The Croatian Competition Agency (AZTN) issued a decision, finding that an entrepreneur headquartered in Zagreb (referred to as “the Company”) entered into a prohibited vertical agreement with its 15 distributors in the Republic of Croatia. This agreement, in accordance with Article 8, Paragraph 1, Point 1 of the Competition Protection Act (Official Gazette, Nos. 79/09, 80/13, and 41/21, hereinafter referred to as ZZTN), established minimum selling prices for certain products from September 17, 2013, to June 1, 2018. Distributors tacitly agreed to implement the Company’s unilateral business policy aimed at determining resale prices for these products, which had an anti-competitive objective.
The Company was fined a total amount of €281,836.88 (2,123,500.00 Croatian Kuna).
The determination of the resale price of a product, or an agreement or concerted action whose immediate or indirect objective is to limit the buyer’s right to freely determine the selling price of the product (without questioning the supplier’s right to set the maximum selling price or recommend a selling price, provided that it does not involve fixed or minimum selling prices resulting from pressure or incentive from any contractual party), is considered a severe restriction of market competition.
In the proceedings, AZTN found that the Company explicitly encouraged its distributors to adhere to retail prices from the relevant price lists and pre-order forms provided to them before the start of the new model season. This was in line with the Company’s business policy, which aimed to establish resale prices for the products.
During an unannounced search of the Company’s premises, evidence was discovered of an agreement between the Company and 15 distributors. This agreement established that discounts on certain products were not allowed, or that the maximum permitted discount on these products was 5 percent. There was also evidence of these distributors’ direct involvement and contribution to the implementation of the Company’s business policy of determining resale prices for these products in practice. They reported or disclosed to the Company distributors who deviated from the pricing policy, the agreement not to allow discounts or the maximum permitted discount on these products.
By analyzing the invoices of the 15 distributors for the sale of these products to end customers from September 15, 2013, to May 1, 2018, AZTN determined the implicit consent of these distributors to the implementation of the Company’s unilateral business policy and the determination of resale prices for these products. Throughout the observed period, they set their retail prices for these products at an amount equal to or greater than the retail prices in the price lists and pre-order forms communicated to them by the Company before the start of the new season or when creating wholesale orders during the season. They also adhered to the agreement with the Company not to allow discounts on these products or the maximum permitted discount of 5 percent.
Of the total number of these products sold by all 15 distributors in all model seasons from 2014 to 2018, AZTN found that a significant portion of them were covered by the prohibited agreement between the Company and these distributors.
The fine imposed by the decision, amounting to €281,836.88 (2,123,500.00 Croatian Kuna, fixed conversion rate: 1 euro = 7.5345 Croatian Kuna), was paid to the State Budget of the Republic of Croatia.
AZTN believes that the imposed fine will have a preventive effect not only on the entrepreneur to which the sanction was applied but also a general preventive effect by sending a warning to other entrepreneurs not to engage in violations of competition regulations.