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Competition & Antitrust
Over the past few years, European and national institutions have warned about the negative effects of unfair trading practices in the supply chain. In order to tackle these and regulate the risk of abuse, several countries have enacted distinct trade laws. Croatia recently followed suit by adopting a new Act on the Prohibition of Unfair Trading Practices in the Business-to-Business Food Supply Chain. The act defines the concept of 'significant buyer power', as well as different types of illegal behaviour.
In July 2015 the Competition Agency received an initiative to initiate proceedings against Ytong porobeton (YP) for alleged abuse of its dominant position. YP rejected all of the assertions against it, arguing that the relevant market had been incorrectly determined. Based on expert opinions, the agency concluded that YP was not dominant on the relevant market and thus that it had not abused its dominant position.
In a recent case the Competition Agency for the first time accepted the proposed commitments in a case conducted under the qualification of a prohibited agreement, even though all the characteristics of a prohibited horizontal agreement limiting competition were present. By accepting the commitments, the agency abandoned its previous position in favour of a more lenient one.
In a recent ruling by the Croatian Competition Agency (CCA), a decision by the Croatian Insurance Bureau to revoke the power of an insurer to issue motor certificates was found not to constitute a prohibited agreement. Irrespective of this, the CCA noted that it is not the role of undertakings to control the operation of their competitors, and that the parties involved should have reported the insurer if they thought it had breached the law.
The Competition Agency is improving its track record in competition law enforcement. One recent decision concerned a cartel of marina operators which exchanged information on future pricing policies for berthing services. Although the parties agreed not to raise the prices of their services (or to raise them minimally), the information exchange was deemed sufficient for the agency to render a statement of objections.
The Competition Agency recently considered whether Gemicro abused its dominant position on the market by allegedly tailoring and concluding 'non-poaching' agreements with the leasing companies which were its buyers, thereby restricting competition and creating significant barriers to entry into the relevant market. This is the first time that the agency has examined this type of agreement as problematic.
In a recent case the Croatian Competition Agency stated that infrastructure that is essential for reaching customers and conducting business should be treated as an 'essential facility'. The agency determined that a bus station owned by Autotrans was not the essential facility for conducting road passenger transport by Slavonija Bus, as there were two further accessible stations with passenger boarding areas in the area.
The Competition Agency recently concluded another proceeding dealing with resale price maintenance, as prohibited under Article 8 of the Competition Act. Although the full decision has not yet been published, the agency's stance on resale price maintenance can be inferred from the announcement and earlier decisions in similar resale price maintenance cases in the food and retail sectors.
In recent years the Competition Agency has discovered several cartels operating within associations of undertakings, which were exploited as a framework to provide logistical support to the cartels and facilitate their illicit existence. In most cases the associations merely followed the plans of their main members. However, a recent decision confirms that associations themselves can also initiate price-fixing cartels.
The Competition Agency has experienced high levels of media attention, following two recently completed merger control proceedings. The agency's conditional clearance of HT's acquisition of control over Optima in pre-bankruptcy settlement proceedings is novel in terms of both the means of acquiring control and the scope of accepted remedies.
The Croatian Competition Agency recently reported that it had initiated abuse of dominance proceedings and issued interim measures against a water supply and sewerage operator. The agency is authorised to adopt interim measures in urgent cases, when there is a risk of irreparable damage to competition.
During 2013 the Competition Agency dealt with several interesting but demanding merger control filings. As legal practice mirrors business dynamics, it was unsurprising that at the end of 2013, several filings were withdrawn – the most significant being that between Agrokor and Adris Group, which had applied for merger control clearance regarding their newsstand chains.
In one of the last sessions convened before the expiry of three Competition Council members' mandates, the Competition Agency terminated proceedings against undertakings operating in the dairy products market on the grounds that there were no longer any legal grounds for further conduct. The decision follows the agency's procedural trend of terminating proceedings if it deems it unlikely that an infringement will be found.
