Price fixing cartel in the sewage treatment market – CCA imposes fines

The Croatian Competition Agency detected a prohibited agreement – cartel between five undertakings in the Šibenik region who fixed the price in the provision of pumping out, transportation and disposal of human waste from septic tanks, holding tanks and black holes. The members of the cartel were imposed fines in the total amount of 141,000 Kuna.

The Croatian Competition Agency (CCA) received information about the alleged existence of a prohibited agreement from a natural person claiming that five undertakings in the Šibenik region who provided services of pumping out, transportation and disposal of human waste from septic tanks, holding tanks and black holes under the same price also agreed to raise the price then in effect by more than 100 %.  The complainant attached also the snap shot of the pricelist in question.

The CCA carried out the relevant preliminary market investigation and established that there was enough circumstantial evidence for opening of a proceeding against the company Daska d.o.o., and four trades – Krtolin, Jole, Garma-promet and Kula.

Despite the fact that they are competitors in the relevant market, the five above mentioned undertakings brought identical bids in the concession awarding tender for the provision of the services concerned in the town of Šibenik on the very same day, which alone was an indication of a prohibited agreement between them. The pricelist that was fixed between 18 August 2016 and 3 October 2016 was the direct evidence of existing collusion. Therefore, 3 October 2016 was established as the day on which the collusive agreement entered into force.

Based on the statements, evidence and facts collected in the course of the proceeding the CCA found that the five undertakings concluded a price-fixing prohibited agreement in the relevant market covering the provision of services including the pumping out, transportation and disposal of human waste from septic tanks, holding tanks and black holes in the wider Šibenik area, which was in effect from October 2016 until February 2019.

Concretely, it has been established that the undertakings concerned were engaged in concerted practices in the market and that the Pricelist for transportation and disposal of human waste fixing the price of the services in 26 places in the wider Šibenik area, stamped and signed by four out of five undertakings concerned, represents a hardcore restriction, in other words, constitutes a prohibited agreement under the Croatian Competition Act.

It should be noted that it is of no significance whether the Pricelist has been applied in practice since it has been established beyond any doubt that the parties to the proceeding agreed on its content. That said, the CCA wants to point out here that a prohibited agreement exists also where the undertakings agree on merely one of the price elements. Therefore, in this concrete case, the fact whether the undertakings concerned actually charged the same price for their services or not, is irrelevant for the existence of the prohibited agreement.

The collusive agreement between the undertakings excluded any uncertainties as to the future operation of the market for all the competitors. In other words, they knowingly and deliberately substituted practical cooperation for the risk of competition, thereby excluding competition in the relevant market and producing harm for the consumers.

In setting the fine for the infringement concerned the CCA took into consideration its gravity, scope and duration as well as the established mitigating and aggravating circumstances and imposed on the undertaking Daska a fine amounting to 53,000 Kuna, the undertaking Krtolin 28,000 Kuna, the undertaking Jole 26,000 Kuna, the undertaking Garma-Promet 14,000 Kuna and the undertaking Kula 10,000 Kuna. Earlier, in the separate administrative procedure, the CCA fined the undertaking Jole for not-cooperating with the CCA. The level of fines is determined as a percentage of the turnover of the undertakings in the relevant market concerned and not of the overall annual turnover.

Thus, the CCA decided that the imposed sanctions will have a special deterrent effect on the undertakings concerned, and a general deterrent effect preventing other undertakings from engaging in similar anticompetitive practices.