specific category of risks in the form of joint co-insurance

and co-reinsurance;

f) the establishment, recognition and distribution of technical specifications,

rules or codes of practice concerning those types of security devices for

which there are no technical specifications in the relevant market,

classification systems, rules, procedures or codes of practice and the

assessment and approval procedures on compliance of security devices

with such specifications, rules or codes of practice (hereinafter: assessment

on compliance of the security devices);

Regulation on Block Exemption Granted to Insurance Agreements

106

g) the establishment, recognition and distribution of technical specifications,

rules and codes of practice for the installation and maintenance of security

devices, and the assessment and approval of the undertakings installing or

maintaining the security device which are already brought into compliance

with technical specifications, rules or codes of practice (hereinafter:

assessment and approval of undertakings);

(2) Standard policy conditions under paragraph (1), item c) of this Article refers to any

clauses contained in model or reference insurance policies prepared jointly by

insurers or by bodies or associations of insurers.

(3) Co-insurance groups under paragraph (1), item e) of this Article means groups of

insurers which agree to underwrite in the name and for the account of all the

participants the insurance of a specified risk category; or entrust the underwriting

and management of the insurance of a specified risk categories in their name and on

their behalf to one of the insurer, to a joint broker or to a joint body set up for this

purpose.

(4) Co-reinsurance groups under paragraph (1), item e) of this Article means groups of

insurers, one or more reinsures have possibility of participating, established for the

purpose of the mutually reinsurance of all or a part of their liabilities in respect of a

specified risk category; and in some cases, the acceptance in the name and on behalf

of all the participants the re-insurance of the same category of risks.

(5) Security devices under paragraph (1), items f) and g) of this Regulation means all

components and equipment designed for loss prevention and reduction, and systems

formed from such elements.

(6) Participating parties to the agreement means undertakings under paragraph (1) of

this Article and their respective connected undertakings.

Article 3


According to the provisions of this Regulation block exemptions shall not apply to:

a) insurance agreements which do not fulfill cumulative conditions laid down in

Article 4, paragraph (3) of the Act and which have not been brought into

compliance with this Regulation,

b) insurance agreements the subject matter of which falls within the scope of another

regulation pursuant to the provisions under Article 7 of the Act.

II CONDITIONS THAT AGREEMENT MUST CONTAIN AND OTHER

CONDITIONS FOR APPLICABILITY OF BLOCK EXEMPTIONS

Article 4

Joint Calculations, Tables and Studies

(1) The block exemption provided for in Article 2, paragraph (1), item a) of this

Regulation shall apply on condition that the calculations and/or tables:

a) are based on the numerical data collected, spread over the risk-years

selected as an observation period, which relate to identical or comparable

risks in sufficient number for statistical data processing for the period of

time concerned. Statistical processing contains a data on the number of


107

claims for reimbursement during the said period, the number of individual

risks insured in each risk-year of the chosen observation period, the data on

the total amounts paid or payable in respect of claims for reimbursement

arisen during the said period, the data on the total amount of capital

insured for each risk-year during the chosen observation period and other

relevant data;

b) include as detailed a breakdown of the available statistics to the extent of

actuarially possibility;

c) do not include in any way elements for potential contingency costs, income

deriving from reserves, administrative or commercial costs or fiscal or

para-fiscal contributions, and take into account neither revenue from

investments nor anticipated profits.

(2) The block exemptions provided for in Article 2, paragraph (1), items a) and b) of

this Regulation shall apply on condition that calculations, tables or study results:

a) do not identify the insurer or any insured parties;

b) when complied and distributed, include non-binding statement;

c) are made available on reasonable and non-discriminatory terms, to any

insurer which requires them, and to insurers which are not active on that

relevant market.

Article 5

Standard Policy Conditions and Models

(1) The block exemption provided for in Article 2, paragraph (1), item c) of this

Regulation shall apply on condition that the standard policy condition:

a) are established and distributed with an explicit statement that they are non-

binding and that their use is not in any way recommended

b) expressly arrange that participating parties to the agreement are free to

offer different policy conditions to their customers; and

c) are available to any interested party and can be obtained upon request.

(2) The block exemption provided for in Article 2, paragraph (1), item d) of this

Regulation shall apply on condition that the non-binding models are established and

distributed only by way of guidance.

Article 6

Other Conditions for Exemption

(1) The block exemptions provided for in Article 2, paragraph (1), item e) of this

Regulation shall apply on condition that:

a) each party to the agreement has the right to withdraw from the co-

insurance and/or co-reinsurance group, within the period of notice of not

more than one year starting from a day of the submission of the statement

of withdrawal, without incurring any sanction;

b) the rules of the co-insurance and/or co-reinsurance group, in whole or in

part, do not oblige any member of the co-insurance group and/or co-

reinsurance group to insure or re-insure any risk of the type covered by the

group;

c) the rules of the co-insurance and/or co-reinsurance group do not restrict the

activity of the group or its members to the insurance or reinsurance of risks

located in any particular part of the relevant market;

d) the agreement does not limit production and sales;


108

e) the agreement does not allocate the markets or customers;

f) the members of a co-reinsurance group do not agree on the gross insurance

premiums which they charge in direct insurance; and

g) no member of the co-insurance and/or co-reinsurance group, or

undertaking which exercises a determining influence on the policy of the

group, is also a member of, and/or exercises a determining influence on the

policy of another co-insurance and/or co-reinsurance group active on the

same relevant market.

(2) Gross insurance premium under paragraph (1), item f) of this Article and Article 11,

paragraph (1), item a) of this Regulation means the price which is charged to the

purchaser of an insurance policy.

Article 7

Security Devices

The block exemptions provided for in Article 2, paragraph (1), items f) and g) of this

Regulation shall apply on condition that:

a) the technical specifications and procedures for the assessment of compliance of the

security devices are precise, technically justified and in proportion to the

performance effects which are to be attained by the security device concerned;

b) the rules for the evaluation and approval of installation undertakings and/or

maintenance undertakings are objective, relate to their technical and professional

competence and are applied in a non-discriminatory manner;

c) such technical specifications and rules are established and distributed with an

expressly given statement that insurers are free to accept to insure, on whatever

terms and conditions they wish, other security devices which do not comply with

these technical specifications or rules;

d) such specifications and rules are established and distributed with an expressly given

statement that insurers are free to accept to insure, on whatever terms and

conditions they wish, other undertakings installing and maintaining the security

devices which do not comply with these technical specifications or rules;

e) such technical specification and rules are provided upon request to any interested

person;

f) any list of security devices and list of undertakings installing and maintaining those

security devices, which is compliant with technical specifications includes a

classification of security devices and undertakings based on the level of achieved

results;

g) a request for an assessment of compliance of security devices or assessment and

approval of undertakings may be submitted at any time by any applicant;

h) the evaluation of conformity under item g) of this paragraph does not impose on the

applicant any expenses that are disproportionate to the costs of the approval

procedure;

i) the security devices under undertakings installing and maintaining those security

devices which satisfy the criteria on compliance assessment and criteria on

assessment and approval of undertakings, get the in a non-discriminatory manner

within a period of six months of the date of application, except where technical

considerations justify a reasonable additional period;

j) the fact of compliance or approval under item i) of this paragraph is certified in

written;

k) the grounds for a refusal to issue the certificate of compliance and approval under

item i) of this paragraph are given in writing by attached copies of the records of the

tests and controls that have been carried out;


109

l) the grounds for a refusal to take into account a request for assessment under item i)

of this paragraph are provided in writing; and

m) the technical specifications and rules are applied by the bodies accredited to norms.

Article 8

Joint Coverage of Certain Types of Risks, Market Share and

Duration of Block Exemption

(1) The block exemption granting to insurance agreements provided for in Article 2,

paragraph (1), item e) of this Regulation shall apply to new co-insurance and co-

reinsurance groups which are created after the date this Regulation enters into force

in order to cover new risks for a period of three years from the date of the first

establishment of the groups, regardless of the market share of those groups.

(2) The block exemptions provided for in Article 2, paragraph (1), item e) of this

Regulation shall apply to co-insurance and co-reinsurance groups which do not fall

within the scope of paragraph (1) of this Article, as long as the present Regulation

remains in force, on condition that the insurance policies underwritten within the

grouping arrangement by the participating undertakings or on their behalf do not, in

any of the markets concerned, represent:

a) in the case of co-insurance, more than 20% of share in the relevant market;

b) in the case of co-reinsurance, more than 25% of share in the relevant

market;

(3) If the total market share of the co-insurance group referred to in paragraph (2), item

a) of this Article is initially not more than 20% but subsequently rises above this

level without exceeding 22%, the block exemption shall continue to apply for a

period of two consecutive calendar years following the year in which 20% total

market share of the co-insurance group was first exceeded.