Fans of football club Hajduk recently filed an initiative before the Competition Agency against two rival clubs for initiation of proceedings to establish a prohibited agreement, arguing that participation by these two obviously associated clubs in the same league reduced transparency. The agency rejected the initiative, explaining that the determined forms of cooperation between the two clubs did not violate the Competition Act.
The Financial Operations and Pre-bankruptcy Settlement Act introduced the pre-bankruptcy proceeding, which is intended to ensure the continuation of the undertaking's business and the restructuring of its debts. However, a question has arisen regarding the relationship between the potential acquisition of control over an undertaking and a pre-bankruptcy proceeding in accordance with the merger control rules.
Upon Croatia's accession to the European Union, the Competition Agency will directly apply the trade-related provisions of EU law in cases which affect trade between member states and Croatia. Presently, these provisions are applied indirectly, as an interpretative mechanism. Except in cases of a purely national nature, infringements of the Competition Act will fall under the jurisdiction of both the European Commission and the agency.
In recent months the Competition Agency has issued two interesting decisions relating to the telecommunications sector. While the first case is interesting with respect to substantive law, the second has significant procedural implications for future cartel cases. Both decisions will significantly influence the future implementation of competition rules in Croatia.
Until the Competition Act entered into force in October 2010, the Competition Agency was not empowered to impose fines directly where it established violations of competition law. Although the relevant regulation has been in force for some time, the agency is only now poised to impose its first fine with regard to the failure to notify a concentration.
The Competition Agency has for the first time accepted commitments under the new legal framework for competition. The agency's decisions make the commitments legally binding on Primalab without reaching any conclusion as to whether any infringement of Croatian competition rules has taken place. If Primalab were to breach its commitments, the agency could impose a fine of up to 10% of Primalab's total turnover.
The Competition Agency has announced fines for infringements of the Competition Act in the bread producers cartel case, the first time it has used its powers to impose fines since the act came into force in 2010. However, taking into consideration the low amount, the fines appear to be largely symbolic. It is hoped that they will deter other undertakings from engaging in anti-competitive behaviour.
The Competition Agency recently opened formal antitrust proceedings against the Auto Club in order to investigate whether it had distorted competition in the breakdown services and roadside assistance market by entering into anti-competitive agreements with its contractors.
The Competition Agency recently issued its opinion on a government decision declaring that state administration bodies and other state-owned companies may no longer enter into contractual arrangements with public relations (PR) agencies. In exceptional cases, the government may issue a special decision to allow the hiring of PR agencies or PR experts – but only for large-scale economic projects, programmes or activities.
The Competition Agency recently published its work programme for 2012 and 2013. In view of Croatia's imminent accession to the European Union, the agency has set its strategic goals as strengthening the existing legal framework, preparing for the expansion of competence, strengthening cooperation and raising awareness about competition issues.
The Croatian Competition Agency recently cleared the Phase II review proceedings regarding the merger between Agrokor Group and Roto Dinamic. The merger will result in increased market shares for Agrokor and Roto Dinamic but will have no significant anti-competitive effects, as it will neither strengthen the parties' existing position on the market nor create a new dominant position.
The Croatian Competition Agency recently established that Euro rent sport, an authorised importer and distributor of Mitsubishi Motors cars, had restricted competition in Croatia by entering into prohibited agreements on the markets for the sale of new motor vehicles, repair and maintenance services and the sale of spare parts for such vehicles.
The Croatian Competition Agency has cleared the extraterritorial concentration arising from a joint venture between AGRANA Beteiligungs-Aktiengesellschaft (Austria) and RWA Raiffeisen Ware Austria Aktiengesellschaft (Austria). Although the transaction will have an effect on the Croatian market, it raised no competition concerns.
The concentration arising from the acquisition of control of Bnet by VIPnet has received double clearance – first from the Agency for Post and Electronic Communications, and then from the Croatian Competition Agency (CCA). The CCA considered that the planned transaction would not trigger anti-competitive concerns.
