Amendments to the Croatian Competition Act

Amendments to the Croatian Competition Act (the "Act") entered into force on 24 April 2021. One of the main goals of the Act was to transpose Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to make the competition authorities of the Member States more effective enforcers and to ensure the proper functioning of the internal market (the "ECN+ Directive") into Croatian law. Apart from transposing the ECN+ Directive, the legislator used the opportunity to harmonise certain other provisions of the Act which were not fully in line with the Community rules.

 (i) ECN+ Directive implementation

• the Act aims to ensure the institutional, financial and operative independence of the Croatian Competition Authority (the "CCA") by enabling the CCA, inter alia, (i) to exercise its competence free of any external intervention or influence which may affect its independent assessment of matters, (ii) to independently spend budget allocations, (iii) to determine priorities in its activities in cases when it receives the initiative for commencing the procedure ex officio;
• save in case of merger control, the CCA now has the explicit power to restore competition in antitrust proceedings by imposing structural and behavioural remedies proportionate to the infringement and necessary to bring the infringement to an end;
• the CCA will also have the authority to reject complaints on the basis that they lack priority for the initiation of proceedings;
• the CCA is empowered to impose fines on undertakings that infringe Croatian or EU competition law either intentionally or through negligence. Notions of intention and negligence must be interpreted in accordance with the case law of the Court of Justice of the European Union in the application of Articles 101 and 102 TFEU, instead of national criminal laws;
• the Act introduced the term secret cartels in addition to other horizontal agreements. The CCA may now also grant immunity to the first member of a secret cartel that files a leniency application with information and evidence which either enables the CCA to carry out a targeted inspection of a secret cartel or which are, in the CCA's view, sufficient for it to find an infringement covered by the leniency programme;
• the Act introduced Obligatory Interviews as a new legal institute under which the CCA may summon any representative of the undertaking or of an association of undertakings as well as any other person that may have significant information for the proceedings under the Act. Information obtained by such obligatory interviews may not be used as evidence for the purpose of sanctioning the interviewed persons;
• the Act introduced new rules on access to leniency statements according to which the CCA will be able to allow access to leniency statements or settlement submissions only to parties of the relevant proceedings and only for the purpose of exercising their rights of defence in those proceedings or in front of the High Administrative Court of the Republic of Croatia;
• interim measures for infringement of Articles 101 and/or 102 (e.g. cease and desist order, fulfilment of special conditions or other proportionate measures) may not be longer than 12 months and the CCA must inform the European competition network in case such a measure is imposed;
• rules on settlement procedure before the CCA are introduced, providing for the parties' right to file a settlement submission with the CCA, thereby admitting the infringement and waiving its right to challenge the CCA's infringement decision. Should the CCA decide to accept the settlement submission, it will reduce the fine that would have been imposed in the absence of a settlement by 10 % to 20 %;
• an institute of periodic penalty payments introduced as a novelty in national competition-related proceedings. These fines will be applied to ensure that the CCA has effective means to challenge persistent non-compliance with its decisions and measures;
• limitation periods for the imposition of fines and periodic penalty payments will be interrupted for the duration of enforcement proceedings before the competition authorities of other EU Member States or the European Commission in respect of the same conduct prohibited by Article 101 and/or 102 TFEU. Any notice of enforcement proceedings for the same conduct in other Member States or before the European Commission will re-start the limitation period following the end of proceedings in that other Member State or before the Commission;
• the CCA's Notice on facts determined in the proceedings was found to be an unnecessary procedural step and was therefore eliminated. The CCA will normally adopt a statement of objections before taking a decision on infringement, allowing the parties to address/dispute the concerns it has identified;
• administrative-criminal sanction (upravno-kazenena mjera) is changed to monetary sanction (novčana kazna) to nomotechnically equalise the type of sanction with the one provided for in the ECN+ Directive as well as in other EU Member States;
• finally, the Act introduced new provisions to regulate cooperation between the applicant authority (CCA) and requested authority receiving the request for mutual assistance, as well as prerequisites for determining the governing law in case the decision of the applicant authority is questioned, and prescribed the content of the uniform instrument under which the CCA will be obliged to execute a final and binding decision of the applicant authority for sanctioning the undertaking, upon its receipt.

(ii) Other changes

Referral to the national authority to decide on concentration

Further amendments are aimed at ensuring appropriate application of Regulation (EC) 139/2004 on the control of concentrations between undertakings (the "EC Merger Regulation"). Based on the current text of the Act, if the European Commission refers a merger notification to the CCA, the CCA has the power to assess the concentration only if the undertakings concerned satisfy the turnover thresholds specified in Article 17 of the Act. To comply with the provisions of the EC Merger Regulation, the Act now expressly provides that in case of a referral by the European Commission to the CCA, the CCA will have the power to assess the referred concentration irrespective of whether the undertakings concerned meet the turnover thresholds set forth under Article 17 of the Act.

National authority applying the EU law on violation of Articles 101 and 102 TFEU

The Croatian Competition Act currently allows the CCA to adopt decisions establishing that an agreement or practice does not restrict competition within the meaning of Croatian competition law or Articles 101 or 102 of the Treaty on the Functioning of the European Union (TFEU). However, in cases of parallel application of Croatian and EU competition law, national authorities should not have the power to decide that a certain agreement or practice is not restrictive under EU competition law. Therefore, under the Act, the CCA will no longer have the authority to establish non-infringement of Articles 101 and 102 TFEU but will only be able to stay the proceedings if it considers that an agreement or practice does not violate EU competition law. Otherwise, the CCA's decision could prevent the European Commission from commencing proceedings based on the same facts (ne bis in idem).

The Croatian regulation on the block exemption of insurance agreements is placed out of force by this Act, as the corresponding EU block exemption regulation has not been in force since 31 March 2017.

authors: Ana Marjančić and Srdjana Petronijević