(4) If the total market share of the co-insurance group referred to in the paragraph (2),

item a) of this Article is initially not more than 20% but subsequently rises above

22%, the block exemptions shall continue to apply for one calendar year following

the year in which the level of 22% total market share of the co-insurance group was

first exceeded.

(5) The benefit of paragraphs (3) and (4) of this Article may not be combined so as to

exceed a period of block exemption of two calendar years.

(6) If the total market share of the co-reinsurance group referred to in paragraph (2),

item b) of this Article is initially not more than 25% but subsequently rises above

this level without exceeding 27%, the block exemption shall continue to apply for a

period of two consecutive calendar years following the year in which the 25% total

market share of the co-reinsurance group was first exceeded.

(7) If the total market share of the co-reinsurance group referred to in paragraph (2),

item b) of this Article is initially not more than 25% but subsequently rises above

27%, the block exemptions shall continue to apply for one calendar year following

the year in which the level of 27% total market share of the co- reinsurance group

was first exceeded.

(8) The benefit of the paragraph (6) and (7) of this Article may not be combined so as

to exceed a period of block exemption of two calendar years.


110

(9) “New risk” under paragraph (1) of this Article means risks which did not exist

before, and for which insurance cover requires a new underwritten insurance policy.

An amendment, improvement or replacement of an existing insurance policy may

not be considered new risks.

Article 9

Calculation of Market Share

(1) The market share of the participating undertakings provided for in Article 8,

paragraph (2) of this Regulation shall be calculated on the basis of the gross

premium income of the insurance policies; if the gross premium income data are not

available, estimates based on other reliable market information, including insurance

cover provided or insured risk value, may be used to establish the market share of

the undertakings concerned.


of data relating to the calendar year preceding the conclusion of the agreement.


market shares of undertakings connected to the participating parties to the

agreement realized as provided for in paragraphs (1) and (2) of this Article.

III RESTRICTIONS AND CONDITIONS WHICH AGREEMENTS MAY NOT

CONTAIN

Article 10

Specific Conditions which Agreements may not Contain

The block exemption provided for in Article 2 of this Regulation shall not apply where

participating undertakings agree, impose or oblige other undertakings not to use calculations

or tables that differ from those established pursuant to Article 2, paragraph (1), item a) of this

Regulation, or not to deviate from the results of the studies referred to in Article 2, paragraph

(1), item b) of this Regulation.

Article 11

Hardcore Restrictions


Regulation shall not apply where the standard policy conditions in insurance contain

clauses which:

a) contain any indication of the level of the gross insurance premiums;

b) indicate the amount of the cover or the part which the policyholder must

pay himself;

c) impose comprehensive cover including risks to which a significant number

of policyholders are not simultaneously exposed;

d) allow the insurer to maintain the policy in force in the event that it cancels

part of the cover, or increase the cover premium without the risk or the

scope of the cover being changed, that is, if the insurer alters the policy

conditions without the express consent of the policyholders, exceptionally,

if it relates to indexation clauses;

e) allow the insurer to modify the term of the policy without the consent of

the policyholder;


111

f) impose on the policyholder in the non-life insurance sector a contract

period of more than three years;

g) impose a renewal period of more than one year where the policy is

automatically renewed;

h) require the policyholder to agree to the reinstatement of the policy which

has been suspended on account of the disappearance of the insured risk, if

the policyholder is once again exposed to a risk of the same nature;

i) require the policyholder to obtain cover from the same insurer for different

risks;

j) require the policyholder, in the event of disposal of the object of insurance,

to make the acquirer obliged by means of agreement to take over the

insurance policy;

k) exclude or limit the cover of a risk if the policyholder uses security devices

or services of undertakings installing or maintaining those security devices,

which are not approved in accordance with the relevant specifications

agreed by an association or associations of insurers in the relevant market.


Regulation shall not apply to the participating undertakings which agree amon

themselves, or agree to oblige other undertakings not to apply conditions other than

standard policy conditions established pursuant to an agreement between the

participating undertakings.


Regulation shall not apply to agreements which exclude the coverage of certain risk

categories because of the characteristics attributes of the policyholder, without

prejudice to the insurer to establish specific insurance conditions for particular

social or occupational categories of the population.


Regulation, shall not apply where the models include only specified interest rates or

contain figures indicating administrative costs. There is the possibility left to the

insurer to calculate in the models the amounts resulting of the legally imposed

obligations.


Regulation shall not apply to the participating undertakings which agree among

themselves, or oblige other undertakings not to apply calculation models illustrating

the benefits of an insurance policy other than the models established pursuant in the

agreement between the participating undertakings.

IV WITHDRAWL OF BLOCK EXEMPTION AND INDIVIDUAL EXEMPTION

Article 12


(1) Pursuant to Article 7, paragraph (4) of the Act, the Council of Competition may ex-

officious initiate the proceedings to assess the compatibility of a particular insurance

agreement or group of insurance agreements stipulated in Article 2 of this

Regulation with stipulations of Article 4, paragraph (3) of the Act and this

Regulation, if the effects of such agreements individually or due to their cumulative

effect with other similar agreements in the relevant market, do not fulfill the

conditions for block exemption.


112

(2) Within the meaning of paragraph (1) of this Article, the Council of Competition

may initiate the assessment of insurance agreements in particular where:

a) studies to which the exemption stipulated in Article 2, paragraph (1), item

b) of this Regulation applies are based on unjustifiable hypotheses;

b) standard policy conditions to which the exemption stipulated in Article 2,

paragraph (1), item c) of this Regulation applies contain clauses which

create, to the detriment of the policyholder, a significant imbalance

between the rights and obligations arising from the contract;

c) the setting-up or operation of a co-insurance group and/or co-reinsurance

group to which the block exemption stipulated in Article 2, paragraph (1),

item e) of this Regulation applies results in the sharing of the relevant

market through the conditions governing admission, the definition of the

risks to be covered, the agreements on sharing the risk out or on

assignment of the risk to another co-reinsurer, and by any other means,.

(3) If the results of the assessment of an agreement on the compliance with the

provisions of the Act and this Regulation prove that there are no grounds for the

applicability of block exemption, the Council of Competition shall by means of a

decision withdraw the benefit granted by block exemption to the agreement

concerned.

Article 13


Pursuant to Article 5 of the Act the participating undertakings may submit to the Council of

Competition a request for individual exemption, if the agreement concerned does not fall

under the applicability of block exemption within the meaning of Article 3 of this

Regulation.

Article 14


The participating undertakings which satisfy the conditions for block exemptions laid down

in this Regulation, within the meaning of the Article 7, paragraph (3) of the Act, do not need

to submit such agreements to the Council of Competition for assessment in respect of

individual exemption.


Article 15

(1) Insurance agreements under Article 2 of this Regulation which have been concluded

before this Regulation enters into force, must be brought in compliance with the

provisions of this Regulation by December 31, 2006.

(2) As regards insurance agreements which have been concluded before this Regulation

enters into force, under the condition that they have been brought in compliance

with the provisions of this Regulation within the period set out under paragraph (1)

of this Article, the market share, by way of an exception of Article 9, paragraph (2)

of this Regulation, shall be calculated on the basis of the data relating to the

calendar year preceding the year when this Regulation enters into force.


113

Article 16

Entry into Force

This Regulation shall enter into force on the eight day of its publication in the Official

Gazettes of Entities and Brcko District of Bosnia and Herzegovina.

C.C. Number: 01-01-26-629/05 President

Sarajevo, 30 December, 2005 Sena Hatibovic


GRANTED TO AGREEMENTS ON DISTRIBUTION

AND SERVICING OF MOTOR VEHICLES



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Pursuant to Article 7, paragraph (1), item d) and Article 25, paragraph (1) item a) of the

Competition Act (“Official Gazette of BiH”, No. 48/05), the Council of Competition in its

22nd session held on 24 January 2006, has adopted

REGULATION ON BLOCK EXEMPTION GRANTED TO AGREEMENTS ON

DISTRIBUTION AND SERVICING OF MOTOR VEHICLES


Article 1


This Regulation shall stipulate the conditions for block exemption granted to agreements on

distribution and servicing of motor vehicles, set out the conditions which such agreements

must contain, the restrictions or conditions which such agreements may not contain, and

other conditions which must be fulfilled in order to meet the conditions for block

exemption from application of the provisions on prohibited agreements pursuant to

Article 4 of the Act on Competition (hereinafter: the Act).

