Fire extinguisher manufacturers recognized as superior over service providers

The Fire Protection Act (ZoZP) does not violate constitutional provisions on market competition, the Constitutional Court recently announced after assessing its constitutionality. Two requests for a review of constitutionality were submitted, but I will only address the one in which the proponent believes that fire extinguisher manufacturers were granted public authority to choose service providers, which threatens the entrepreneurial and market freedom of service providers.

This concerns Article 41, paragraphs 2 and 3, which allow fire extinguisher manufacturers to control access to the market for their servicing since they simultaneously act as a sort of regulator and as a market competitor. An opinion was obtained from the Competition Protection Agency (AZTN), which states that manufacturers or authorized representatives of fire extinguisher manufacturers should not be regulators who grant authorization or prescribe conditions for granting and revoking authorization for testing their correctness, while simultaneously being competitors in the market for the production and servicing of these products.

AZTN’s position is that the authorization for testing the correctness and functionality of portable and transportable fire extinguishers and prescribing conditions for granting and revoking the relevant authorization should be prescribed by the responsible ministry. The same position was taken by the Croatian Chamber of Commerce (HGK), and AZTN additionally reminds that this is a step backward for market competition compared to the previously valid ZoZP, which stipulated that the Ministry of the Interior (MUP) was the one to issue such regulations, not the manufacturers.

Transparency and safety

The MUP’s position was, predictably, contrary given that ZoZP is its work. The police explained that the manufacturer or its authorized representative must prescribe and publicly announce the conditions that service providers must meet to obtain authorization for testing the correctness and functionality or maintenance of fire extinguishers, and there is an obligation to ensure a service and provide data on authorized service providers to the MUP for keeping necessary records and issuing evidence labels. The MUP also defends itself by stating that some manufacturers, in accordance with the Product Safety Act, requested to be allowed to participate in monitoring the safety of products placed on the market. Therefore, the MUP believes that transparency in meeting the necessary conditions and high safety and efficiency of fire extinguishers in use and maintenance has been achieved.

I must admit that the response from the MUP is not very clear to me as safety and transparency are mentioned, although no one disputes that every manufacturer will indeed strive to ensure the quality of their product (in this case, safety) and transparency. However, the issue here is granting public authority to companies to choose service providers, which then create their own rules, which seems somewhat problematic to me. Primarily because these legal changes allow for the issuance of as many regulations as there are fire extinguisher manufacturers (instead of the state, as a neutral actor, issuing one regulation for all), and on the other hand, service providers may find themselves in a subordinate position when entering into contracts with manufacturers since the manufacturer is the much stronger party.

14 years of waiting?!

Even the ruling of the Constitutional Court cites an example of the opinion of the State Administration for Protection and Rescue (DZUS), the Firefighting and Rescue Education Institute from April 9, 2008, which states that the then company Pastor-TVA imposed rigorous conditions on service providers that were ‘naturally aimed at the benefit of the manufacturer itself. In all this, one must not lose sight of the fact that Pastor has its own fire extinguisher service, which likely generates significant financial profit’.

But who am I to dispute the decisions of the Constitutional Court, which considers that the ZoZP is in accordance with the Constitution because (including the obligations of manufacturers to the MUP) ‘service providers still have the opportunity to perform the specified activity, but under the conditions set equally for all of them by a specific fire extinguisher manufacturer or its authorized representative’?

Finally, one more remark to the Constitutional Court – it has been 14 years since the proponent requested a review of the constitutionality of Article 41, paragraphs 2 and 3! 

POST SCRIPTUM

One of the conditions in the contract that Pastor once imposed on service providers states: ‘Pastor will unilaterally terminate the contract if the service provider does not achieve annual turnover with Pastor in the amount of 50,000 kuna.’ DZUS then considered that ‘this in practice means that the service provider, regardless of the volume of work, must annually purchase spare parts from Pastor worth the specified amount, otherwise they lose the contract, and thus the possibility of performing maintenance work on fire extinguishers’.