CCA terminates proceeding against Čakovečki mlinovi i Tvornica stočne hrane

On 30 October 2024 the Croatian Competition Agency (CCA) terminated the proceeding initiated against the undertaking Čakovečki mlinovi d.d. from Čakovec, and Tvornica stočne hrane d.d. from Čakovec finding that there had been no legal presumption for any further action.

The alleged infringement was communicated to the CCA on 12 July 2022 by the Committee for Agriculture of the Croatian Parliament raising concerns about the existence of a possible secret price arrangement (prohibited horizontal agreement on the purchase price of wheat) between the purchaser of wheat in 2022.

Within its powers, the CCA carried out the preliminary market investigation in the relevant market and found that the agreements between the undertakings Čakovečki mlinovi and Tvornica stočne hrane (TSH) contained identical wheat purchase prices for all five grades of wheat (Super, I, II, III and IV) in 2020, 2021 and 2022.

Consequently, on 26 October 2023 the CCA opened the infringement proceeding with the view to establishing whether the parties concerned entered into a prohibited horizontal price fixing agreement in line with Article 8 of the Competition Act.

In that sense, the CCA commenced a surprise inspection of the premises of the undertakings concerned looking for evidence of concurrence of wills regarding the conclusion of a prohibited price fixing agreement in question.

After having carried out the investigation and the analysis of all documents and evidence, the CCA found no evidence that would indicate any direct or indirect illegal contact between Čakovečki mlinovi and TSH in this particular case, nor the existence of concurrence of wills on the side of these undertakings to apply a specific fixed wheat purchase price, i.e., the existence of a prohibited agreement that would lead to distortion of competition by object or effect in the relevant market by fixing the purchase price of wheat. This finding made any further action unsubstantiated and the CCA terminated the proceeding.

Regarding the established fact that Čakovečki mlinovi and TSH had identical wheat purchase prices across all five grades (Super, I, II, III, and IV) in 2020, 2021, and 2022, which prompted the initiation of the proceeding in the first place, the CCA emphasized that this fact, in itself, could not prove that the prices were the result of a prohibited agreement between Čakovečki mlinovi and TSH.

In this regard, the main principle of competition is that each undertaking determines independently its economic conduct on the relevant market. This principle does not prevent undertakings from adapting themselves intelligently to the existing or anticipated conduct of their competitors in the market.

In this context, TSH stated during the proceedings that in forming its price lists, it took into account the price lists of all major buyers in Croatia, Slovenia, Hungary, and Serbia, observing the market behaviour of the competitors. TSH further explained that, as a small and new wheat buyer, particularly for the first three grades of wheat, it has chosen to adopt the prices of Čakovečki mlinovi as relevant prices when creating its wheat purchase price lists. TSH justified this decision by noting that the prices of Čakovečki mlinovi have been generally among the highest in Croatia, and that as the largest agricultural company in Međimurje County and the largest buyer of wheat in the region, Čakovečki mlinovi likely had the most accurate and realistic wheat purchase prices.

Here the CCA pointed out that parallel behaviour by two or more competitors in a market is not by itself evidence that those competitors are involved in a concerted practice. In other words, parallel behaviour can represent prohibited concerted practice if it results from prior unlawful contact between competitors, but not if it stems from individual actions triggered by the market conditions and the observed or anticipated behaviour of competitors.

Considering all the above, and in the absence of any direct evidence unequivocally pointing to any prohibited direct or indirect contact between Čakovečki mlinovi and TSH, the CCA found that the identical wheat purchase prices of Čakovečki mlinovi and TSH in 2020, 2021, and 2022 could not be attributed to a prohibited agreement or concerted practice. Instead, this may point to parallel behaviour by the undertakings in question, resulting from TSH’s adapting to the relevant market situation, particularly to the wheat purchase terms set by Čakovečki mlinovi. Consequently, the CCA decided to discontinue the case.