Article 2

Applicability of Block Exemption

(1) Block exemption shall apply to the agreements referred to in Article 7,

paragraph (1) item d) of the Act, concluded between two or more undertakings

each of which, for the purpose of the agreement, operate at the different level of

production or distribution (hereinafter: vertical agreements) where they relate to

the conditions under which the contracting parties may purchase, sell or resell new

motor vehicles, spare parts for motor vehicles or provide repair and maintenance

services for such vehicles, and particularly to the agreements which:

a) apply a qualitative, quantitative or mixed qualitative-quantitative selective

distribution system as a form of distribution and servicing of motor

vehicles;

b) apply the exclusive distribution or exclusive supply as a form of

distribution and servicing of motor vehicles;

c) contain provisions which relate to the assignment to the buyer or

giving the right to use to the buyer the intellectual property rights,

provided that such provisions do not constitute the main object of such

agreements and that they are directly connected to the use, sale and/or

resale of contract products by the buyer or its buyers.

(2) Exceptionally, the block exemption shall apply under the conditions set forth in

Article 6 of this Regulation and to the particular vertical agreements entered into

between association of undertakings and their members, as well as between such

association and their suppliers, in other words, to particular vertical agreements

entered into between competing undertakings.

(3) Motor vehicles referred to in paragraph (1) of this Article means:

a) Self-propelled vehicles intended for use on public roads and having tree

or more road wheels;

b) passenger cars intended for the carriage of passengers and comprising

no more than eight seats in addition to the driver's seat;

c) light commercial vehicles intended for the transport of goods or

passengers with a maximum mass not exceeding 3.5 tones; if a certain


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light commercial vehicle is also sold in a version with a maximum

mass above 3.5 tones, all versions of that vehicle are considered to be

light commercial vehicles.

(4) Selective distribution system referred to in paragraph (1), item a) of this

Article means a distribution system established on the basis of the agreement on

distribution and servicing of motor vehicles where the supplier undertakes to

sell the contract products and services, either directly or indirectly, only to

distributors or repairers selected on the basis of specified criteria and where

these distributors or repairers undertake not to sell such products or services

to unauthorized distributors or independent repairers, without prejudice to the

ability to sell spare parts to independent repairers or the obligation to provide

independent operators with all technical information, diagnostic equipment, tools

and training required for the repair and maintenance of motor vehicles or for the

implementation of environmental protection measures.

(5) Qualitative selective distribution system, as referred to in paragraph (1), item

a) of this Article, means a system where the supplier determines criteria for the

selection of distributors or repairers which are only qualitative in nature, are

required by the nature of the contract products or services concerned, are

determined uniformly for all distributors or repairers wishing to join the

distribution system, are not applied in a discriminatory manner, and do not directly

limit the number of distributors or repairers in the relevant market.

(6) Quantitative selective distribution system, as referred to in paragraph (1), item

a) of this Article, means a system where the supplier determines criteria for the

selection of distributors or repairers which directly limit their number in the

relevant market.

(7) Exclusive distribution agreements as a form of distribution and servicing of

the motor vehicles referred to in paragraph (1), item b) of this Article, means

vertical agreements where the supplier undertakes to sell the contract products

only to one distributor selected in a particular location or to exclusively allocated

customers groups which have been allocated exclusively to that distributor.

(8) Exclusive supply agreements as a form of distribution and servicing of motor

vehicles referred to in paragraph (1), item b) of this Article, means a vertical

agreement where the supplier directly or indirectly undertakes to sell the contract

products only to one buyer inside the market of Bosnia and Herzegovina for the

purpose of a specific use or for resale.

(9) It is not allowed to combine, at the same market, application of a selective

distribution system referred to in paragraph (1), item a) and paragraphs (3), (4)

and (5) of this Article, with the exclusive distribution or exclusive supply form

referred to in paragraph (1), item b) and paragraphs (6) and (7) of this Article, by

means of the agreement on distribution and servicing of motor vehicles.

Article 3

Non-applicability of Block Exemption

Under the provisions of this Regulation, the following agreements may not be exempted from

prohibition of block exemption:


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a) vertical agreements which fail to fulfill the cumulative criteria stipulated by the

provisions of Article 4, paragraph (3) of the Act and which are not in compliance


b) vertical agreements which, according to their subject, fall into the category of

some other regulation, pursuant to the provisions of Article 7 of the Act.

II CONDITIONS THE AGREEMENTS MUST CONTAIN

Article 4

Market Share

(1) Block exemption for vertical agreements shall apply on condition that the

supplier's market share on the relevant market on which it sells new motor

vehicles, spare parts for motor vehicles or provides repair and maintenance services

does not exceed thirty percent (30%).

(2) Block exemption for vertical agreements establishing quantitative selective

distribution system for sale of new motor vehicles shall apply on condition that

the market share on the relevant market does not exceed forty percent (40%).

(3) However, the market share value shall not apply to block exemption for

vertical agreements establishing qualitative selective distribution system referred

to in paragraphs (1) and (2) of this Article.

(4) In the case of vertical agreements containing exclusive supply obligation, the

block exemption shall apply on condition that the market share held by the buyer

does not exceed thirty percent (30%) in the relevant market where it purchases

the contract products or services.

Article 5

Market Share Calculation

(1) The market share in the relevant market, within the meaning of Article 4 of

this Regulation, shall be calculated:

a) for the distribution of new motor vehicles, on the basis of the sale

volume of the contract products sold by the supplier and other products

which are regarded as interchangeable or substitutable (hereinafter:

substitute products);

b) for the distribution of spare parts, on the basis of the income realized by

the supplier from the sale of contract products and other products which

are regarded as their substitute products;

c) for the provision of repair and maintenance services, on the basis of the

turnover realized by the members of the supplier's distribution network

from the provision of contract services together with other services which

are regarded as substitute services;

(2) The market share referred to in paragraph (1) of this Article shall be

increased by the income achieved by the connected undertakings realized in

the market of contract products and their substitutes.

(3) Mutual trade in contract products and their substitutes between the supplier

referred to in paragraph (1) of this Article and the connected undertakings


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referred to in paragraph (2) of this Article, as well as the mutual trade in such

contract products and their substitutes between the connected undertakings, shall

not be taken into account in the market share calculation.

(4) The income, calculated in accordance with paragraphs (1), (2) and (3) of this

Article, shall be reduced by the amount of customs duties, the value added tax, and

other taxes directly relating to the turnover and rebates in the financial year

preceding the conclusion of the agreement.

(5) The market share held by the buyer in the relevant market where it

purchases the contract products which does not exceed thirty per cent (30%), and

stipulated as a condition for the application of block exemption in the case of

agreement containing exclusive supply obligations, within the meaning of

Article 5, paragraph (4) of this Regulation, shall be calculated applying the

criteria referred to in paragraphs (1) to (4) of this Article, taking into account

the value of its purchases or the estimates thereof.

(6) If the income amount figures, required for the calculations of the market share

of the undertakings are not available, other available information, including the

sale volume data of the products may be used, unless the undertaking performed

no activity in the relevant market in the financial year preceding the year of the

conclusion of the agreement.

(7) If the market share of the undertakings, on the moment of the agreement

conclusion, is not more than thirty per cent (30%) or forty per cent (40%), when

the agreement establishes the quantitative selective distribution system for the

sale of new motor vehicles, but subsequently rises above that level

without exceeding thirty five per cent (35%) or forty five per cent (45%)

respectively, the exemption shall continue to apply for a period of two

consecutive calendar years following the year in which the market share of

thirty per cent (30%) or forty per cent (40%) respectively was first exceeded.

(8) If the market share of the undertakings, on the moment of the

agreement conclusion, is not more than thirty per cent (30%) or forty per cent (40%),

when the agreement establishes the quantitative selective distribution system for

the sale of new motor vehicles, but subsequently rises above thirty five per cent

(35%) or forty five per cent (45%) respectively, the exemption shall continue

to apply for one calendar year following the year in which the market share of

thirty five per cent (35%), or forty five per cent (45%) respectively was first

exceeded.

