On 14 April 2022 the Croatian Competition Agency (CCA) opened ex-officio proceeding against the Croatian forestry and woodland management company Hrvatske šume d.o.o. and the Croatian Chamber of the Economy – Wood processing Association with the view to identifying any anticompetitive behaviour in the form of a prohibited vertical agreement in the distribution of timber assortments within the meaning of Article 8 paragraph 1 of the Competition Act, OG 79/09, 80/13 and 41/21, based on the circumstantial evidence indicating that these undertakings concluded a prohibited vertical agreement implementing the Letter of Understanding signed on 15 December 2017 that may result in distortion of competition in the relevant market concerned.
Article 11.2 of the Letter of Understanding stipulates the establishment of a Commission for the Implementation of the Letter of Understanding consisting of two representatives of the signing parties in charge of its operation.
What raises competition concerns in this concrete case is that the representatives of the Wood Processing Association, regardless of the fact whether they are appointed members of the Commission or not, and regardless of the fact whether they participate in decision making, participate in the meetings of the Commission where complaints of the customers of Hrvatske šume – who are their direct competitors, are discussed and decided upon.
The objective of the procedure concerned is to identify whether the parties participated in a prohibited vertical agreement that produces anticompetitive effects within the meaning of Article 8 paragraph 1 items 2,3, or 4 of the Competition Act i.e., whether under the challenged provision of the agreement concerned they limit or control the market or technical development, share markets or sources of supply or apply dissimilar conditions to equivalent transactions with other undertakings, thereby placing them at a competitive disadvantage.
The CCA notes here that the opening of the proceeding does not prejudice the decision of the CCA that will be based on the merit of the case, considering all the relevant facts of the case.