CCA closes the proceedings against Navela Pula following committments

The Croatian Competition Agency (CCA) accepted the committments offered by the undertaking Navela from Pula in the proceeding against this undertaking in the distribution of spare parts for Yanmar marine engines.

The proceeding against the undertaking Navela was initiated by the CCA, first, due to the indices that Navela refused to deliver and to sell the spare parts for one vessel, unless the whole business was transferred to another, specified service provider. Second, there have also been indices that the Standard Contracts for Maintenance and Repair of Marine Engines, Purchase of Engines and Spare Parts of Yanmar brand that Naval has concluded with the members of its network, contained provisions that may raise competition concerns.

At an early stage of both separate proceedings Navela reacted by offering commitments to eliminate possible anticompetitive effects in the market.

In the course of the preliminary market investigation it has been established that the spare part at issue was the Engine Control Unit (ECU) that is not a typical spare part that has been regularly delivered to unauthorised repairers but a unit that falls under a special replacement protocol provided by Yanmar, applicable within and outside the warranty period, a fact that has been confirmed by an independent expert witness in the field of engineering and shipbuilding. It was the view of the expert witness that the diagnostics, replacement, programming and starting the operation may solely be carried out by an authorised and trained operator that has been certified by Yanmar service centre whereas the diagnostics and programming requires special equipment and an adequate programme (firmware) applicable to a particular series and type of Yanmar engines.

At an early stage of the proceeding Navela offered remedies committing itself to deliver the spare parts for Yanmar marine engines to any interested operators, including the unauthorised repairers.

In the case of specific inquiries, including the ECU and other electronics that requires specific training and tools, Navela shall first of all refer every customer to the authorised repairers’ network. Should the customer refuse such a proposal, it would have to sign a statement confirming that it does not agree to be referred to an authorised repairer and takes the responsibility for all consequences that may arise as a result of the incorrect replacement of a spare part, including the consequences that such behaviour may have on third persons and their property.

With respect to the Service Agreement Navela offered to review the challenged provisions thereof. The revised Service Agreement will contain provisions regulating that the invoice price and the final cost due to rebates are to be considered a maximum price of the product for the final consumer. Should the service sell the products to final consumers above the maximum price, Navela holds the power to terminate such an agreement.

At the same time, the provision that empowered Navela to terminate the agreement should the repairer purchase the spare parts from the any other source than Navela was deleted.

The CCA found that the above commitments in both proceeding are voluntarily proposed by Navela and are adequate to eliminate possible competition concerns that could have arisen had the behaviour of Navela in the relevant market remained unchanged sufficient to restore effective competition in the relevant market concerned. In addition, in the market tests that have been carried out in this matter the CCA has not received any comments.