(9) The benefit of paragraphs (7) and (8) may not be combined so as to

exceed the exemption period of two calendar years.

Article 6

Total Annual Income for Certain Categories of Vertical Agreements

(1) Block exemption shall also apply to vertical agreements entered into between an

interest association of undertakings and their members, or between such

associations and their suppliers:

a) if all members of such associations are distributors of motor vehicles

or spare parts for motor vehicles or repairers;


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b) if no individual member of such associations, together with their

connected undertakings have a total annual income exceeding

4,000,000.00 KM.

(2) Block exemption shall also apply to vertical agreements entered into between

competing undertakings, on condition that the agreement does not guarantee of

equal rights and obligations to each of the parties:

a) if the supplier is at the same time a manufacturer and distributor of the

products, while the buyer is a distributor but does not manufacture the

substitute products; and/or

b) if the supplier is a provider of services at several levels of trade, while

the buyer does not provide substitute services at the trade level where it

purchases the contract services; and/or

c) if the buyer has a total annual income not exceeding 4,000,000.00 KM

Article 7

Calculation of Total Annual Income

(1) Within the meaning of Article 6 of this Regulation, the total annual income shall

include the total annual income achieved by the undertaking during the financial

year preceding the conclusion of the agreement and the income achieved by all its

connected undertakings added together.

(2) For the purposes of calculating the total annual income, referred to under

paragraph (1) of this Article, no account shall be taken of dealings achieved by

the sales of product between the undertakings concerned and their connected

undertakings and between the connected undertakings.

(3) The total annual income calculated pursuant to the provisions of paragraphs

(1) and (2) of this Article, shall reduced by an amount of customs duties, the

value added tax, and other taxes directly relating to the turnover and rebates.

(4) Block exemption for agreements referred to in Article 6 of this Regulation,

shall remain applicable even if during the period of two consecutive financial

years the total annual income is exceeded by no more than ten per cent (10%).

Article 8

Duration and Application of Block Exemptions

(1) Block exemption shall apply on condition that the vertical agreement

concluded by the supplier of new motor vehicles with a distributor or authorized

repairer provides:

a) that the agreement is concluded for a period of at least five years, and each

party to the agreement undertakes to give the other party at least six

months' prior notice of its intention not to renew the agreement; or

b) that the agreement is concluded for an indefinite period, in this case the

period of notice for regular termination of the agreement has to be at least

two years for both parties to the agreement.

(2) The period of notice for regular termination of the vertical agreement in line with

paragraph (1), item b) of this Article may be reduced to at least one year where:

a) the supplier is obliged by law or by special agreement to pay

appropriate compensation on termination of the agreement, or


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b) the supplier terminates the agreement where it is necessary to re-organize

the whole or a substantial part of the network.

(3) Block exemption shall apply on condition that the vertical agreement

concluded with a distributor or repairer provides that a supplier who wishes to give

notice of termination of an agreement must give such notice in writing and

must include detailed and objective reasons for the termination, in order to

prevent a supplier from ending a vertical agreement with a distributor or

repairer because of practices which may not be restricted under this Regulation.

(4) Block exemption shall apply on condition that the vertical agreement provides

for each of the parties to the agreement the right to refer disputes resulting

from the agreement.

(5) Block exemption shall apply on condition that vertical agreement concluded with a

distributor or repairer provides that the supplier agrees to the transfer of the rights

and obligations resulting from the vertical agreement to another distributor or

repairer within the distribution system.

III RESTRICTIONS OF COMPETITION

Article 9

Hardcore Restrictions Concerning the Sale of New Motor Vehicles, Spare Parts

and Repair and Maintenance Services

(1) Block exemption shall not apply to vertical agreements on the sale of new motor

vehicles, spare parts and repair and maintenance services, which directly or

indirectly, in isolation or in combination with other factors under the control of the

parties to the agreement, contain vertical restraints which have as their object:

a) the restriction of the distributor's or repairer's ability to determine its

sale price, without prejudice to the supplier's ability to impose a

maximum sale price or to recommend a sale price, provided that this

does not amount to a fixed of minimum sale price as a result of pressure

from, or incentives offered by, any of the parties to the agreement;

b) the restriction of the territory into which, or of the particular

customers to whom, the distributor or repairer may sell the contract

products; the exemption shall apply to:

1) active sales into the exclusive territory or to an exclusive customer

group reserved to the supplier or allocated exclusively for sale by the

supplier to another distributor or repairer, where such restrictions

do not allow the sales by the customers of those distributors or

repairers;

2) the sales to end users by a distributor operating on the wholesale level

of trade;

3) the sales of new motor vehicles and spare parts to unauthorised

distributors by the members of a selective distribution system in

markets where selective distribution is applied;

4) the sales of products supplied by the buyer from the supplier as spare

parts for the purposes of incorporation in a new product, to end-

users who would use those spare parts to manufacture the same type of

products (substitutes) as those produced by the supplier.

c) the restriction of cross-supplies between distributors or repairers within a


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selective distribution system, including restrictions of cross-supplies

between distributors or repairers operating at different levels of trade;

d) the restriction of active or passive sales of new passenger cars or light

commercial vehicles, spare parts for any motor vehicles or repair and

maintenance services for motor vehicles to end users by members of a

selective distribution system operating at the retail level of trade in the

markets where selective distribution is used;

e) the restriction of active or passive sales of new vehicles other than

passenger cars or light commercial vehicles to end users by members of

a selective distribution system operating at the retail level of trade in the

markets where selective distribution is used, without prejudice to a

prohibition on a member of a selective distribution system from operating

out of an unauthorised place of business.

(2) Active sales within the meaning of paragraph (1) of this Article shall mean

sales made by actively searching for or approaching customers or particular group

of customers inside another distributor's exclusive territory, the conclusion of

individual agreements and taking measures of general presentation of products to

the relevant customers, establishment of branches, warehouse or organization of

distribution networks and advertising in another distributor's exclusive territory.

Active approach includes visits, direct and electronic mail, advertisements in the

media or other promotions specifically targeted at that customer group or

customers in another distributor's territory.

(3) Passive sales within the meaning of paragraph (1) of this Article shall mean

sales in response to requests from individual customers, including delivery of

products to such customers, to the extent that such responding is not the result of

active sales operations. Passive sales includes the sales generated by general

advertising or promotion in the media or on the Internet that reaches customers in

other distributors' exclusive territories or customer groups, which is the result of

development in technology and easily access, and therefore it considered to be a

reasonable method of approaching the customers or groups of customers.

Article 10

Hardcore Restrictions Concerning the Sale of New Motor Vehicles

(1) Block exemption shall not apply to vertical agreements on the sale of new motor

vehicles, which directly or indirectly, in isolation or in combination with other

factors under the control of the parties to the agreement, contain vertical restraints

which have as their object:

a) the restriction of the distributor's ability to sell any new motor vehicle

which corresponds to a model within its contract range set forth by the

agreement;

b) the restriction of the distributor's ability to subcontract the provision of

repair and maintenance services to other authorized repairers, without

prejudice to the supplier's ability to require the distributor to give end

users the name and address of the authorized repairer in question before

the conclusion of the sales contract.

(2) Contract range of products determined in the agreement, within the meaning of

paragraph (1), item a) of this Article, means any of the different models of motor

vehicles available for purchase by the distributor from the supplier.


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(3) A motor vehicle which corresponds to a model within the contract range of

products, within the meaning of paragraph (1) of this Article, means a vehicle

which is the subject of a distribution agreement with another undertaking within

the distribution system set up by the manufacturer or with his consent and which is:

a) manufactured or assembled in volume by the manufacturer, and

b) identical as to body style, drive-line, chassis, and type of motor to a

vehicle within the contract range.

(4) Authorized repairer within the meaning of paragraph (1) of this Article means a

provider of repair and maintenance services for motor vehicles not operating

within the distribution system set up by a supplier of motor vehicles for which it

provides the repair or maintenance services.

