CCA closes the proceedings against Peugeot Hrvatska

The Croatian Competition Agency (CCA) closed two ex-officio proceedings carried out against the undertaking Peugeot Hrvatska that had been opened following the initiative of the undertaking Auto Maksimir based on the fact that Peugeot Hrvatska terminated on 31 December 2013 the new motor vehicles sales agreements, servicing and sales of spare parts agreements with the undertaking Auto Maksimir.

Two separate proceedings were carried out due to the fact that Peugeot Hrvatska held different market shares in the sales of new motor vehicles and the provision of repair services and sales of spare parts. In the former proceeding, the CCA analysed whether Peugeot Hrvatska infringed competition rules on the basis of a prohibited vertical agreement in the new motor vehicle distribution, whereas in the latter, it investigated whether the undertaking in question abused the dominant position in the provision of repair and maintenance services and in the sales of spare parts for Peugeot cars.

Namely, based on the new business policy and the distribution strategy of Peugeot Hrvatska, in December 2011 it terminated the agreements for the sale of new motor vehicles and spare parts and authorised repair with all the members of its distribution network with a two-year agreement cancellation period.

In the sale of new motor vehicles Peugeot Hrvatska decided on a combination of qualitative and quantitative selective distribution system. This means that it limited the number of distributors in the relevant market, whereas the criteria for joining the network had been transparent and known in advance to all the dealers of new motor vehicles of the Peugeot brand in Croatia under the same conditions.

The conclusion of new agreements depended on two conditions. First, the interested undertakings had to comply with the obligations set under the contract, the selection criteria, the standards and methods set by Peugeot that had been in force until 31 December 2013. Second, the interested undertakings had to respect the contract obligations and the selection criteria in force from January 2014 onwards.

Peugeot Hrvatska claimed that that an agreement for the sale of new Peugeot motor vehicles had not been concluded with Auto Maksimir on the account of the fact that Auto Maksimir had not purchased and installed the new Peugeot brand identity elements until 1 January 2014 – the point in time when the new agreements should have entered into force.

Auto Maksimir challenged the legality of the cancellation of the agreement in December 2011 and also insisted that it fulfilled all the criteria set by Peugeot.

The CCA terminated the proceeding for the establishment of a prohibited agreement that it carried out with respect of the sales of new Peugeot motor vehicles given the fact that no anticompetitive behaviour of the undertaking Peugeot Hrvatska had been detected. Namely, on 1 June 2013 there had been a significant revision in the application of competition rules in the motor vehicle sector, particularly in the sale of new motor vehicles. The former Regulation on vertical agreements for the purchase, sale or resale of new motor vehicles that provided for a stricter assessment regime in the sales of new motor vehicles ceased to apply and the general Regulation on block exemption granted to certain categories of vertical agreements started to apply in the sales of new motor vehicles. In other words, the provisions of the former Regulation relating to the duration, termination, dispute resolution and transfer of rights and obligations under the new motor vehicles distribution agreements on third parties in the sense of competition rules ceased to apply.

Therefore, all the issues relating to the duration and termination of an agreement, dispute resolution and transfer of rights and obligations under the agreement on the sale of new motor vehicles on third parties cannot any longer constitute the subject of the proceeding carried out by any competition authority, including the CCA, but may be referred to and resolved by the court.

Apart from that, the market share of Peugeot Hrvatska in the sales of new motor vehicles in Croatia is less than 10 per cent. The agreements it concluded with authorised dealers of new motor vehicles did not contain hard core restrictions that are considered prohibited under the general block exemption regulation applicable to vertical agreements. In other words, the agreements in question satisfied the criteria for block exemption from the application of the provisions on prohibited agreements under the Croatian Competition Act.

In the second proceeding that was carried out by the CCA against Peugeot Hrvatska on the basis of alleged abuse of a dominant position in the provision of repair and maintenance services for motor vehicles of the car make Peugeot and the connected market in sales of spare parts, where Peugeot Hrvatska holds a dominant position, the CCA accepted the commitments proposed by the undertaking at issue. The CCA found the proposed remedies adequate for the elimination of the possible anticompetitive effects and the restoration of effective competition in these markets.

In this respect the CCA found that the proposed commitments undertaken on the own initiative of the undertaking Peugeot Hrvatska ensure that Auto Maksimir, which has for many years been the authorised dealer of new Peugeot motor vehicles and authorised repairer for Peugeot motor vehicles, and once it has left the network of authorised dealers for new motor vehicles, remains in the network of authorised Peugeot repairers, which is in line with the EU practice.

Peugeot Hrvatska committed itself to supply all brand identity elements to Auto Maksimir within 3 working days from the receipt of the decision of the CCA for the purpose of implementation of the Authorised Repair Agreement for the repair shop located in Zagreb, Ulica kneza Branimira 191. It also committed itself to keep in force the Authorised Repair Agreement for the repair shop of Auto Maksimir located in Zagreb, Kraljevićeva ulica 24, until 29 November 2015 at the latest, i.e. the date when Auto Maksimir plans to close down the authorised repair activities for Peugeot motor vehicles and continue to provide repair services and sell spare parts for Peugeot cars on the location of its repair shop in Ulica kneza Branimira 191.

Finally, Peugeot Hrvatska will not oppose to erecting of any additional road signs by Auto Maksimir in the neighbouring streets that would in accordance to the new brand identity elements lead to the repair shop entrance.