Tender associations are associations of economic entities with the aim of providing a unified offer in public bids. According to the opinion of the Croatia Competition Agency, they trigger no antitrust concerns provided that they are not based on agreements or collusions which have the aim or effect of distorting competition. However, this position is far from settled.
The Croatian Competition Agency (CCA) has cleared the extraterritorial concentration between VW and MAN. The transaction creates a significant market share in the heavy-duty truck and passenger bus markets. However, the CCA based its clearance on the fact that both markets have large customers with high-value purchasing power, making abuse of dominance difficult.
The Croatian Competition Agency has found that TDR doo, part of the Adris Group, abused its dominant position on the cigarette market for nearly six years. TDR had offered fidelity rebates to its customers based on the percentage of cigarettes that the customer purchased from TDR directly, not the volume of TDR cigarettes sold by the customers.
The new block exemption regulation for horizontal cooperation agreements applies from June 6 2011 and replaces the previous 2004 regulation. The new regulation takes into account the new rules introduced under the Competition Act which entered into force in October 2010, as well as the relevant rules at EU level. Existing agreements will continue to benefit from the old block exemption regulation until the end of June 2013.
The Competition Agency has found that INA, the exclusive wholesale trader and supplier of jet fuel at Croatian airports, abused its dominant position in the jet fuel supply market by imposing unfair prices. The agency opened an investigation after it received a complaint from Dubrovnik Airline in December 2009. The agency ordered INA to amend its jet fuel prices within a three-month period.
A new regulation has been announced on notification and assessment of concentrations for the Competition Agency. Unlike the old rules, the new regulation introduces the forms for the concentration notification, which are to a large extent similar to those at EU level. The new rules provide clearer guidelines on information and documents that must be provided by notifying parties when filing a concentration.
The new regulations exempting vertical agreements in general and vertical agreements in the motor vehicle sector will take effect shortly, replacing two regulations from 2004. Both regulations take into account the new rules introduced under the Competition Act - which entered into force in October 2010 - as well as the relevant competition rules at EU level.
Two new bylaws which entered into force in late 2010 have introduced a new methdology for setting fines for competition law infringements and a new leniency programme for cartel members that are first to blow the whistle on the cartel's existence.
The Croatian Competition Agency has found that Croatia's two biggest weekly press publishers - Europapress Holding doo and NCL Media Grupa doo - colluded in 2008 to raise the retail price of their weekly magazines, Globus and Nacional, by HRK2.
The Croatian Competition Agency recently published the results of its market research on the supply of groceries under the Plus Market project. In contrast to its initial conclusions, the agency has now stated that the Plus Market project does not constitute activity which would be prohibited under the competition rules.
The European Commission has published its latest report on the progress made by Croatia in preparing for EU membership. The report states that while significant progress has been achieved in the field of antitrust and mergers, there are still further steps needed to improve the Competition Agency's record against cartels and its administrative capacity.
The Croatian Competition Agency recently approved a takeover that resulted in a concentration of undertakings in the confectionery market. Investments planned by the acquirers concern the development of the industry by developing new products in order to increase market competitiveness.
The Competition Agency has given final approval to the Mol/INA merger, finding that the structure of the relevant market showed that there would be no negative competitive effect. In addition, the merger between Atlantic Grupa and Droga Kolinska and the joint venture controlled by Merck & Co and Sanofi-Aventis have been approved.
The most high-profile current merger case in Croatia involves a horizontal merger between Mol Hungarian Oil and Gas Public Limited Company and INA – Industrija nafte dd. Although the merger was conditionally cleared by the Croatian Competition Agency in June 2009, certain conditions remain to be fulfilled.
The new Competition Act will enter into force on October 1 2010 and will affect all aspects of competition law. For the first time, the Croatian Competition Agency will be empowered to conduct unannounced inspections of undertakings that are accused of infringing competition rules. The agency will also be able to impose fines directly.