Article 11

Hardcore Restrictions Concerning the Sale of Spare Parts and of Repair and

Maintenance Services

(1) Block exemption shall not apply to vertical agreements on the sale of spare parts

and of repair and maintenance services which directly or indirectly, in

isolation or in combination with other factors under the control of the parties to the

agreement, contain vertical restraints which have as their object:

a) the restriction of the authorized repairer's ability to limit its activities to

the provision of repair and maintenance services and the distribution of

spare parts;

b) the restriction of the sales of spare parts for motor vehicles by

members of selective distribution system to independent repairers

which use these parts for the repair and maintenance of motor vehicles;

c) the restriction agreed between a supplier of original spare parts or spare

parts of matching quality, repair tools or diagnostic or other equipment

and a manufacturer of motor vehicles, which limits the supplier's rights

to sell these products to authorized or independent distributors or to

authorized or independent repairers or end users;

d) the restriction of a distributor's or authorized repairer's ability to obtain

original spare parts or spare parts of matching quality from a third

undertaking of its choice and to use them for the repair or maintenance

of motor vehicles, without prejudice to the ability of a supplier of new

motor vehicles to require the use of original spare parts supplied by it

for repairs carried out under warranty, free servicing and vehicle recall

work;

e) the restriction agreed between a manufacturer of motor vehicles which

uses components for the initial assembly of motor vehicles and the

supplier of such components which limits the latter's ability to place its

trade mark or logo effectively and in an easily visible manner on the

components supplied or on spare parts.

(2) Independent repairer within the meaning of paragraph (1), items b) and c) of

this Article means a provider of repair and maintenance services for motor

vehicles not operating within the distribution system set up by the supplier of

the motor vehicles for which it provides repair or maintenance. An authorized

repairer within the distribution system of a given supplier is deemed to be an

independent distributor for the purposes of this Regulation to the extent

that it provides repair or maintenance services for motor vehicles in respect of

which it is not a member of the respective supplier's distribution system.


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(3) Spare parts referred to in paragraph (1), item b) of this Article means parts which

are to be installed in or upon a motor vehicle so as to replace components of

that vehicle, including products such as lubricants which are necessary for the

use of a motor vehicle, with the exception of fuel.

(4) Spare parts of matching quality referred to in paragraph (1) item c) of this Article

means spare parts made by any undertaking which can certify at any moment that

the parts in question match the quality of the components which are or were used

for the assembly of the motor vehicles in question.

(5) Original spare parts within the meaning of paragraph (1), item c) of this Article

means spare parts which are of the same quality as the components used for the

assembly of a motor vehicle and which are manufactured according to the

specifications and production standards provided by the vehicle

manufacturer for the production of components or spare parts for the motor

vehicle in question. This includes spare parts which are manufactured on the

same production line as these components. It is presumed, unless the contrary

is proven, that parts constitute original spare parts if the part manufacturer

certifies that the parts mach the quality of the components used for the assembly

of the vehicle in question and have been manufactured according to the

specifications and production standards of the vehicle manufacturer.

Article 12

Other Hardcore Restrictions of Market Competition

(1) Block exemption shall not apply where the supplier of motor vehicles refuses to

give independent undertakings access to any technical information, diagnostic and

other equipment, tools, including any relevant software or training required for the

repair and maintenance of these motor vehicles or for the implementation of

environmental protection measures.

(2) Independent undertakings referred to in paragraph (1) of this Article shall

mean undertakings which are directly or indirectly involved in the repair and

maintenance services of motor vehicles, in particular independent repairers,

manufacturers of repair equipment or tools, independent distributors of spare

parts, publishers of technical information, automobile clubs, roadside

assistance operators, operators offering inspection and testing services and

operators offering training for repairers.

Article 13

Specific Conditions Agreements May Not Contain

(1) Block exemption shall not apply to vertical agreements relating to the sale of new

motor vehicles, of spare parts and repair and maintenance services containing any of

the following restraints:

a) any direct or indirect compete obligation;

b) any direct or indirect obligation limiting the right to an authorized

repairer to provide repair and maintenance services for vehicles from

competing suppliers;

c) any direct or indirect obligation causing the members of a distribution

system not to sell motor vehicles or spare parts of particular competing

suppliers or not to provide repair and maintenance services for motor


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vehicles of particular competing suppliers;

d) any direct or indirect obligation causing the distributor or authorized

repairer, after termination of the agreement, not to manufacture, purchase,

sell or resell motor vehicles or not to provide repair or maintenance

services.

(2) With the exemption of paragraph (1), item a) of this Article, a compete

obligation shall not be deemed a prohibited vertical restraint where the distributor

sells motor vehicles from other suppliers in separate areas of the showroom in order

to avoid confusion. An obligation imposed on the distributor to have brand-

specific sales personnel for different brands of motor vehicles shall

constitute a prohibited vertical restraint, unless the distributor decides to have

brand-specific sales personnel and the supplier pays all the additional costs

involved.

(3) A compete obligation within the meaning of paragraph (1), item e) and

paragraph (2) of this Article, means any direct or indirect obligation causing the

buyer not to manufacture, sell or resell substitute products which compete with the

contract products, or any direct or indirect obligation on the buyer to purchase

from the supplier or from another undertaking designated by the supplier more

than thirty per cent (30%) of the buyer's total purchases. That is to be calculated

on the basis of the value of its purchases in products and substitutes in the

relevant market in the preceding financial year.

(4) Block exemption shall not apply to vertical agreements relating to the sale of

spare parts and repair and maintenance services containing restraints as to the place

of business where the system of selective distribution applies.

IV OTHER CONDITIONS FOR APPLICABILITY OF BLOCK EXEMPTION

Article 14

Other Criteria for Block Exemption

(1) In the assessment of vertical agreement, relating to the conditions the agreements

must satisfy in order to be granted block exemption, pursuant to the conditions

provided for under Article 4, paragraph (3) of the Act, and under Articles 4 to 8 of

this Regulation, following criteria is also to be taken into account, and in

particular:

a) the relevant market structure on the supply and demand side;

b) the market position of competing undertakings and the extent to which

the parties to the agreement and other suppliers of the substitute

products face competition in the relevant market;

c) the nature of vertical contractual obligations containing restrictions of the

inter-brand or intra-brand market competition;

d) the existence of parallel networks of vertical agreements.

(2) Vertical agreements within the meaning of paragraph (1), item c) of this Article,

shall be deemed compatible or prohibited depending on the economic and legal

analysis of the conditions on the relevant market where those agreements have

particular influences, or depending on relation between positive and negative

effects.


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V WITHDRAWAL OF BLOCK EXEMPTION AND INDIVIDUAL EXEMPTION

Article 15

Conditions for Withdrawal of Block Exemption

(1) Pursuant to Article 7, paragraph (1), item d) of the Act the Council of

Competition may, ex officio, initiate the proceedings to assess the compatibility of

a particular agreement or group of agreements, if such agreements individually or

due to their cumulative effect with other similar agreements in the relevant market,

do not fulfill the conditions for block exemption, and particularly:

a) where the access to the relevant market or competition therein is

significantly restricted by the cumulative effect of vertical agreements

containing similar vertical restraints;

b) where competition is restricted on a market where one supplier is not

exposed to effective market competition from other suppliers;

c) where prices or conditions of supply for contract products or

corresponding products differ substantially between relevant

geographic markets;

d) where discriminatory prices or sales conditions are applied within a

relevant market.

(2) If the Council of Competition proves that there are no grounds for the

applicability of block exemption, pursuant to the provisions of the Act and this

Regulation, it shall by means of a decision withdraw the benefit granted by block

exemption to a particular or a group of vertical agreements.

Article 16


Pursuant to Article 5 of the Act the undertakings - parties to the vertical agreement may

submit to the Council of Competition a request for individual exemption, if the agreement

concerned does not fall under applicability of block exemption within the meaning of this

Regulation, or if it, by its nature, is not covered by some other block exemption within the

meaning of Article 3, paragraph (1), item b) of this Regulation.

Article 17


The parties to the vertical agreement that satisfy the conditions for block exemption laid

down in this Regulation, within the meaning of Article 7, paragraph (3) of the Act, do

not need to submit those agreements to the Council of Competition for assessment in

respect of individual exemption.


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VI TRANSITIONAL AND FINAL PROVISIONS

Article 18

Transitional Provisions

(1) Vertical agreements referred to in Article 2 of this Regulation, which have

been concluded before this Regulation enters into force, must be brought in

compliance with the provisions of this Regulation by 31st December, 2006.

(2) As regards vertical agreements which have been concluded before this

Regulation enters into force, under the condition that they have been

brought in compliance with the provisions of this Regulation within the time

period set out under paragraph (1) of this Article, the market share, without

prejudice to Article 5, paragraphs (2) and (4) of this Regulation, shall be calculated

on the basis of the income realized during the financial year preceding the year of

the entry into force of this Regulation.

