Montenegro’s government has introduced a significant set of amendments to the Law on Protection of Competition, which, if passed, would fundamentally alter the enforcement of market dominance, cartel behavior, and merger regulations in the country. This reform seeks to address longstanding criticisms of the existing system, which has been deemed ineffective due to weak deterrents and fragmented procedures. The new framework is designed to centralize sanctioning authority within the competition authority and substantially increase financial penalties for companies that fail to comply.
The proposed changes focus on transferring sanctioning powers directly to the Agency for Protection of Competition. Currently, while the agency investigates violations of competition laws, it lacks the authority to impose penalties directly; instead, cases are referred to misdemeanor courts for fines. This dual-track system has led to delays and inconsistent penalties that many stakeholders consider insufficient for deterring anticompetitive actions.
The amendments aim to eliminate these inefficiencies by granting the agency direct administrative fining authority. Companies found guilty of engaging in prohibited agreements or abusing their dominant market position could face fines of up to 10% of their total annual turnover, based on consolidated revenues. This aligns Montenegro’s penalties with those commonly utilized in the European Union.
Beyond raising maximum fines, the draft law introduces a more adaptable sanctioning scale. Previous iterations mandated a minimum fine threshold; however, the new proposals allow for penalties below 1% of turnover in cases deemed less severe or where mitigating factors are present. This reflects a shift towards proportional enforcement tailored to specific circumstances rather than a rigid application of penalties.
This reform increases regulatory risk for businesses operating in Montenegro. By linking fines directly to revenue rather than fixed amounts, companies face greater financial uncertainty. For larger enterprises in sectors like energy, telecommunications, retail, construction, and transport, potential sanctions at the upper limit could result in multi-million-euro liabilities that affect cash flow and dividend policies.
The amendments also modernize how restrictive agreements are treated. The current requirement for companies to seek individual exemptions will be replaced by a self-assessment model. Companies will need to evaluate their agreements’ legality proactively and justify their assessments if challenged by regulatory authorities, mirroring practices established in post-2004 EU competition law.
In addition, merger-control procedures will be revised significantly. The strict fifteen-day deadline for notifying concentrations following a transaction will be replaced with a requirement for parties to notify “without delay” once they meet notification thresholds. While this change offers procedural flexibility, it emphasizes the importance of internal compliance systems since delays could lead to regulatory consequences.
A notable aspect of the reform is the introduction of a legal framework for private damages resulting from competition violations. The proposed Damage Law would enable individuals and companies to seek full compensation for losses linked to anticompetitive conduct. A final decision by the competition authority or an administrative court would be binding on civil courts in subsequent damage claims, easing the evidentiary burden for claimants and facilitating follow-on litigation.
This combination of enhanced public enforcement and streamlined private claims represents a significant shift in Montenegro’s business landscape. Previously viewed as a mere compliance obligation with limited implications, competition law is set to become a more enforceable regime with both administrative and civil repercussions. Businesses operating in concentrated markets or holding strong positions will need to reevaluate their pricing strategies and agreements under this expanded enforcement framework.
The government has positioned this reform as part of its broader commitment to align with EU competition policy standards. Stronger enforcement is expected to foster market entry, minimize distortions, and enhance consumer welfare. However, investors may also view these changes as introducing new layers of regulatory discipline that could affect risk assessments in sectors with high market concentration or legacy dominant players.
Concerns have been raised by business associations about potential legal uncertainties and compliance costs associated with these changes, particularly for smaller firms lacking adequate legal resources. These issues highlight the challenges posed by a self-assessment regime combined with significant turnover-based fines that require varying levels of legal expertise across Montenegro’s corporate landscape.
If parliament adopts these amendments as proposed, they will represent the most extensive revision of Montenegro’s competition framework in over ten years. The reforms would elevate the Agency for Protection of Competition into a key regulator with genuine sanctioning authority, align domestic regulations closer to EU standards, and significantly impact how companies assess risks within Montenegro’s market environment. The period following adoption will be closely monitored by both local businesses and foreign investors as initial enforcement actions will indicate how effectively these new powers are implemented.
