The contract between HOK and HEP-Supply regarding the delivery of electricity under more favorable conditions would not be disputed

The Competition Protection Agency believes that, in principle, the framework agreement that the Croatian Chamber of Trades and Crafts would conclude with HEP-Supply for the procurement of electricity for HOK members under more favorable conditions is not disputed, it was announced on Monday by the Agency.

The Agency provided its opinion to HOK regarding the intention to conclude a framework agreement with HEP-Supply that would enable HOK members to procure electricity under more favorable conditions. The benefit could only be used by HOK members who regularly fulfill their membership obligations, the Agency’s statement notes, from which HOK requested an opinion regarding the potential application of competition protection regulations.

– The AZTN concluded, solely based on the data from HOK’s letter and without insight into the specific contract, that in this case the legal conditions for concluding an agreement in terms of the provisions of the Competition Protection Act have not been met, and thus neither for the assessment of a prohibited agreement which falls under the Agency’s jurisdiction. Namely, although HOK members are craftsmen, i.e., entrepreneurs, and HOK is an association of entrepreneurs, HEP concludes the contract with the end customer/user of the service. Therefore, this contract does not represent an agreement in terms of competition protection regulations, the statement notes.

At the same time, since HEP-Supply is in a dominant position in the relevant market, the Agency, considering the possibility of potential abuse of dominant position, emphasized in its opinion that granting discounts to all end customers (HOK members) under equal conditions is, in principle, not disputed.

– However, HEP – Supply should generally not condition the delivery of electricity to HOK members under more favorable conditions with the application of sanctions if the other contracting party (HOK or any member) wishes to change the supplier. Namely, an entrepreneur in a dominant position must act with particular care so as not to disrupt market competition in the relevant market (in relation to individual customers (entrepreneurs) and in relation to its competitors in the market. This particularly relates to pricing policy, i.e., the discount system. Discounts based on quantity or those granted depending on a standard and objective purchase threshold are generally not abusive, emphasize the AZTN.

The Agency also notes that in its opinion it further distanced itself by “indicating to HOK that when concluding the contract it must take into account the rules on state aid (for whose application the Ministry of Finance and the European Commission are responsible) and that the analysis did not enter into the rights and obligations of HEP arising from special regulations governing the electricity market under the jurisdiction of other bodies.”

– Regardless of HOK’s inquiry, the AZTN points out to both it and everyone else that from the standpoint of fundamental principles of market competition, it is always desirable that the procurement of products and services be conducted through public procurement so that all interested suppliers have access to the market and the conclusion of contracts under equal conditions, concludes the Agency’s statement.