Communication

The aim of the protection of market competition is primarily to create benefits for consumers and equal conditions for all entrepreneurs on the market, who, acting in accordance with the existing rules and competing on the market with the quality, price and innovation of their products and services, contribute to the overall development of the economy.

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CCA opinion on favourable energy contracts

The Croatian Competition Agency (CCA) gave its opinion to the request received by the Croatian Chamber of Trades and Crafts regarding the intention of entering into a framework agreement with HEP-Opskrba (HEP Electricity Supplier) on the basis of which the members of the Chamber would be supplied under favourable conditions. These favourable conditions would be used exclusively by the members of the Chamber that regularly fulfil the membership requirements. The Camber asked the CCA opinion in the sense of application of competition rules in the matter concerned.

Based exclusively on the data from the writing it received from the Chamber and without an actual insight in the framework agreement at issue the CCA concluded that in this particular case the legal conditions for the conclusion of an agreement within the meaning of the Competition Act have not been met. Consequently, the CCA could not assess the agreement in question under the rules defining prohibited agreements between undertakings that fall under the competence of the CCA.

Concretely, it is understood that on one hand the members of the Chamber are tradesmen and craftsmen, in other words, undertakings, whereas on the other hand, the Chamber is an association of undertakings. However, HEP Electricity Supplier enters into an agreement with the final customer or user of the service. Accordingly, this agreement does not represent an agreement within the meaning of competition rules.

At the same time, given the fact that HEP Electricity Supplier holds a dominant position in the relevant market, in the context of possible abuse of a dominant position the CCA stated in its opinion that discounts for end users (members of the Chamber) in principle do not raise any competition concerns. However, HEP Electricity Supplier should in principle not condition the power supply under favourable conditions to the members of the Chamber by imposing sanctions should the Chamber or any of its members like to switch to any other electricity supplier.

Namely, an undertaking holding a dominant position should particularly take care not to infringe competition rules in the relevant market, regarding both its buyers (undertakings) and the competing undertakings, and particularly with respect to its pricing and discounts policy. In this context, the volume rebates that depend on the standard and objective purchase thresholds are generally not abusive.

In its opinion the CCA indicated that the Chamber when entering into such agreements should also take into account the State aid rules that fall under the competence of the Ministry of Finance and the European Commission. The CCA also stated that it has not analysed the rights and obligations of HEP Electricity Supplier under separate laws regulating the electricity market and falling under the authority of specific regulators in this area.

Regardless of this query of the Chamber the CCA conclusively wants to call attention to the founding principles of competition law and policy that call for a public procurement procedure for the purchase of goods and services in such cases, where all interested bidders are ensured equal access to these contracts and the market as a whole.