Croatian Competition Law; Legal Framework Determining Cartel Investigations and Fines for the Infringements of Competition Act
Author: Mirna Pavletić Župić PhD
The Competition Act – CA (consolid. 2013) [1] in Art 8 stipulates pursuant to Art. 101 TFEU[2] a prohibition to all vertical or horizontal agreements among undertakings which might harm the competition on relevant market. It states that the following shall be prohibited as incompatible with the internal market of EU: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.[3]
Initiation of Proceedings
The Agency for Protection of Competition as the competent administrative authority initiates and conducts the procedures of determining the distortion of competition and the process of establishing the existence of conditions for the imposition of fines for violation of the Act and violation of Article 101 or 102 TFEU, and makes a decision based on which would be determined measures, terms and conditions for the re-establishment of effective competition. Furthermore, it imposes administrative and punitive measures in a way of financial fine, along with the deadlines and the manner of its execution. The proceedings of determining the prohibited agreement is initiated ex officio[4].
If the procedure is initiated by applying Article 101 or 102 TFEU, on the basis of EU Council Regulation (EC) No. 1/2003 , then the EU Commission would be involved without delay, at the latest after the first action in the proceedings.[5]
The Dawn-Raid
During the proceeding the Agency would collect all data and other kind of information, and require from the entrepreneurs all other evidence such as direct access to all business premises, movable and immovable property, business books and databases. If entrepreneurs do not act upon the request of the Agency, same could impose a financial fine. The Competition Agency may carry out unannounced search, the so-called dawn raid, of the business premises, other property and means of transport of the entrepreneurs being investigated. It can also require submission of documents, and other evidence necessary for determining the distortions of competition, and can also undertake the sealing and seizure of the same it would consider to be a risk of their concealment or destructions. [6]
The search would be carried out by Agency, along with Ministry of Interior, and the same includes: forced entry and search of all business premises, other property and means of transportation of the entrepreneurs under suspect, review of their business records and other documents as well as PCs, servers, telephone systems, confiscation and copy of all books and other business records, additional to sealing offices, and taking the oral statements from the employees relating to the facts relevant to the subject, by which the search can be extended to private premises, apartments, houses and cars of the persons involved.[7]
Imposition of Fines
After applied procedure of prohibited agreements between undertakings, the Agency imposes fines – administrative punitive measures. In addition, in accordance with Council Regulation (EC) no. 1/2003, no later than 30 days before the date of the decision establishing a distortion of competition on the basis of Article 101 or 102 TFEU, reported according to the European Commission, and submitted by available a summary of the case and the draft decision. Penalties for serious violations of the law, so-called administrative punitive measures, can amount up to 10% of the total annual revenue of the entrepreneur, calculated based on financial statements from the year preceeded.[8] Decission can be challenged in front of High Administrative Court.
[1] Offic.Gazz. 79/09,80/13
[2] TFEU- Treaty on Funct. of EU; cons. vers.- Part III; TITLE VII: COMMON RULES ON COMPETITION, TAXATION AND APPROXIMATION OF LAWS – Chapter 1: Rules on Competition – Section 1: Rules applying to undertakings – Article 101 (ex Article 81 TEC) ;Official Journal 115 , 09/05/2008 P. 0088 – 0089
[3] Art. 101. TFEU
[4] Art. 30-38 CA
[5] Art. 40 CA
[6] Art. 41-42 CA
[7] Art. 42-44 CA
[8] Art. 58 CA