AZTN Returned Restructuring Programs for Three Shipyards for Revision

The Competition Protection Agency (AZTN) will not submit the restructuring programs of Croatian shipyards to the European Commission until it assesses that the programs guarantee profitability and sustainability of production in privatized shipyards, it was stated at today’s briefing at AZTN.

The Agency has returned the restructuring programs for three shipyards – Rijeka’s 3. maj, Brodosplit, and Brodotrogir – to the bidders and the Ministry of Economy, Labor, and Entrepreneurship for revision, and it should be in their interest to do so as soon as possible, as there can be no contracting of new jobs until the European Commission approves these programs, warned the Chairwoman of the Competition Protection Council, Olgica Spevec.

Our goal is to attract credible investors who will be able to restructure Croatian shipyards and make them competitive in the global market, emphasizes Spevec. She expressed moderate optimism regarding the acceptance of the programs and successful privatization, especially for 3. maj, for which the Austrian concern A-tec submitted an offer. The Rijeka shipyard has chances, estimates Spevec, and its biggest problem is finding a market for the ships it produces.

The Split shipyard, which is sought to be purchased by the Samobor-based DIV, is technologically in good condition, so there is no need for new investments, meaning that with a smart investor it has a good future, but the issue of internal restructuring and productivity needs to be resolved. Brodotrogir, on the other hand, has difficulties with the contribution of a potential buyer to the restructuring, for which the company Jadranska ulaganja must secure 40 percent of its own funds.

There were no offers for Kraljevica, so that shipyard will most likely go into bankruptcy if no one shows interest in a quick privatization, while care must be taken that the state aid that needs to be repaid is not transferred to the new owner, says Spevec. Uljanik is a special case as it is not a company in distress, so it does not require restructuring, according to AZTN. Uljanik’s problem is the return of state aid, along with default interest, which it has received since March 1, 2006.

Croatia should have already, according to its own laws, ceased the practice of providing state guarantees, emphasizes Spevec, but such a policy continued and the European Commission “looked the other way” for 4.5 years. Now, however, the Government can no longer approve state guarantees until the European Commission accepts the restructuring programs; otherwise, Croatia would seriously violate the rules for EU accession. The briefing warned that as of October 1, the Competition Protection Act comes into force, which gives AZTN the authority to determine violations of the law and impose penalties.

To implement this law, subordinate legislation needs to be adopted, and AZTN has already prepared a proposal for two essential regulations – on the imposition of penalties and on the reduction or exemption from penalties. The regulation on the imposition of penalties will enable the Agency to fine the violator up to 30 percent of the revenue generated in the activity in which the law was violated, and each repeated violation of the law will increase the penalty by 100 percent. The maximum penalty can reach 10 percent of the total annual revenue of the entrepreneur.

The regulation on the reduction or exemption from penalties introduces the institute of the whistleblower, so that the entrepreneur who first reports a cartel to AZTN and cooperates in its exposure will receive immunity in return. Those who later agree to cooperate may be exempted from 50 percent to 20 percent of the penalty. Experiences from developed countries show that without whistleblowers, it is almost impossible to detect a cartel, say the Agency. (H)