The amendments of the Croatian Competition Act (I) (the “Amended Competition Act”) entered into force on 24 April 2021. The main reason for adopting the amendments was transposition of the ECN+ Directive (II) into the local legal regime. The ECN+ Directive’s primary aim is to provide national competition agencies with adequate independence to ensure effective application of Articles 101 and 102 of the TFEU (III). With these amendments, the Croatian Competition Act is further harmonised with EU acquis.
- Independence of the Croatian Competition Agency
The Amended Competition Act introduced new powers of the Croatian Competition Agency (“Agency”), which is now authorised to directly impose fines and periodical penalty payments for infringements.
The legal status, independence, organisation and the resources of the Agency have been aligned with the ECN+ Directive. In addition, provisions regarding election, salaries and non-compete clauses of the Competition Council (a decision-making body of the Agency) and the Agency’s staff have been changed in order to ensure that they exercise their powers autonomously, without influence from any public or private authority.
- Merger Control Thresholds
The Amended Competition Act now specifies that revenue which is considered relevant for an assessment of merger filing thresholds is the business revenue, excluding the revenue realised from taxes and parafiscal charges.
Also, the thresholds for conducting summary merger control procedure have been increased, now allowing the Agency to conduct such a procedure in cases when the undertakings hold jointly less than 20% of the market share horizontally (instead of previous 15%) or when they individually or jointly hold less than 30% of the market share vertically (instead of previous 25%).
- Referred concentrations
The Agency’s competence is extended to concentrations which have been referred to the Agency by the European Commission. In such cases, the Agency shall assess the compatibility of the concentration concerned regardless of the fact whether the parties to the referred concentration meet the merger filing thresholds under the Amended Competition Act or not, on the account of the fact that higher turnover thresholds defined under the EC Merger Regulation (IV) are fulfilled.
- Behavioural and Structural Measures
In cases where prohibited agreements have been found, the Agency can impose behavioural and/or structural measures. The structural measures can be imposed only in cases where an equal behavioural measure would not be efficient or would cause an excessive burden for the undertaking concerned. The behavioural and/or structural measures can be imposed in cases of abuse of the dominant position if they are proportionate to the infringement and necessary for effective remedy.
Interim measures, as a rule, cannot exceed 12 months and, in cases when they are imposed based on the Articles 101 and/or 102 of the TFEU, the Agency should inform the European Competition Network.
- Intent or Negligence
As a result of harmonisation with the ECN+ Directive, in proceedings dealing with serious infringements of competition rules under the Amended Competition Act and Articles 101 and/or 102 of the TFEU, fines are imposed where the infringement has been committed intentionally or negligently. The notions of intent and negligence are interpreted in line with the case law of the Court of Justice of the European Union.
- Procedural Revisions
All requests issued by the Agency to any party to the proceeding or other third parties should be proportionate to the scope and should not compel to admission of infringement of the Amended Competition Act and/or Articles 101 and 102 of TFEU.
The Amended Competition Act enables the Agency, upon inspection of its content, to dismiss any initiative for the initiation of the proceeding ex officio within the meaning of the Amended Competition Act and Articles 101 and/or 102 TFEU on the grounds that the Agency does not consider such a complaint to be an enforcement priority. As a rule, such a decision can be adopted by the Agency where it assesses that there is no significant impediment of competition in the case at hand. The complainant may file a complaint in an administrative dispute against such a decision of the Agency.
In addition, the Amended Competition Act introduces new legal tools, such as: “mandatory interview”, “periodic penalty payment”, “uniform instrument”, “settlement in cartel cases”, and elaborates “access to leniency statements and settlement submissions”. It also specifies the imposition of fines where the infringement is committed by an association of undertakings and further clarifies rules in relation to statute of limitations.
