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Zagreb, 27 January 2010 – The Croatian Competition Agency (CCA) closed two proceedings opened on its own initiative against seven property managers providing services in the territory of the town of Split and four property managers in the territory of the town of Pula respectively. The complaint came from the consumers associations DALMATINSKI POTROŠAČ from Split and POTROŠAČ – DRUŠTVO ZA ZAŠTITU POTROŠAČA ISTRE from Istra.
The CCA established in the case of the infringement committed by the property managers in the territory of the town of Split EHNOPLAST d.o.o., STANO-UPRAVA d.o.o., NOVI DANI d.o.o., DUB-INŽENJERING d.o.o., JAMB-TUKIĆ d.o.o., DIKA d.o.o. and UPRAVITELJ d.o.o., that they explicitly agreed to raise their management fee to a fixed amount in their meeting held in December 2007 in the offices of the undertaking STANOUPRAVA in Split. The concerted practices which result in a fixed price for services agreed on and provided by the above listed property managers applicable as of 1 January 2008 constitute an infringement of competition rules in the sense of prohibited cartel behaviour.
Where a group of similar, independent companies join together to fix prices instead of competing with each other, cartel members rely on each others' agreed course of action, which reduces their incentives to provide new or better products or services at competitive prices. As a consequence, their clients (consumers or other businesses) end up paying more for less quality.
Thus, the anticompetitive behaviour concerned produced effects in the relevant market in the provision of property management services in the territory of Split, Kaštela, Trogir, Solin and Dugi Rat. In the proceeding of the CCA it was proved beyond any doubt that the undertakings in question agreed in the above mentioned meeting to fix the fee for the provision of property management services at HRK 0.25 per m2 applicable as of 1 January 2008.
The above practice eliminates competition between competitors – in this particular case between property management service providers. What is more, the seven undertakings involved in the infringement hold a significantly high market share in the relevant market which was additionally increased in 2008 by the application of this cartel agreement and exceeded 90 per cent. At the same time, the individual market shares of the participants in the cartel remained the same, whereas the number of cases where the service users switched to other providers was negligent compared to 2007, which is again a strong indicator of decreased competition between the property managers in the relevant market in question.
In respect of the second proceeding, the one carried out against the propriety managers in the territory of Pula: EKI INŽINJERING d.o.o., ULJANIK UPRAVLJANJE STAMBENO-POSLOVNIM ZGRADAMA d.o.o., STAMBENI INŽENJERING d.o.o. and KANY d.o.o., the CCA established that the members of this cartel signed a decision on fixing the fees for the provision of property management services on 15 May 2008 in the meeting held in Pula. The decision on the basis of which the signatories explicitly agree on fixed charges for their services was put in effect on 1 June 2008. At the same time, they agreed on the increase of the fee for the provision of the services concerned and set the minimum compensation for the property manager regardless of the calculation method. In this particular case the CCA established beyond any doubt that since the day it entered into force the decision has as its object the prevention, restriction and distortion of competition within the relevant market and regardless of its actual effect it is regarded as a hard core restriction of competition.
In both cartel cases the CCA established that property managers have been using the services of different suppliers and provide they own services to a different number of users who live in buildings which differ in age, location, level of maintenance etc. Thus, the level and the structure of costs incurred by the participants of both cartels are also different although the fixed fee is the same. These costs are in no way economically justified whereas the agreement on price fixing for the provision of the services in question between existing competitors is aimed exclusively against the users of these services – final consumers, leading to undeserved profit making of the undertakings that enter into such agreements. Fixing the property management fee between the property management operators removes market mechanisms which would make the latter to switch to cost effective operation and deprives the users of these services – citizens of Split and Pula, of higher quality and lower prices of the relevant services. In addition, such practices generate unjustified profit for operators, possibly for a period lasting for a number of years, whose costs are lower than the costs of the most inefficient operator of the group. Although a larger number of operators remain active in the relevant market concerned this is to disadvantage of the consumers, taking into account that through price fixing the cartel actually operates as a collective monopoly.
Against all above mentioned property managers the CCA will take necessary steps at the competent minor offence courts with the view to imposing adequate fines in line with the relevant competition rules.
The decision of the CCA will be delivered also to the association of property managers at the national level so to deter its members from similar collusive behaviour. |
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