CCA to Municipality of Udbina: Place of residence requirement contravenes with principles of market competition

The Croatian Competition Agency (CCA) issued an opinion concerning the Decision on the conditions and locations for the sale of goods by mobile vendors and for the sale of goods on stalls outside the market in the Municipality of Udbina (Official Bulletin of Lika-Senj County, 4/16, 10/17, 6/20 and 13/25).

In the process of adopting decisions by units of local and regional self-government, including the Municipality of Udbina, the CCA has observed that provisions are often introduced which, in the sense of competition rules, fail to respect the principles of market competition. Such situations typically arise where the conditions imposed are excessive, restrictive, or discriminatory, and therefore produce effects on competition in the relevant market.

From the standpoint of competition law, the CCA considers that every undertaking must have free and equal access to the market, which constitutes a fundamental element of entrepreneurial freedom and a market-based economy.

Accordingly, in this particular case, the CCA found that the provisions of Article 5(3) and Article 6(1) of the Decision — which condition the performance of mobile sales activities on residence within the Municipality of Udbina — contravene with the principles of market competition. The provisions in question read as follows:

“The vendor must be a producer of agricultural products or a craftsman engaged in trade activities, with residence within the Municipality of Udbina…”

“The sale referred to in paragraph 1 of this Article is permitted to family agricultural holdings, agricultural crafts, agricultural cooperatives and legal entities registered for performing agricultural activities… as well as crafts engaged in trade activities with residence within the Municipality of Udbina.”

The CCA assessed that the above provisions restrict market access for certain groups of undertakings on the basis of a geographical criterion (residence or registered seat), thereby undermining the principle of equal treatment and preventing effective competition under equal conditions.

The CCA therefore proposed that the provisions be amended so that the conditions for conducting the activity are determined exclusively according to professional, technical, and expertise-related criteria, in accordance with the specific regulations governing the activity concerned, regardless of the registered seat, residence of the bidder, or any other geographical characteristic.

In its written response, the Municipality of Udbina stated that these provisions were adopted with the aim of protecting small local producers, ensuring the sustainability of local agriculture, and supporting rural development.

However, the CCA emphasises that, although the units of local and regional self-government are entitled to regulate matters within their self-governing competence, such actions must nevertheless be aligned with competition rules, which are of mandatory nature. This ensures equal and transparent access to the market for all undertakings.

The conditions set forth in such decisions should therefore be formulated so as to ensure the fulfilment of exclusively professional, technical and expertise-related criteria, as prescribed by the relevant regulations governing the specific activity, and should not restrict access to the market based on territorial or other discriminatory grounds, as this could have a negative effect on competition.

In conclusion, through this opinion, the CCA points out that the objectives of market regulation — including the regulation of mobile sales within the territory of local self-government units — must be aligned with the principles of market competition in order to ensure effective competition, a level-playing field for all undertakings, benefits for the end consumers, and transparent and fair management of local markets.

You can download the CCA Opinion at the following link