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10 April 2014
On March 17 2014 the Croatian Competition Agency reported that it had initiated abuse of dominance proceedings and issued interim measures against Vodoopskrba i odvodnja doo – a water supply and sewerage operator. Vodoopskrba i odvodnja doo is a monopoly in its concession geographical area. The agency's actions are interesting, as it has seldom used(1) its powers in such a way.
The agency is authorised to adopt interim measures in urgent cases, where there is a risk of irreparable damage to competition. Outlined in Article 51 of the Competition Act (Official Gazette, 79/09 and 80/2013), interim measures are considered a delicate procedural mechanism. Interim measures allow the agency:
The proceedings were initiated on the basis of a complaint submitted by Brunata doo, which alleged that Vodoopskrba i odvodnja doo was abusing its dominant position by foreclosing downstream and neighbouring markets through the business policy set out in its general and technical conditions for the provision of water services, adopted in July 2013. The agency had concerns about the effects of this policy on the markets for services associated with the measurement of water consumption, which facilitate the provision of data for billing and reporting, in the territory of the city of Zagreb and the Zagreb area.
In its preliminary assessment, the agency focused on the provisions that obliged Vodoopskrba i odvodnja's competitors to connect to its automatic water meter reading network. The agency also ordered(3) Vodoopskrba i odvodnja to cease applying the disputed provisions, which prevented other companies from providing the services that they had provided before the disputed policy entered into force. The agency allowed Vodoopskrba i odvodnja to continue issuing approvals to the competing companies for the installation of water meters in old buildings:
"the undertakings which have so far been involved in the installation of telemetry devices, as well as reading and billing of data on water consumption collected in such a way, are - as of 1 January 2014 - prohibited to install telemetry devices in old buildings, whereas new competitors have been prevented from entering the market. Moreover, a transitional period also began on 1 January 2014, in which these undertakings are still allowed to perform distance readings from local networks. Upon the expiration of this transition period, distance reading will be exclusively provided by Vodoopskrba i odvodnja d.o.o."
Although it is too early to derive any conclusions, in its preliminary assessment the agency showed itself willing to preserve the variety of services and benefits that the water supply market has offered consumers.
For further information on this topic please contact Gabriele Wahl Cesarec or Mislav Bradvica at Wahl Cesarec & Partners in cooperation with Schoenherr by telephone (+385 1 4813 244), fax (+385 1 4813 073) or email (email@example.com or firstname.lastname@example.org). The Schoenherr website can be accessed at www.schoenherr.eu.
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Gabriele Wahl Cesarec