(3) As regards vertical agreements which have been concluded before this

Regulation enters into force, under the condition that they have been

brought in compliance with the provisions of this Regulation within the time

period set out under paragraph (1) of this Article, for the purpose of calculating

the total annual income, without prejudice to Article 7, paragraphs (1) and (2)

of this Regulation, the total annual income in the financial year preceding the

year of the entry into force of this Regulation shall be taken into account.

Article 19

Entry into Force

This Regulation shall enter into force on the eighth day following the day of publication in

the “Official Gazette of BiH “and it shall be published in official gazettes of Entities and

Brcko District of Bosnia and Herzegovina.

C.C., No. 01-01-26-124-I/06 President




TECHNOLOGY TRANSFER AGREEMENTS

(LICENCE AND KNOW-HOW AGREEMENTS)



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Pursuant to Article 25, item a) and Article 7, paragraph (1), item c) of the Act on

Competition (“Official Gazette of BiH”, No. 48/05), the Council of Competition in its 20th

session held on 27 December 2005, has adopted

REGULATION ON BLOCK EXEMPTION GRANTED TO CERTAIN

CATEGORIES OF TECHNOLOGY TRANSFER AGREEMENTS

(LICENCE AND KNOW-HOW AGREEMENTS)


Article 1


This Regulation shall stipulate the conditions for block exemptions granted to certain

categories of technology transfer agreements (licence agreements and know-how

agreements) set out conditions which such agreements must contain, the restrictions or

conditions which such agreements may not contain, and other conditions which must be

fulfilled in order to satisfy the conditions for block exemption from application of those

agreements from application of the provisions on prohibited agreements set out in the Act on

Competition (hereinafter: the Act).

Article 2

Applicability of the Block Exemption

(1) Block exemption shall apply to technology transfer agreements laid down in article

7, paragraph (1), item c) of the Act entered into between two undertakings

permitting the production of the contract products, including the agreements

permitting, besides the production, more than one level of trade.

(2) Within the meaning of paragraph (1) of this Article a technology transfer

agreement means a patent licensing agreement, licensing agreement on

technological knowledge and experience (know-how), a software copyright

licensing agreement or a combined patent licensing agreement, licensing

agreement on technological knowledge and experience (know-how) or software

copyright licensing agreement, including any such agreement containing provisions

which relate to the sale and purchase of products or which relate to the licensing of

other intellectual property rights and the assignment of intellectual property rights,

provided that those provisions do not constitute the primary object of those

agreement and that they are directly related to the production of the contract

products.

(3) Within the meaning of paragraph (1) of this Article the technology transfer

agreement means also an agreement on assignment of patents, licensing agreement

on technological knowledge and experience (know-how), software copyright or a

combination thereof in a case where the part of the risk associated with the

exploitation of the technology remains with the assignor, in particular where the

sum payable in consideration of the assignment of technology is dependent on the

income earned by the assignee in respect of products produced with the assigned

technology, the quantity of such products produced or the number of operations

carried out employing that technology.

(4) Within the meaning of paragraphs (1) and (2) of this Article licensing agreement on

technological knowledge and experience (hereinafter: know-how) means a package


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of non-patented practical information, resulting from experience and testing, which

is secret, substantial and identified. “Secret” means that the know-how package as

a body or in the precise configuration and assembly of its components is not

generally known or easily accessible. “Substantial” means that the know-how

includes data, or information which is indispensable and useful for production of

the contract products. “Identified” means that the know-how is to be described in a

sufficiently comprehensive manner so as to make it possible to verify that it fulfils

the criteria of secrecy and substantiality.

(5) Intellectual property rights within the meaning of paragraph (2) of this Article are

industrial property rights, know-how, copyrights and neighbouring rights.

(6) Within the meaning of paragraphs (2) and (3) of this Article patents means patents,

requests for consensual patents licensing, industrial designs, topographies of

semiconductor-products, supplementary protection certificates for medical

products or other products for which such supplementary protection certificates

may be obtained and plant breeder’s certificates.

(7) Contract product stipulated under paragraph (1) of this Article means product

produced with the licensed technology and/or product in which such technology

has been incorporated.

(8) Undertakings - parties to the agreement, that is to say a licensor and licensee under

paragraph (1) of this Article include also their connected undertakings.

Article 3


As for block exemptions, the following agreements may not be excluded from prohibition,

according to the provisions of this Regulation:

a) technology transfer agreements which do not fulfil the cumulative conditions laid

down under Article 8 of the Act and which have not been brought into compliance


b) technology transfer agreements which fall within the scope of any other regulation

pursuant to the provisions of Article 7 of the Act.

II CONDITIONS THAT AGREEMENTS MUST CONTAIN AND OTHER

CONDITIONS FOR EXEMPTION

Article 4

Market Share

(1) Where the parties to the agreement are competing parties, the block exemption

provided for in Article 2 of this Regulation shall apply on condition that total

market share of the parties to the agreement does not exceed twenty per cent (20%)

on the defined relevant technology and product market.

(2) Where the parties to the agreement are not competing parties, the block exemption

provided for in Article 2 of this Regulation shall apply on condition that the market

share of each of the parties to the agreement does not exceed thirty per cent (30%)

on the defined relevant technology and product market.


133

(3) For the purpose of paragraphs (1) and (2) of this Article, the market share of the

parties to the agreement on the relevant technology market is defined in terms of the

presence of the licensed technology on the relevant product market.

(4) Within the meaning of paragraph (1) of this Article, competing undertakings shall

be considered actual competitors on the relevant technology market if they compete

on the relevant technology market by assigning licences for substitute technologies

without infringing intellectual property rights of other undertakings.

(5) Within the meaning of paragraph (1) of this Article, undertakings shall be

considered actual competitors on the relevant product market which are both active

on the relevant product and geographic market on which the contract products are

sold without infringing each others` intellectual property rights.

(6) Within the meaning of paragraph (1) of this Article, potential competitors on the

relevant technology and relevant product market are undertakings which would, on

realistic grounds, undertake necessary additional investments or other necessary

switching costs so that they could timely enter, without infringing each others`

intellectual property rights, that relevant market in response to a small and

permanent increase in prices.

Article 5

Calculation of the Market Share

(1) Within the meaning of Article 4 of this Regulation, the market share of the parties

to technology transfer agreement shall be calculated on the basis of the market sales

value of the contract products and their substitutes. If the market sales value data

concerned is not available, estimates based on other reliable market information,

including market sales volumes of the contract products and their substitutes in the

relevant market may be used to establish the market share of the parties to the

agreement.


of data relating to the calendar year preceding the conclusion of the agreement.

(3) The market share under paragraph (1) of this Article shall include the market share

of the respective connected undertakings realised as provided for under paragraphs

(1) and (2) of this Article.

(4) Within the meaning of paragraphs (1), (2) and (3) of this Article, the licensor’s

market share on the relevant technology market shall include the combined market

shares of its all licensees calculated on the basis of the sales value data of products

incorporating the licensed technology and this for each relevant market separately.

When the parties to the agreement are competitors on the relevant technology

market, sales value data of products incorporating the licensed technology includes

the sales value data of the products incorporating the licensee’s own technology. In

the case of new technologies being incorporated in new products which have not

been yet sold on the market, the market share of the parties to the agreement shall

be deemed zero on the technology relevant market until the sale of new products

starts.

(5) The market share of both parties to the agreement on the relevant product market,

within the meaning of paragraphs (1), (2) and (3) of this Article, shall not take into


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account the sale value of other licensees-not parties to the agreement in question.

The market share of the licensee on the relevant product market includes sale value

data of products incorporating the licensed technology and the sale value data of

their substitutes. If the licensor is also a supplier of products on the relevant product

market, then the licensor’s market share includes its market share on that market

calculated on the basis of the sale value data of products.

Article 6

Duration of Block Exemption

(1) The block exemption for technology transfer agreements under the conditions

provided for in Article 4, paragraphs (1), (2) and (3) of this Regulation shall apply

for as long as the intellectual property right in the licensed technology exists, that is

to say, until the intellectual property right expires, lapses or been declared invalid.

The block exemption for know-how agreements shall apply for as long as the know-

how remains secret, except in the event where the know-how becomes publicly

known as a result of action by licensee, in which case the block exemption shall

apply for the duration of the agreement.

