CCA accepts commitments offered by Hrvatske šume in two infringement cases – conclusion of a prohibited vertical agreement and abuse of a dominant position

On 20 July 2023 the Croatian Competition Agency (CCA) closed the infringement case with respect to the conclusion of a prohibited agreement against the Croatian forestry and woodland management company – Hrvatske šume and the Croatian Chamber of the Economy – Wood Processing Association by accepting the commitments offered by Hrvatske šume.

Concretely, Hrvatske šume committed itself not to apply Article 11.2 of the Letter of Understanding for the conclusion of framework and annual agreements for the purchase of trunks signed on 15 December 2017 and Article 9.2 of the Letter of Understanding for the conclusion of framework and annual agreements for the purchase of cubic timber of 20 April 2018. In addition, the Wood Processing Association must be exempt from the meetings and decision making about the complaints of the customers of Hrvatske šume in the sale of timber assortments. The decision can exclusively be made by the managing body of Hrvatske šume.

Furthermore, the Commission for the monitoring of the sale of timber assortments in public tenders has been established that will decide about the complaints of the bidders.

Finally, within a period of three months Hrvatske šume committed itself to introducing a competition compliance training program for managers and employees in contact with competition rules in any segment. This compliance training program will include a Competition Guidebook for the employees, inhouse trainings and for the members of the Commission for the monitoring of the sale of timber assortments and other persons involved in commercial activities with respect to competition rules and relevant mechanisms, the implementation of competition rules in practice, their revision and the appointment of a responsible person in charge of competition compliance matters who would be contacted in case of any competition concerns in the course of their businesses.  By 13 September 2023 Hrvatske šume must submit to the CCA both the Competition Guidebook and the Training Program.

Namely, following a complaint of the undertaking Massive Panels d.o.o., on 14 April 2022 the CCA opened ex-officio proceeding against Hrvatske šume and the Wood processing Association with the view to identifying any anticompetitive behaviour in the form of a prohibited vertical agreement in the distribution of timber assortments within the meaning of Article 8 paragraph 1 of the Competition Act, based on the circumstantial evidence indicating that these undertakings concluded a prohibited vertical agreement implementing the Letter of Understanding signed on 15 December 2017 that may have resulted in distortion of competition in the relevant market concerned. So, Article 11.2 of the Letter of Understanding stipulated the establishment of a Commission for the Implementation of the Letter of Understanding consisting of two representatives of the signing parties in charge of its operation. What raised competition concerns in this concrete case was that the representatives of the Wood Processing Association, regardless of the fact whether they were appointed members of the Commission or not, and regardless of the fact whether they participated in decision making, participated in the meetings of the Commission where complaints of the customers of Hrvatske šume – who are their direct competitors, were discussed and decided upon.

Hrvatske šume offered the said commitments before the Statement of Objections was issued with the view to eliminating possible anticompetitive effects of its actions or a failure to act within the prescribed time period.

The CCA accepted the proposed commitments finding the measures and respective deadlines legitimate and appropriate and sufficient to eliminate the competition concerns and to restore effective competition in the market, without the need of carrying out lengthy procedures.

Given the fact that the remedies proposed by Hrvatske šume were accepted by the CCA, the proceeding that was initiated against the Wood Processing Association was terminated due to absence of legal presumption for any further action.

In the second case involving the same undertaking – Hrvatske šume, on 20 July 2023 the CCA also accepted the remedies voluntarily proposed by the undertaking concerned relating to alleged abuse of a dominant position in the market.

In this particular case Hrvatske šume undertook the commitments to apply equal, clear and transparent conditions to equivalent transactions to its buyers – undertakings that are its competitors in allocation of timber assortments quotas in public calls for the conclusion of framework and annual agreements. The compliance with these criteria would be under scrutiny of the management office in line with the Competition Compliance Program.

In addition, Hrvatske šume undertook to conduct a public consultation with the interested public on the central state portal for consultations with the interested public, e-Savjetovanje, on the Draft Decision on the forms and conditions for the sale of timber assortments of Hrvatske šume for each coming year.

Hrvatske šume has also committed itself to adopt the Competition Compliance Program within three (3) months, i.e., by 6 September 2023 and communicate it to the CCA.

Namely, following a complaint of the undertaking Massive Panels d.o.o., on 7 October 2021 the CCA opened an infringement proceeding against Hrvatske šume with the view to identifying whether this undertaking abused its dominant position by applying unclear, non-transparent and dissimilar conditions in the allocation of timber assortments quotas to competing undertakings in public calls for the conclusion of framework and annual agreements.

Hrvatske šume voluntarily offered the said commitments before the Statement of Objections was issued with the view to eliminating possible anticompetitive effects of its actions or a failure to act in a prescribed time period.

The CCA accepted the proposed commitments finding the measures and respective deadlines legitimate and appropriate and sufficient to eliminate the competition concerns and to restore effective competition in the market, without the need of carrying out lengthy procedures.

Given the fact that Hrvatske šume implemented the said remedies there has been no legal standing to act against the undertaking in question.