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20 October 2011
On August 3 2011 the Croatian Competition Agency (CCA) found that TDR doo, part of the Adris Group, had abused its dominant position on the cigarette market for nearly six years (from August 15 2004 to December 31 2010).
Holding the dominant position on the relevant market, TDR had exercised an anti-competitive strategy towards its customers on the wholesale and retail markets, binding them to its products. The CCA found that 90% of all TDR customers on the Croatian market purchased approximately 80% of their cigarettes from TDR. 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.
This strategy created a strong barrier to market entry for potential competitors. Thus, TDR had abused its dominant position and seriously impeded competition.
Due to the fact that the case was processed before the coming into force of the new Competition Act 2010, the CCA initiated the procedure for imposing the fines before the relevant magistrate.
Cigarette consumers on the Croatian market would have welcomed the application of the CCA's new punitive powers. These powers, together with the CCA's repeated announcement that it will fine entities which seriously obstruct competition heavily, have given rise to high expectations for the CCA's future practice. It will soon become clear whether the CCA's decisions are taken more seriously now that it can impose fines directly.
TDR's behaviour continues to raise competition concerns. Two further, independent complaints regarding TDR's new sales strategy (as of January 2011) are being investigated.
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Gabriele Wahl Cesarec