CCA’s answer to the Ministry of the Interior: Price of an hour of personal protection or security guards’ service should be freely set

The Ministry of Internal Affairs of the Republic of Croatia informed the Croatian Competition Agency (CCA) of the pending draft procedure for the Personal Protection Act where the unions’ representatives proposed to the ministry the adoption of an Ordinance regulating the price of an hour of personal protection or security guards’ service that, in their opinion, should be defined as a percentage of a minimum wage in the Republic of Croatia, or, relative to the average pay. Thus, the ministry asked the opinion of the CCA whether such a provision would be in compliance with competition rules.

The draft Ordinance itself was not communicated to the CCA. However, with the view to avoiding any possible misinterpretations the CCA advised that the definition of the cited, so called “price value of an hour of a personal protection officer or a security guard” may cause ambiguity as to whether it means setting of the price of the service or merely determining the pay calculated as a fee for the provided work. The CCA pointed out that the former is likely to produce effects on competition, and particularly in case of setting a minimum price for an hour, in other words, in case of setting of the minimum price of the service.

The CCA added that it would be desirable to let the free competition on the market, supply and demand determine the price of the service concerned.

However, if the legislator decides to define a certain activity as an activity of public interest, such a service would be in principle excluded from the application of competition rules.