High Administrative Court rejects the claims against the CCA infringement decision in scheduled bus transport case: CCA v Presečki grupa d.o.o., Rudi-express d.o.o., Jambrošić tours and Autobusni prijevoznik Turist

In its infringement decision of 7 October 2021, the CCA found that the bus operators Presečki grupa d.o.o., Rudi express d.o.o., Jambrošić tours and Autobusni prijevoznik Turist entered into a Cooperation Agreement on 1 March 2011 and the Agreement on joint scheduled bus transport services in Međimurje County on 1 March 2011. The agreements concerned contained restrictions of competition by object in the provision of scheduled bus transportation services in Međimurje County, such as the provisions on market sharing, the provisions on joint arrangements and registration of new bus transportation routes in Međimurje County, the provisions on agreed re-scheduling of the existing bus services and the provisions on joint bidding in all future biddings for the provision of scheduled bus transportation services on school buses in Međimurje County.  The CCA found that in the time period from 1 March 2011 to 9 October 2011 the undertakings concerned distorted competition in the scheduled public bus transport market and scheduled transport on school buses in Međimurje County by concluding a prohibited horizontal agreement within the meaning of Article 8 items 1, 2 and 3 of the Competition Act. The undertakings concerned were imposed a fine in the amount of HRK 1,031 million.

The decision concerned was adopted by the CCA in the proceeding that was reversed after the High Administrative Court of the Republic of Croatia in its ruling UsII-171/18-2 of 27 September 2018 cancelled the decision of the CCA of 27 December 2012 that found that the undertakings concerned distorted competition in the relevant markets concerned by the conclusion of the above described Cooperation Agreement and in the Agreement on joint scheduled bus transport services in the period from 1 February 2011 to 9 October 2011, i.e. that they concluded a prohibited agreement within the meaning of Article 8 items 1, 2 and 3 of the Competition Act.

Presečki grupa appealed against that decision of the CCA but the High Administrative Court of the Republic of Croatia rejected the statement of claim and upheld the legality of the decision of the CCA by its ruling UsII-65/2013-6 of 20 February 2014. Shortly afterwards Presečki grupa filed a constitutional complaint against the ruling of the High Administrative Court of the Republic of Croatia of 20 February 2014 with the Constitutional Court of the Republic of Croatia. The Constitutional Court of the Republic of Croatia confirmed the constitutional complaint by its decision U-III-1678/2014 of 21 April 2016, cancelled the ruling of the High Administrative Court of the Republic of Croatia and returned the case to the High Administrative Court of the Republic of Croatia to reverse the proceeding.

The High Administrative Court of the Republic of Croatia rejected the statement of claim of Presečki grupa for the second time by its ruling UsII-60/16-2 of 19 January 2017 and confirmed the legality of the decision of the CCA. Again, Presečki grupa filed a constitutional complaint against that ruling of the High Administrative Court of the Republic of Croatia. On 19 April 2018 the Constitutional Court confirmed the complaint by its decision U-III-952/2017 and cancelled the ruling of the High Administrative Court of the Republic of Croatia of 19 January 2017.

In its decisions the Constitutional Court of the Republic of Croatia mainly stated that the rulings of the High Administrative Court of the Republic of Croatia that the Constitutional Court of the Republic of Croatia revoked did not contain a detailed description of the reasons why in this concrete case that court did not apply the relevant provisions of the Road Transport Act OG 178/04, 48/05, 151/05, 111/06, 63/08, 124/09, 91/10 and 112/10, in the part regulating the issues of joint provision of transport services, subcontracting etc. and the (non)existence of a prohibited agreement (cartel) in the case concerned. In other words, it failed to juxtapose the provisions of two laws applicable in the case concerned: the Competition Act and the Road Transport Act, in other words, questioned why under the circumstances of the case concerned (also) the provisions of the latter did not apply.

The Constitutional Court of the Republic of Croatia also pointed out that the High Administrative Court of the Republic of Croatia failed to explain why it provided a different legal standing in the case of the same factual and legal nature (UsII-64/2018), in other words, why it accepted the standing of the CCA that “the implementation, deadlines and criteria for the provision of scheduled passenger transportation services based on a public call, the provision of public and special scheduled services and the procedure for the issuance, re-issuance and expiration of the licence for the provision of the transportation services are regulated by the Road Transport Act and the ancillary provisions and that legal protection in the sense of this piece of legislation is ensured by other authorities and institutions”.

After the Constitutional Court of the Republic of Croatia cancelled the ruling of the High Administrative Court of the Republic of Croatia for the second time, the High Administrative Court of the Republic of Croatia, complying with the interpretation of the Constitutional Court of the Republic of Croatia in the decision of 19 April 2018, cancelled the decision of the CCA of 27 December 2012 by its ruling UsII-171/18-2 of 27 September 2018 and reversed the proceeding to the CCA.

