Competition encourages market participants to be more efficient, which increases the economic growth rate and the standard of living. Any distortion of competition reduces economic efficiency and social well-being. The need to protect competition raises the issue of the effectiveness of the competition policy. The rules protecting the right of competition are the basis of this protection, but the effectiveness of competition protection also depends on other state activities in the field of competition protection policy. The state policy can both protect and compromise competition (e.g. the state aid policy). Domestic businesses are not used to competition but often try to profit by using privileges. On the other hand, our country does not demonstrate a genuine willingness to implement an effective competition policy, nor does it engage in a serious fight against business-related corruption. The domestic Competition Protection Commission and the State Aid Control Commission are essentially not independent, especially the latter. The Administrative Court is directly competent to decide on competition protection issues in our country; it is in charge of overseeing the decisions of the Competition Protection Commission but, for the time being, there are no specialized departments that would deal with this area. There is no effective competition policy without an independent and expert body, which would competently apply the regulations in this area, and an efficient judiciary. The national Competition Protection Act is not perfect, but it provides a solid basis for competition protection. The major objection to this Act is that the government establishes closer conditions for the implementation of this law, thus giving the executive authorities the power to restrict legislative provisions by enacting by-laws. The Act on State Aid Control should undergo major changes because it has not accomplished its goals, especially concerning the position of the competent commission in charge of its implementation. Although the Serbian legislation in the field of competition is not perfect, the legal provisions are less of a problem than their implementation. Thus, competition protection implies that good legal solutions are in place and that there are independent and effective institutions for implementing the envisaged provisions.