Selling Out Isn’t Always a Bad Idea

The process of privatizing socially owned enterprises (SoEs) can be complicated during a post-socialist transition, especially when combined with a post-conflict environment. In the decades following the breakup of Yugoslavia, Serbia has had difficulty normalizing the transition to an efficient market economy. In many cases the sale of SoEs has involved old friends recounting their days in the Communist League of Serbia under Milosevic while enjoying a glass of rakija. However, there have been successful cases of private acquisitions of formerly public companies. One example of this would be the Belgian company Delhaize Maxi and their purchase of Delta Maxi. Hopefully, as Serbia continues its efforts to meet EU accession conditions, more foreign investors will expand into the Serbian economy and contribute to its economic development.

The western philosophy of prescribing privatization for all socialist ailments by any means necessary has had some devastating effects in Serbia, as well as other countries in the region. Following a 1997 law the results were loss of close to 83,000 jobs and a shutdown rate of about 65% percent for sold enterprises. In 2001 the Serbian Government passed a new privatization law in an attempt to modernize the transitional process and formalize procedures from the previous 1997 law and to curtail devastating predatory practices. However the new law proved ineffective in reigning in the Balkans most controversial businessmen.


Miroslav Mišković, owner of Delta Holding, former Deputy Prime Minister, and the First Serb to make the Forbes’ list of billionaires was in a unique position to take advantage of Serbia’s rapid push for privatization. Delta Holding owned the second largest grocery retailer in the region with the government owned C Market, their main competitor. In 2002 when the Serbian government was finalizing plans to sell C Market, Mišković was hard at work attempting to take control of retail chain. Through a series of shady back room meetings, C Market was sold to offshore companies owned by Mišković and Milan Beko and, over time, was fully acquired by Delta Holding. The sale, along with several others made by Mišković and his associates, has since been under investigation over allegations of corruption and the establishment of an illegal monopoly. Fortunately, Mišković would not have ownership over the newly formed grocery retail monopoly for too long.

In 2011 Delhaize Group, a Belgian company, finalized a deal with Delta Holding to purchase Delta Maxi Group (part of Delta Holding) and the majority share of C Market for an estimated $1.3 Billion USD. This record deal is the largest foreign investment ever made in Serbia. Though the sale of an established monopoly to a foreign firm may sound like the beginning of a terribly boring horror story, Delhaize Group has operated as a responsible sector leader should. In fact, they have received official praise from the Serbian Trade Ministry.

“The Trade Ministry officially applauded the Belgian supermarket chain Delhaize for “raising the quality of services with new methodologies, thus assigning the same task to its competitors, which the consumers will benefit from.””

The Delhaize Company released their “New Game Plan” presentation for the acquisition of Delta Maxi, outlining their future strategy and priorities. In the context of the Serbian economy, perhaps some of the most important aspects are price competitiveness and employee training. Delhaize has established training programs to further employee skills sets and help train future industry leaders. The company has shown its willingness to invest operating profits into pushing prices lower, sometimes reaching reductions of up to 30%, establishing a precedent for domestic and foreign competitors to follow. This was highlighted in an interesting campaign where young people dressed as “prices” repelled down a building in downtown.

Maxi Supermarket in Niš
Maxi Supermarket in Niš, Serbia

Delhaize Serbia has developed several private product brands focused on health and domestic production. The “Grown in Serbia”campaign has highlighted the companies’ commitment to local investment and community support showcasing pictures of smiling farmers and their products as well the location in Serbia they are from. The “Green Ring” label indicates domestic products that havegone from local farms to retail in 24 hours. The Serbian Chamber of Commerce and Ministry of Trade and Telecommunications has awarded Delhaize Serbia with the “best private brand” for Prima, boasting that, “Over 800 food products are produced for Delhaize Serbia by 80 domestic producers. The products are exclusively available in Delhaize Serbia’s stores.”

In the past, Serbia has had difficulty transitioning towards a market economy. It is not hard to find instances of public restructuring gone awry in the world but, it also necessary to look at success stories. Delhaize is an example of foreign investors taking over an industry and improving upon the existing infrastructure to the benefit of the domestic market. Delhaize’s purchase of Delta Maxi has incentivized their own reinvestment in other related sectors of the Serbian economy, as well as their own employees. The successful navigation of the Serbian legal system by Delhaize has already encouraged other foreign investment from companies such as Germany’s Lidl. It will be interesting to see how the future plays for Serbia as it struggles to join the EU, cope with memories of the 90’s, and solve the mystery of how unemployed young people pay for coffee.


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