New competition legislation in Croatia – key takeaways

Croatia

In terms of competition law in Croatia, the past few months have been lively. In April 2021, the Croatian Parliament adopted an amendment to the Croatian Competition Act (the “Amendment”). The main aim of the Amendment is to align the national competition legislation with the Directive (EU) 2019/1 (the “ECN+ Directive”) by further strengthening the powers of the Croatian Competition Agency (“AZTN”). This coincided with the prior approval of the annual report of AZTN reflecting on its work in 2019.

These developments serve as a great opportunity to look at the AZTN’s practices through the lens of the new competition legislation, which empowers the AZTN to become a more effective enforcer.

What’s new?

The Amendment extends some of the AZTN’s competences and clarifies and emphasizes others. For example:

  • the right to so-called “mandatory interviews”, whereby the AZTN may request a hearing from the representative(s) of a business or other legal person or any individual, if those persons might possess relevant information (either prior to or during the competition procedure),

  • the ability to reject initiations of the competition procedure, if after considering the initiation the AZTN assesses that it is not a priority to resolve it,

  • the ability to use the institution of what are known as “daily fines” to sanction businesses not acting in accordance with the AZTN’s requests,

  • the ability to hold the oral hearing procedure electronically in exceptional circumstances (e.g., pandemic, natural disaster).

Changes have also been made to increase the efficiency of procedures before the AZTN. For example, in accordance with the “right to a settlement”, a party may voluntarily acknowledge its conclusion of a prohibited agreement, in which case the AZTN – if it accepts the settlement – will reduce the fine by between 10-20%. Also, the Amendment regulates in more detail the ability to exempt cartel whistle-blowers from paying fines, defines many other procedural details (concerning sentencing, interim measures, etc.),and introduces additional provisions on the cooperation between competition authorities when applying for mutual assistance. All of these should ensure that competition laws are enforced more effectively.

The Amendment also contains some adjustments aimed at aligning the national law with the existing rules and principles of EU law, such as: 

  • the ability for the AZTN to review the concentration ceded to it by the European Commission, even when it does not meet the local thresholds;

  • reflecting the fact that the local regulation on block exemption of insurance agreements is no longer applicable in Croatia, due to the expiry of Commission Regulation (EU) 267/2010 at the EU level and the convergence rules for the local level.

The AZTN’s focus so far

As noted above, the AZTN’s annual report provides a useful overview of what it has been focusing on recently – but it can also indicate what to expect after the change of law. A key point from the report is the intensification of the AZTN’s activities. It is reported that in 2019, the AZTN resolved a total of 772 cases in the field of competition law and unfair trading practices (UTPs), which represents a 12.6% increase compared to the previous year. Although this increase is partly due to the extended competence of the AZTN in the field of UTPs, the number of cases dealing with prohibited agreements (25), abuse of dominance (22), and concentrations (34) has increased too.

Another takeaway is the focus of the AZTN on expeditiously eliminating negative effects on competition. In cases of alleged breaches of competition rules, for example, the AZTN often agreed with businesses on implementing measures to remove the breach (such as amending the contracts and implementing internal compliance training). It will be interesting to see if settlements with businesses, prioritization possibilities, and the other enforcement tools mentioned above will be used in a similar way in the upcoming period.

To conclude

The new competition legislation has arrived – the Amendment entered into force on 24 April 2021. And given the growing activity of the AZTN in investigating and prosecuting competition law breaches, now is the right time for companies to check their own compliance status and (if necessary) take measures to stay on top of things and comply with the relevant regulations.