More than six months after the introduction of a government regulation limiting retail margins, the first lawsuit against the state of Serbia has arrived, filed by the retail chain Delhaize (the owner of Maxi supermarkets).
The company has requested arbitration before an international court in Washington because, as they claim, after the regulation was adopted, they began operating with large losses.
It is stated that they attempted to find a solution through negotiations with the Government of Serbia, but without success. They are now seeking compensation for damages from the International Centre for Settlement of Investment Disputes.
The regulation on limiting retail margins expires at the end of this month, and speaking about arbitration before the International Centre for Settlement of Investment Disputes and how it differs from ordinary court proceedings, lawyer Nikola Panjković told Euronews Serbia that the differences are significant.
“That arbitration was established by the World Bank and is intended to help resolve disputes between states that are signatories to such arbitration agreements and foreign investors who invest in those states. In other words, it serves as a corrective factor that tries to resolve problems that arise between them. The main advantage of such arbitrations, and the reason they are agreed upon, is that decisions should be made by impartial individuals. Another point is that the specific law of the state where the problem arose is not applied; instead, international treaties are applied, as well as certain bilateral agreements concluded between the states involved in the dispute. And the third, very important point, is that these decisions, like court judgments, are final. In the vast majority of cases, there is no appeal procedure,” he said.
The main argument of the company Delhaize is that reducing the margin, that is, limiting it to 20 per cent, has led to a drop in profit.
“The basic argument is that their profit has been significantly reduced, that it has fallen sharply because their logistics, rents, workforce and all accompanying costs have remained at roughly the same levels, the same nominal amounts, while their margin has, so to speak, been limited and capped. As a result, they have experienced a reduction in profit. The biggest problem, as I understand from the lawsuit and these media reports, is that because of all this, they have already had to close around 25 outlets in Serbia and have started laying off workers. That, I believe, was the trigger for them to initiate this lawsuit against the state of Serbia,” Panjković said.
Professor Snežana Radukić from the Faculty of Economics in Niš told Euronews Serbia that it is obvious that the introduction of the regulation has achieved some results, given the reaction of the largest participant in the food retail market.
“It is clear that the Republic of Serbia was motivated to introduce this regulation in order to regulate prices in the retail market in Serbia, as prices of certain products were even higher than in developed European countries. On the other hand, this had a very negative impact on inflation in Serbia, so the intention of the regulation was to limit margins in the short term and, in the short term, limit the prices of fast-moving consumer goods, so that this would have a positive effect on the living standard of the population, alongside other accompanying measures related to wage increases in the Republic of Serbia,” she said.
However, she notes that this is a market with very weak competition. It consists of market participants who are very dominant and who have used that dominance for years to achieve their objective function, which is profit maximisation in our market.
“So, from a highly profitable company that, as we heard in some of the arguments preceding the introduction of this regulation, had profits of around 45 per cent, we have come to a situation where we now have a different argument, namely that they are operating at a loss. It is simply unbelievable that losses could be incurred in such a short period of time, that we have moved from high profits to negative profit rates or losses. Therefore, there should be an appeal for us, as consumers, and for the sake of transparency of this entire price regulation process in our market, to have more detailed economic analyses of what percentage reduction in profit is involved, whether profits have actually fallen at all, whether there are losses or not, so that we can make sound economic decisions,” she said.
Consequences for Serbia
Panjković explains that Delhaize is invoking basic principles from a bilateral agreement between Serbia and the Netherlands that was concluded a long time ago.
“I think it was concluded more than 20 years ago, and Serbia simply took it over as a republic. They claim that three key principles from that agreement have been violated, namely that their right to fair and equitable treatment in the country where they operate, that is Serbia, has been breached, that there was a contractual prohibition of discrimination, and the last thing they are invoking, in my view, is protection against indirect expropriation,” he added.
Asked what the consequences for Serbia could be and whether Delhaize is expecting financial compensation, Panjković says that it is.
“However, I think Serbia can defend itself very well for several important reasons. This regulation was not adopted to apply only to Delhaize; it applies to all retailers, so Delhaize was not singled out, everyone is covered by it. Secondly, the state adopted this regulation in order to protect consumers, that is, to protect all its citizens, and it has justification in that consumer protection. The final two points are that the regulation is temporary, it is not something that will affect a particular company over a long period of time, and this is simply the right of the state. The state has the authority to change laws and bylaws within its own legal system, and a foreign company cannot directly influence that. It can try to exert pressure, but the state is there to explain why it adopted a certain regulation and why it did not adopt something else,” he said.
Asked what happens when the end of February arrives and whether citizens should expect a return to the previous situation, Radukić says there is concern about that deadline and what will happen next.
(Euronews, 09.02.2026)
https://www.euronews.rs/biznis/biznis-vesti/209572/tuzba-protiv-srbije-zbog-smanjenja-marzi/vest