CCA: No abuse by Ytong– it does not hold a dominant position

The Croatian Competition Agency established in the proceeding against the undertaking Ytong porobeton that pervious concrete is easily interchangeable or substitutable by other building materials used for the construction of walls and that Ytong porobeton does not hold a dominant position in the market concerned.

The Croatian Competition Agency (CCA) established that the undertaking Ytong porobeton has not been involved in any abusive practices that would lead to distortion of competition in the distribution of building material used for wall construction in the territory of Croatia.

The initiative for the initiation of the proceeding was filed by the undertaking Tegula projket that claimed that the undertaking Ytog has for years been the importer and distributor of pervious concrete (porous concrete, autoclaved aerated concrete) of Ytong brand and since May 2015 the importer and distributor of Lea pervious concrete. Lea was a new brand of pervious concrete manufactured in Ytong factory in Tuzla. The complainant claimed in its initiative that the sole objective of the distribution of Lea pervious concrete brand was to eliminate the competition; in the first place the company Tegula projekt, since the pricelist and the discounts offered by Ytong to its buyers indicated that the price of the brand concerned was lower than its purchase price.

The CCA initiated the infringement proceeding in January 2016.

Tegula projekt also found that the pervious concrete market is a separate market on the account of the fact that in its opinion the pervious concrete products are not interchangeable or substitutable with other building products used for wall construction such as bricks, brick blocks or plaster cardboard. However, Ytong stated that pervious concrete products must be treated as a part of the complete market in building material used for wall construction. It was therefore essential for the CCA to define the relevant market, in other words, to establish the substitutability of pervious concrete by other building material used for wall construction, in particular other types of concrete, taking into account their characteristics, price and the intended use.

In defining a relevant product market the CCA thus analysed the statements from a number of market participants – construction companies (apartment contractors) and professional associations of the Croatian architects, construction engineers, participants in the non-metal industries, experts from the Croatian Chamber of the Economy, the Croatian Employers’ Association, the Civil Engineering Faculty in Zagreb etc.

In addition, Ytong submitted the opinion of the civil engineering expert witness and the results of the independent survey conducted among the customers on interchangeability of building materials.

After having analysed all the relevant statements, received opinions, other data and facts the CCA concluded that by reason of the characteristics, price and intended use of the building materials used for wall construction pervious concrete may be regarded as sufficiently interchangeable or substitutable by the consumer. Consequently, the relevant market was defined as the market in distribution of building materials used for wall construction.

Given the fact that the relevant marked so defined included a wide range of interchangeable building materials used for wall construction, the market share in the relevant market so defined indicated no dominance by Ytong porobeton, which is the legal prerequisite for establishing abusive practices.