Price agreements and agreed price increases of associations of undertakings are prohibited under competition law

With respect to the announcements of associations undertakings and trade associations, such as the Croatian Chamber of Crafts and Trades, the Association of Crafts and Trades of the City of Zagreb, professional sections or guilds of hairdressers, beauticians, food services and hospitality providers, construction workers, car repairers and dry cleaners, that are planning to meet and agree on the percentage of price increase in light of the rise in energy prices, the Croatian Competition Agency warns that any agreement on the price or the price increase between the competing undertakings in the market, including any collusive behaviour of the particular association in its meetings is strictly prohibited under competition law.

Every undertaking must define its own price and any collusion about the price or price increase at the meeting of the association of undertakings is prohibited. In practice, many prohibited horizontal agreements (cartels) have been identified in the meetings of professional associations, where the competing undertakings discussed the prices or the percentages of the price increase, and actually, announced later after the meeting that they decided to increase the price of their services by a certain percentage. The association of undertakings is also involved in the prohibited agreement where it makes a recommendation to its members to raise the price of their services and they apply these recommendations in practice.

Such price agreements constitute hard core restrictions of competition rules because they restrict or even eliminate competition, fix the price of the service, foreclose the market and directly harm consumers who pay a higher price for the same service that would be provided without the agreement concerned.

Such agreements between competing undertakings constitute the most serious infringements of competition law due to their most harmful anticompetitive effects on the consumers, competition and the entire economy. The participants in these agreements are therefore severely sanctioned.

For the participation in such prohibited agreements the Croatian Competition Act provides for a fine of up to 10 of the total turnover of the undertaking realized in the last year for which financial statements have been completed. The fines for infringements of competition rules can be imposed both on undertakings and associations of undertakings.

With this press release the Croatian Competition Agency wants to advise the undertakings and their associations on the importance of compliance with competition rules in their operation.