- Mandatory Interview
During preliminary market investigation, but also after the initiation of an infringement proceedings, the Agency can summon a representative of any undertaking for an interview, where such representative or person may possess information relevant for the application of the Amended Competition Act and Articles 101 and 102 of the TFEU. These requests must be proportionate and not compelling towards admission of infringement of the Amended Competition Act and Articles 101 and 102 of the TFEU. The summoned persons must appear at the interview subject to sanctions.
- Periodic Penalty Payments
Periodic penalty payments may be imposed if an undertaking fails to appear at a mandatory interview or comply with an inspection, or if they fail to comply with the decision of the Agency, particularly in situations where the Agency adopts commitments offered by undertakings or associations of undertakings. The decision of the Agency imposing periodic penalty payments must be effective, proportionate, and dissuasive for undertakings and associations of undertakings.
When insolvent associations of undertakings have committed an infringement, the association is obliged to collect contributions from its members and/or additional payments to cover the amount of fine imposed.
- Settlement in Cartel Cases
The Amended Competition Act also introduced the legal tool of “settlement in cartel cases” which allows the party to the proceeding to admit to the infringement concerning participation in a prohibited horizontal agreement – a cartel or a secret cartel – not later than 30 days from the receipt of the Statement of Objections, describing in writing the undertaking’s acknowledgement of the infringement and its renunciation to dispute. In return, the Agency may approve a reduction in fine between 10 % and 20% when compared to the fine that the Agency would have imposed had the party not settled.
- Immunity and Leniency Programme
The Amended Competition Act provides immunity for the member of a cartel or a secret cartel who first comes forward and informs the Agency on the existence of a cartel or a secret cartel and provides information, facts, and evidence which enable the Agency to initiate the proceeding and/or conduct an unannounced inspection, provided that the Agency did not until then have sufficient evidence for opening of such proceeding.
The new legal tool “access to leniency statements and settlement submissions” empowers the Agency to grant access to leniency statements or settlement submissions only to the parties subject to the relevant proceedings and only for the purposes of exercising their right of the defence in the proceeding concerned or in the administrative dispute before the High Administrative Court of the Republic of Croatia.
In addition, former directors, managers, and other members of staff of applicants for immunity from fines under the leniency programme shall not be fined in the administrative proceeding and administrative dispute. Decision about the criminal prosecution against these persons shall be made by the State Attorney who may decide not to press criminal charges or propose to the competent court to mitigate the sanctions, depending on the individual’s contribution to the detection and investigation of the cartel.
- Statute of limitations
The Amended Competition Act further regulates the rules on statutes of limitations for the imposition of fines and periodic penalty payments and provides that the limitation periods for the imposition of fines or periodic penalty payments are suspended or interrupted for the duration of enforcement proceedings before national competition authorities of the other Member States or the European Commission in respect of an infringement concerning the same behaviour of an undertaking or association of undertakings or other conduct prohibited by Article 101 and/or 102 of the TFEU
The Amended Competition Act introduced new definitions of the previously used terms, such as “competition authority”, “cartel”, “secret cartel”, “leniency programme”, “immunity from fines”, “reduction of fines” etc. In addition, it provides an explanation of the term “association of undertakings” and redefines the term “undertakings concerned” in merger control cases.
Further, the Amended Competition Act repealed the Croatian Regulation on Block Exemption of Insurance Agreements (V), which is in line with the EU acquis as the EU Regulation on Block Exemption of Insurance Agreements (VI) expired on 31 March 2017.
(I) Competition Act, Official Gazette of the Republic of Croatia nos. 79/09, 80/13, and 41/21.
(II) Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, OJ L 11, 14 January 2019.
(III) Treaty on Functioning of the European Union, OJ C 326, 26 October 2012.
(IV) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation), OJ L 024, 29 October 2004.
(V) Regulation on Block Exemption of Insurance Agreements, Official Gazette of the Republic of Croatia no. 78/2011.
(VI) Commission Regulation (EU) No 267/2010 of 24 March 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector OJ L 83, 30 March 2010.