Croatian Post Did Not Exclude Cityex and A1 Direkt from the Market

The Competition Protection Agency (AZTN) dismissed the initiatives of the companies Cityex and A1 Direkt from Zagreb to initiate proceedings against Croatian Post for abuse of a dominant position through the application of predatory pricing, determining that Croatian Post could not have excluded these companies from the market since they were not competitors in the market for universal postal services at that time, as they did not have the legally required license to provide those services.

The agency also took into account the fact that HP, as a public operator, had the exclusive right to provide reserved universal services until December 31, 2012, after which the liberalization of the postal services market occurred, AZTN announced on its website.

Cityex and A1 Direkt stated that Croatian Post (HP) sent offers with predatory prices to a number of banks and telecom operators, lower by up to 50 percent compared to existing and currently valid legal prices. They claim that HP, as a state-owned entity with significant market power, and even a monopoly on some services, disrupts market competition through non-transparent pricing with the aim of maintaining or increasing its market power and pushing other participants out of the market.

The initiators of the initiative also stated that HP offered a completely different discount scale for postal services to only part of its clients than the one officially stated, which completely changes the meaning of the declared official prices and discounts, and that HP, with such economically unjustified predatory prices, consciously accepts short-term losses to exclude competitors from the market.

The Competition Protection Agency determined that this is a very detailed market regulated by the Postal Services Act, which distinguishes between the market for universal and other postal services, whereby universal services are specifically reserved and belong to the protected sphere of public interest, while other postal services, including value-added services, are on a completely open and fully liberalized market.

The provisions of this law stipulate that universal postal services are exclusively provided by the public operator HP, and that the approval of the prices of these services is exclusively the responsibility of the regulator, the Croatian Agency for Postal and Electronic Communications (HAKOM), which has the authority to fully or partially amend or revoke the prices of universal postal services, before or after their publication.

In this specific case, the discounts that HP offered to those users who send a larger number of shipments within the framework of the universal postal service are provided for in the postal services price list, and neither before nor after their publication did HAKOM exercise its legal powers to fully or partially amend or revoke them. Moreover, HAKOM stated in its response that it does not consider HP’s discounts on the prices of universal postal services to be discriminatory.

The agency determined that HP has a dominant position in the market for universal postal services, but at the time when HP sent its discount offers to users of universal postal services, CITYEX and A1 Direkt were not its competitors in the market for universal postal services, as they did not have the legally required license to provide those services at that time.

Consequently, HP could not have excluded Cityex and A1 Direkt from the market through predation or in any other way, as they were not competitors in the market for universal postal services at that time, AZTN stated.