(2) When the combined market share of the parties to the agreement which are

competing undertakings in the relevant market initially does not exceed twenty per

cent (20%) but subsequently rises above that level, the block exemption shall

continue to apply for a period of two consecutive calendar years following the year

in which the 20% of market share was first exceeded.

(3) When the market share of each of the parties to the agreement which are not

competing undertakings in the relevant market initially does not exceed thirty per

cent (30%), but subsequently rises above that level, the block exemption shall

continue to apply for period of two consecutive calendar years following the year in

which the 30% of market share of each of the parties to the agreement was first

exceeded.

III RESTRICTIONS OR CONDITIONS WHICH AGREEMENTS MAY NOT

CONTAIN

Article 7

Hard Core Restrictions within Agreements between Competing Undertakings

(1) Where the parties to the agreement are competing undertakings, the block

exemption shall not apply to agreements which, directly or indirectly, in isolation or

in combination with other factors under the control of the parties, have as their

object:

a) the restriction of the parties’ ability to determine the sale prices of product

when selling them to third parties;

b) the limitation of production, except the limitations on the production of

contract products, imposed on the licensee in non-reciprocal agreement or

imposed on only one of the licensees in the reciprocal agreement;

c) the allocation of markets or allocation of customers into groups, except the

obligation under paragraph (2) of this Article;

d) the restriction of the licensee’s right to exploit its own technology or the

restriction of the ability of any of the parties to the agreement to carry out

research and development, unless such restriction is indispensable to

prevent the disclosure of the licensed know-how to third parties.


135

(2) The allocation of markets or allocation of customers into groups stipulated under

paragraph (1), item c) of this Article, shall not be considered a hard core restriction

of the market competition in the case of:

a) the obligation on the licensee to produce with the licensed technology only

within one or more technical fields of use or one or more product markets;

b) the obligation on the licensor and/or licensee, in non-reciprocal agreement,

not to produce with the licensed technology within one or more technical

fields of use or within one or more product markets or within one or more

exclusive territories reserved for the other party to the agreement;

c) the obligation on the licensor not to assign the licence for the said

technology to another licensee in a particular territory;

d) the restriction, in non-reciprocal agreement, of active and/or passive sales

by the licensee and/or the licensor into the exclusive territory or to the

exclusive customer group reserved for the other party to the agreement;

e) the restriction, in a non-reciprocal agreement, of active sales by the

licensee into the exclusive territory or to the exclusive customer group

allocated by the licensor to another licensee provided the latter was not a

competing undertaking of the licensor in the relevant market at the time of

achievement of its own licence;

f) the obligation on the licensee to produce the contract products only for its

own use provided that the licensee is not restricted in selling the contract

products actively and passively as spare parts for its own products;

g) the obligation on the licensee, in a non-reciprocal agreement, to produce

the contract products exclusively for a particular customer, where the

licence is assigned for the purpose of creating an alternative source of

supply for that customer.

(3) Within the meaning of paragraph (1), item b) of this Article, reciprocal agreement

means a technology transfer agreement which is based on reciprocity, where two

undertakings assign each other, in the same or separate contracts, a patent licence, a

know-how licence, a software copyright licence or a combined patent, know-how or

software copyright licence and where these licences relate to the substitute

technologies or can be used for production of substitute products.

(4) Within the meaning of paragraph (1), item b) and paragraph (2), items b), d), e) and

g) of this Article, non-reciprocal agreement means a technology transfer agreement

which is based on reciprocity, where one party assigns a technology licence to

another party, and agreement where two undertakings assign each other a patent

licence, a know-how licence, a software copyright licence or combined patent,

know-how or software copyright licence, provided that those licences do not relate

to substitute technologies and cannot be used for production of the substitute

products.

(5) Within the meaning of paragraph (2), items b), d) and e) of this Article, exclusively

allocated territory means a territory in which only one undertaking is approved to

produce the contract products with the licensed technology, without prejudice to the

possibility of allowing within that territory another licensee to produce the contract

product only for a particular customer where this second licence was assigned with

the intention of creating an alternative source of supply for that customer.

(6) Within the meaning of paragraph (2), items d), e) and g) of this Article, exclusively

allocated customer group means a group of customers to which only one


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undertaking is approved actively to sell actively the contract products produced

with the licensed technology.

Article 8

Hard Core Restrictions within Agreements between Non-competing Undertakings

(1) Where the undertakings-parties to the agreement are not competing undertakings,

the block exemption shall not apply to agreements which, directly or indirectly, in

isolation or in combination with other factors under the control of the parties, have

as their object:

a) the restriction of a party’s right to freely determine sale prices when selling

products to third parties, without prejudice to the possibility of imposing a

maximum sale price or recommending a sale price, provided that it does

not amount to a fixed or minimum sale price as a result of pressure from,

or incentives offered by, any of the parties to the agreement;

b) the restriction of the territory into which, or of the customers group to

whom, the licensee may passively sell the contract products, except the

obligations under paragraph (2) of this Article;

c) the restriction of active or passive sales to end-users by a licensee which is

a member of a selective distribution system and which operates at the retail

level, without prejudice to the possibility of prohibiting a licensee to

operate out of an unauthorised place of business.

(2) The restriction of the territory into which, or the customers to whom, the licensee

may passively sell the contract product referred to under paragraph (1), item b) of

this Article, shall not be considered a hard core restriction in the case of:

a) the restriction on the licensee making passive sales into an exclusive

allocated territory or to an exclusive allocated customer group reserved for

the licensor;

b) the restriction on the licensee making passive sales into an exclusive

allocated territory or to an exclusive allocated customer group assigned by

the licensor to another licensee during the first two (2) years, when the

latter licensee sells the contract products in that territory or to that

customer group;

c) the obligation on the licensee to produce the contract products only for its

own use provided that the licensee is not restricted in selling the contract

products actively and passively as spare parts for its own products;

d) the obligation on the licensee to produce the contract products exclusively

for a particular customer, where the licence was assigned for the purpose

of creating an alternative source of supply for that customer;

e) the restriction on licensee operating at the wholesale level of trade the

active or passive sales to end-users;

f) the restriction on the members of a selective distribution system the active

or passive sales to unauthorised distributors.

(3) Where the undertakings-parties to the agreement are not competing undertakings in

the relevant market at the time of the conclusion of the agreement but become

competing undertakings afterwards, the provisions of paragraphs (1) and (2) of this

Article shall apply to them for the full life of agreement unless the agreement is

amended in any significant part.

(4) Within the meaning of paragraph (1), item c) and paragraph (2), item f) of this

Article, selective distribution system means a distribution system where the licensor


137

undertakes to assign the license on production of the contract products only to

licensee selected on the basis of specified criteria and where these licensees

undertake not to sell actively or passively the contract products to unauthorised

distributors.

(5) Within the meaning of paragraph (1), item c) and paragraph (2), items c), e) and f)

of this Article, active sales means sales made by actively searching for or

approaching to customers or customer groups inside another parties` exclusive

territory, initiation of conclusion of individual agreements and taking measures of

general presentation of products to those customers, establishment of branches,

warehouse or organization of distribution networks and advertising in that territory.

Active approach includes visits, direct and electronic mail, advertisements in the

media or other promotions specifically targeted at those customers or customer

group in the other parties` exclusive territory.

(6) Within the meaning of paragraph (1), items b) and c) and paragraph (2), items a),

b), c), e) and f) of this Article, passive sales means sales in response to requests

from individual customers in other parties` exclusive territories, including delivery

of products to such customers, to the extent that such responding is not the result of

active sales operations. Sales generated by general advertising or promotion in the

media or on the Internet that reaches customers in other parties` exclusive territories

or customers in the respective territories, as a result of the development in the

technology and easy access, are considered to be a reasonable method of

approaching those customers.

Article 9

Particular Obligations which Agreements may not Contain

(1) The block exemption shall not apply to any of the following obligations contained

in technology transfer agreements.

a) any direct or indirect obligation on the licensee to assign to the licensor or

to a third party designated by the licensor an exclusive licence in respect of

its own improvements to or its own new applications of the licensed

technology;

b) any direct or indirect obligation on licensee to assign, in whole or in part,

to the licensor or to a third party designated by the licensor, the rights in

respect of its own improvements to or its own new applications of the

licensed technology;

c) any direct or indirect obligation on the licensee not to challenge the

validity of intellectual property rights which the licensor holds in the

relevant market, without prejudice to the possibility of providing for

termination of the technology transfer agreement in the event that the

licensee challenges the validity of one or more of the licensed intellectual

property rights.