Respecting the legal interpretation of the High Administrative Court of the Republic of Croatia provided in the explanation of ruling mentioned above, and in compliance with the above-mentioned decisions of the Constitutional Court of the Republic of Croatia, in the repeated proceeding the CCA examined the complaints of Presečki grupa that in line with the specific nature of the case, exclusively the provisions of the Road Transport Act as lex specialis were applicable and that the challenged circumstances of the case could not be investigated outside its context, where, in other words, the consistent application of the Road Transport Act excluded the notion of the cartel and distortion of competition.

For the purpose of proper application of the relevant law, in the reversed proceeding the CCA juxtaposed the provisions of the Competition Act and the Road Transport Act, with the view to investigating whether under the circumstances of the case at issue provisions of the Road Transport Act (also) apply in the part regulating the notions of “subcontracting” and “joint provision of transport services”.

Given the fact that the CCA indisputably found that in the period from 30 December 2010 to 1 March 2011 Rudi express and Jambrošić tours provided, in compliance with Article 42 of the Road Transport Act, the scheduled public bus transport services on the county lines as subcontractors – based on the licence for the provision of these services issued to Presečki grupa, the CCA found that in this concrete case and in the period concerned, exclusively the provisions of the Road Transport Act applied as a separate law in the part regulating the subcontracting, which within the meaning of  the principle lex specialis derogat legi generali enjoyed supremacy over the competition law.

Taking into account the regulatory provisions of Article 40 of the Road Transport Act with respect to the “joint provision of transport services” by two or more bus operators, providing for the obligation of the bus operators concerned to attach a written agreement if they are engaged in joint provision of transport services, on which the provisions of business partnership apply, the CCA found that in this concrete case, the joint provision of scheduled bus transport services in Međimurje County was a legitimate objective of the Cooperation Agreement and the Agreement on joint scheduled bus transport services in line with Article 40 of the Road Transport Act.

However, given the fact that Međimurje County has never cleared the application of Presečki grupa, Rudi express and Jambrošić tours for the licence for the provision of “joint  provision of transport services” in line with the Road Transport Act as lex specialis, specifying in Article 40 paragraph 3 thereof that such a licence is a prerequisite for the provision of these transportation services, the CCA found that in the period following 1 March 2011, after the conclusion of the Cooperation Agreement and the Agreement on joint scheduled bus transport services, the undertaking concerned had not provided the joint scheduled public transport services in Međimurje County, in the manner and under the conditions set in Article 40 of the Road Transport Act, on the account of the fact that they failed to satisfy the prerequisites identified thereof and had not been given the licence for the joint provision of transport services on scheduled bus lines, which was not challenged by the parties concerned, meaning that under the circumstances of the case concerned, in the specified period, the Competition Act had to be applied as a mandatory rule of law.

Therefore, in this reversed procedure the CCA investigated whether the Cooperation Agreement and the Agreement on joint scheduled bus transport services contained anticompetitive objectives and produced actual or potential negative effects on competition.

Taking into account the results of the analysis involving the scope of cooperation and competition between Presečki grupa, Rudi express, Jambrošić tours and Autobusni prijevoznik Turist, the scope of joint activities, the objectives that they aimed to achieve in the legal and economic context concerned, the CCA found that the Cooperation Agreement and the Agreement on joint scheduled bus transport services contained provisions that represent restrictions of competition by object that by their very nature have such a high potential of negative effects on competition, i.e. on the volume and quality of products and services, that it is unnecessary for the purposes of applying Article 8 paragraph 1 of the Competition Act to demonstrate any actual effects on the market.

In the view of the CCA the conclusion of the prohibited agreement in the sense of Article 8 paragraph 1 of the Competition Act contained in certain provisions of the Cooperation Agreement and the Agreement on joint scheduled bus transport services indicated the objectives of market sharing, restriction of competition and arrangements about joint bidding in future biddings resulted in a prohibited cooperation agreement deliberately replacing the risks of competition by practical cooperation between Presečki grupa, Rudi express, Jambrošić tours and Autobusni prijevoznik Turist by fully eliminating any actual or potential competition between the undertakings concerned in the relevant markets.

In its ruling of 9 March 2022, the High Administrative Court of the Republic of Croatia rejected the statement of claim of Presečki grupa and upheld the infringement decision of the CCA of 7 October 2021 specifying that the CCA provided a valid extensive explanation regarding the challenged issues identified by the Constitutional Court and thereby acted fully in compliance with the binding standing of the Constitutional Court. Furthermore, the proper findings and the conclusions of the CCA made in the infringement decision proved a proper application of the relevant law and the EU case law.

Pursuant to the renewed proceeding and the established facts of the case the CCA adopted its decision on 7 October 2021 finding that the undertakings concerned concluded a prohibited agreement. The decision of the CCA was confirmed by the ruling of the High Administrative Court of the Republic of Croatia on 9 March 2022 that rejected the statement of claim against the decision of the CCA.