Fight Against Cartels in Croatia: More than a Decade of Enforcement Practice

This article is part of a Chronicle. See more from this Chronicle

Jasminka Pecotic Kaufman, Jun 13, 2009

The Croatian Competition Act 2003 prohibits cartel agreements and considers them to be null and void: “agreements between undertakings…, explicit or tacit agreements, coordinated practice… which have as their object or effect distortion of competition are prohibited, in particular those by which undertakings determine directly or indirectly purchase or sale prices, or other commercial terms.”  Although this provision is modeled on Article 81 EC, there is a significant departure from the Community acquis in part of the provision which mentions “tacit agreements.” It is a widely accepted view that tacit collusion should not be prohibited unless the behavior at stake cannot be explained in any other way. This view is strongly promoted by antitrust economists and was also accepted by the European Court of Justice. Although the first Croatian Competition Act (1995) was already drafted under the influence of EC competition law, it was the Stabilisation and Association Agreement (“SAA”) signed between Croatia and EU in 2001 that introduced an obligation for Croatia to harmonize its domestic legislation with the acquis (Art 69 SAA), which resulted in adoption of the new, more thoroughly harmonized Competition Act in 2003. Pursuant to the SAA (Art 70) Croatian authorities must apply, to restrictive agreements and abuse of dominant position (and state aid), criteria arising from the application of Community competition rules provided there is an effect on trade between Croatia and Community. Unlike Europe Agreements, which also contained a similar provision, no implementing rules must be adopted to this effect. Under the current Croatian competition regime there is no leniency program. However, the possibility of a more lenient treatment of undertakings is extensively used by the Croatian misdemeanor courts when deciding on a fine on the basis of the Competition Agency infringement decision (under the current legislation the Agency has no competence to pronounce fines). Misdemeanor courts are for this purpose applying the general rule of criminal law on immunity from fines and reduction of fines, and thereby perversely distorting the efficient prosecution of undertakings that breach competition rules. Evidently, this is no alternative to having a U.S. or EU-style leniency program.