(2) Where undertakings-parties to the agreement are not competing undertakings in the

relevant market, the block exemption shall not apply to technology transfer

agreements containing any direct or indirect obligation limiting the licensee’s rights

to exploit its own technology or limiting the right of any of the parties to the

agreement to carry out research and development, unless such latter restriction is

indispensable to prevent the disclosure of the licensed know-how to third parties.


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(3) The improvement referred to under paragraph (1), items a) and b) of this Article

means an improvement that can be exploited without infringing the rights covered

in the licensed technology.

IV WITHDRAWL OF BLOCK EXEMPTION AND INDIVIDUAL EXEMPTIONS

Article 10


(1) Pursuant to Article 7, paragraph (4) of the Act, the Council of Competition may ex-

officio or at the request of a party initiate the proceedings for assessment of

compatibility of a particular agreement or agreements under Article 2 of this

Regulation with the provisions laid down in Article 4, paragraph (3) of the Act and

this Regulation, where the effects of such agreements, individually or in

combination with similar agreements in the relevant market do not fulfil the

conditions for block exemption.

(2) Within the meaning of paragraph (1) of this Article, the Council of Competition

may initiate the proceedings for assessment of a technology transfer agreement, in

particular where:

a) access of third parties` technologies to the relevant market is restricted by

the cumulative effect of parallel networks of similar restrictive agreements

prohibiting licensees from using third parties` technologies;

b) access of potential licensees to the relevant market is restricted by the

cumulative effects of parallel networks of similar restrictive agreements

prohibiting licensors from assessing the licence licensing to other

licensees;

c) without any objectively valid reason, the parties to the agreement do not

exploit the licensed technology.

(3) Where the results of the assessment of an agreement on the compliance with the

provisions of the Act and this Regulation prove that there are no grounds for the

applicability of block exemption the Council of Competition shall by means of a

decision withdraw the benefit granted by block exemption to this particular

agreement.

Article 11


Pursuant to Article 5 of the Act the undertakings-parties to the agreement may submit to the

Council of Competition a request for individual exemption, if the agreement concerned does

not fall under applicability of block exemption within the meaning of Article 3 of this

Regulation.

Article 12


The undertakings-parties to the technology transfer agreement that satisfy the conditions for

block exemption laid down in this Regulation within the meaning of Article 7, paragraph (3)

of the Act, are not obliged to submitted those agreements to the Council of Competition for

assessment in respect of individual exemption.


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Article 13

(1) Technology transfer agreements under Article 2 of this Regulation, which have

been concluded before this Regulation enters into force, must be brought into

compliance with the provisions of this Regulation by 31st December 2006.

(2) As regards technology transfer agreements which have been concluded before this

Regulation enters into force, on condition that they have been brought in

compliance with the provisions of this Regulation set out under paragraph (1) of this

Regulation, the market share, with the exception of Article 5, paragraph (2) of this

Regulation, shall be calculated on the basis of the data relating market calendar year

preceding the year of the entry into force of this Regulation.

Article 14

Entry into Force

This Regulation shall enter into force on the eight day following the day of its publication in

the “Official Gazette of Bosnia and Herzegovina” and it shall be published in official

gazettes of Entities and Brcko District of Bosnia and Herzegovina.

CC. Number: 01-01-26-628/05 President

Sarajevo, 30 December 2005 Sena Hatibovic

REGULATION ON THE AMOUNT OF

ADMINISTRATION TAXES RELATING TO THE

PRACTICES BEFORE THE COUNCIL OF

COMPETITION



143

Pursuant to Article 17 of the Law on the Council of Ministers of Bosnia and Herzegovina

(“Official Gazette of BiH”, No.30/03) and Article 25, paragraph (19), item i) of the Act on

Competition (“Official Gazette of BiH”, No. 48/05) on a proposal from the Council of

Competition, The Council of Ministers of Bosnia and Herzegovina in its 112th session held

on 16 March 2006, has adopted

REGULATION ON THE AMOUNT OF ADMINISTRATION TAXES RELATING

TO THE PRACTICES BEFORE THE COUNCIL OF COMPETITION


Article 1

Subject Matter

This Regulation shall stipulate the amount of administration taxes relating to the practices in

competence of the Council of Competition pursuant to the Act on Competition (hereinafter:

the Act).

II THE TARIFFS OF ADMINISTRATION TAXES

Article 2

Tariffs

Administration taxes set out in Article 1 of this Regulation shall be paid according to

following tariffs:

Tariff number 106

Type of a tax obligation Amount in KM

(1) For application where a party requests:

a) the expert opinion, recommendations and explanations in line

with Article 25, paragraph (1), items c) and f) of the Act;

250.00

b) an individual exemption from the agreement prohibition in line

with Article 5, paragraph (1) of the Act;

200.00

c) the extension of the time limit of an individual exemption in

line with Article 6, paragraph (4) of the Act;

200.00

d) the assessment of the block exemption of the agreement in line

with Article 7, paragraph (4) of the Act;

200.00

e) determination of abuse of a dominant position in line with

Article 11, of the Act;

1,000.00

f) determination of prohibited agreements in line with Article 4,

paragraph (2) of the Act;

1,000.00

Regulation on the Amount of Administration Taxes Relating to the Practices Before the

Council of Competition

144

g) the extension of the duration time of the obligation to bank and

other financial institution or insurance associations to notify a

concentration in line with Article 12, paragraph (3), item a) of

the Act;

300.00

h) proposals in cases when the concentration has been

implemented contrary to the decision of the Council of

Competition or without submittal of a prior notification of

concentration in line with Article 19, paragraph (1), of the Act;

1,000.00

(2) The notification of intended concentration in line with Article

16, paragraph (1) of the Act

2,000.00

Tariff number 107

(1) For Decision which :

a) establishes an individual exemption from an agreement

prohibition in line with Article 5, paragraph (1) of the Act;

2,000.00

b) approves the extension of the time limit of an individual

exemption from an agreement prohibition in line with Article

6, paragraph (3) of the Act;

1,000.00

c) establishes the block exemptions from an agreement

prohibition in line with Article 7 of the Act;

2,000.00

d) declares the concentration compatible, incompatible or

conditionally compatible in line with Article 18 of the Act:

1) for concentration which shall be declared as

compatible before taking a conclusion on initiation of

the proceedings;

2,500.00

2) for concentration which shall be evaluated following a

conclusion on initiation of the proceedings.

25,000.00

e) approves the extension of the time limit of the obligation to the

bank and other financial institution or insurance associations to

notify a concentration in line with Article 12, paragraph (3),

item a) of the Act

2,500.00

(2) Annulment, amendment or cancellation of a decision:

a) on individual exemption from an agreement prohibition in line

with Article5, paragraph (5) of the Act

2,000.00

b) on evaluation of concentration when the parties are not able to

accomplish some of the conditions or infringe certain measures

set forth in the decision taken by Council of Competition due to

particular circumstances which could not be predicted and

avoided and which do not depend on the will of the parties in


145

line with Article 18, paragraph (7) of the Act

2,500.00

Tariff number 108

For Resolution which states that :

a) a compromise is made between parties to the proceedings

1,000.00

b) the proceedings is ceased because the parties to the proceedings

have waived the request, in a case when a decision on initiation

of the proceedings is issued

500.00

c) a concentration notification is rejected due to unaccomplished

conditions regarding the aggregate annual income in line with

Article 14, paragraph (19) of the Act.

1,000.00

Article 3

Tax Obligations

(1) The tax is to be paid in a moment the obligation comes into being.

(2) Tax obligation comes into being:

a) by application, notification and other submissions, in a moment when it is

submitted;

b) by administration act made by Council of Competition, before it is

delivered to the party upon whose request the act is issued;

c) by other legal process, in a moment when a request for its realization is

submitted.

III FINAL PROVISIONS

Article 4

Application

The Law on Administration Taxes (“Official Gazette of BiH”, No. 16/02, 19/02, 43/04, and

8/06) is to be applied to other matters not regulated in this Regulation.

Article 5

Entry into Force

This Regulation shall enter into force on the eight day after the publication in the “Official

Gazette of Bosnia and Herzegovina”, and shall also be published in the official gazettes of

the Entities and Brčko District of Bosnia and Herzegovina.

C.C. No. 48/06 President

of the Council of Ministers of

Bosnia and Herzegovina

Sarajevo, 16 March 2006 Adnan Terzic

the collection of regulations of the council of...

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