Infringement decision of the CCA in the orthodontists’ cartel case upheld by the Supreme Court

By its ruling of 2 March 2021 in the administrative dispute of the claimant – the Croatian Orthodontists Society – against the decision of the Croatian Competition Agency of 12 June 2014, and based on the request of the Croatian Competition Agency for an extraordinary legal review by the State Attorney’s Office of 29 September 2015 challenging the legally valid ruling of the High Administrative Court of the Republic of Croatia of 5 March 2015, the Supreme Court of the Republic of Croatia declared the request of the State Attorney’s Office founded, revised the legally valid ruling of the High Administrative Court and rejected the claim as unfounded. In other words, it upheld the infringement decision of the CCA of 12 June 2014 in the orthodontists’ cartel case.

Namely, after having closed the administrative proceeding that had been initiated in September 2013 the Croatian Competition Agency (CCA) found in its decision of 12 June 2014 that by the adoption of the “Minimum prices for orthodontists services” the Croatian Orthodontic Society (COS) concluded a prohibited agreement within the meaning of Article 8 paragraph 1 of the Competition Act, OG 79/09 and 80/13, that was in force from 1 October 2010 until 9 October 2013.  The setting of minimum prices by this association of undertakings was considered an infringement of competition rules by the CCA who imposed a symbolic fine amounting to HRK 150,000 and declared the price list concerned null and void.

The prohibited agreement at issue involved fixing the price of services which is prohibited by object and therefore it was not necessary for the CCA to provide evidence of its actual anticompetitive effects. Thus, the CCA did not have to analyse the concrete effects of the prohibited agreement concerned on the market and consumers. In addition, there was no legal ground for COS to set a pricelist on the account of the fact that the sole authority able to do so was the Croatian Chamber of Dental Medicine under a separate law. The fact was that the Chamber of Dental Medicine did not determine the minimum prices for orthodontists’ services by means of a separate pricelist and has neither directly nor indirectly empowered the COS to do so. The price and the standard of the orthodontists’ services should have been regulated in any other legal way, said the CCA in its decision then. The prohibited agreement concerned involved fixing the price which is prohibited by object and therefore it was not necessary for the CCA to provide evidence of its actual anticompetitive effect. Price arrangements of competing undertakings in the same market are explicitly prohibited and constitute hardcore restrictions of competition, added the CCA in its decision. Thus, the CCA did not analyse the concrete effects of the prohibited agreement concerned on the market and consumers. The fact that the pricelist was not binding for the members of the association and that they were not sanctioned if they did not observe the said pricelist was also taken into account when setting the fine but could not discharge the association from liability in this cartel case.

Despite the fact that in its statement of defence the CCA provided a detailed reply to the claim of COS and explained the reasons for the adoption of the infringement decision, in its ruling of 5 March 2015 the High Administrative Court of the Republic of Croatia confirmed the claim of COS and overturned the decision on a prohibited agreement of the CCA.

It was the position of the CCA that the High Administrative Court of the Republic of Croatia challenged in its ruling the very concept of a cartel as defined under the Competition Act and by EU acquis in the area of competition. In other words, the CCA pointed out back then that if such a ruling had remained in force, it would have constituted a precedent that would have jeopardized the interest of consumers, undertakings and competition policy in general. Given that there was no ordinary legal remedy against the ruling of the High Administrative Court of the Republic of the CCA in July 2015 the CCA resorted to an extraordinary legal remedy and decided to seek the State Attorney’s Office of the Republic of Croatia to re-examine the legality of the ruling of the High Administrative Court of the Republic of Croatia in the case CCA v Croatian Orthodontic Society. The State Attorney’s Office found the CCA’s request substantiated and informed the CCA that it had submitted the request for extraordinary legal review of the legally valid decision to the Supreme Court of the Republic of Croatia.

In its final ruling of 2 March 2021, the Supreme Court of the Republic of Croatia stated that the infringement decision of the CCA properly found that that by the adoption and publishing of the document “Minimum prices for orthodontists services” COS concluded a prohibited agreement under Article 8 paragraph 1 of the Competition Act.

The Supreme Court of the Republic of Croatia also repeated the very statements of the CCA during the administrative proceeding that the law does not empower any association of undertakings to fix prices of products or services of its members, and that any fixing of minimum or fixed prices constitutes an infringement of competition rules.

In addition, in its ruling the Supreme Court of the Republic of Croatia supported the finding of the CCA that such agreements are prohibited by object where restrictions of competition by object are those that by their very nature have the potential of restricting competition and have such a high potential of negative effects on competition that it is unnecessary to demonstrate any actual effects on the market. Consequently, where this is the case, no examination of actual or potential effects on the market of such agreements is necessary.

The CCA welcomes the decision of the Supreme Court and is looking forward to any future decisions and interpretations of the Supreme Court of the Republic of Croatia that would serve as a source of law containing legal rules by a competent authority and contributing to proper understanding and appropriate application of competition rules.