More than a year after the Arab investor Muhamed Alabar, or his company Eagle Hills, acquired a 100% ownership stake in Sunčani Hvar from the CPI Property Group fund, the Competition Protection Agency (AZTN) issued a decision on the conditional approval of the concentration that arises. Eagle Hills is already the owner of the company Sunce hoteli, which he purchased from Jake Andabak, and which operates eleven hotels and several camps in the Dalmatia region.
There are three conditions that the new owner of Sunčani Hvar must fulfill, which were proposed by Eagle Hills itself, in order to eliminate the negative effects of the concentration on market competition.
The first condition is that within five years, at least 20 to 30 million euros must be invested in the Sirena and/or Amfora hotels, which does not exclude investment in other existing or new accommodation units of Sunčani Hvar. This would lead to positive effects that can eliminate potential market competition disruption. By investing in Hotel Sirena, the hotel offer in the city of Hvar would be improved and diversified, as this hotel is located two kilometers from the city, in a bay that has not been sufficiently touristically utilized, and at the same time, it would increase the competitiveness of Sunčani Hvar. The investment in Hotel Sirena will also have positive effects on the well-being of the local community as the promenade and the lighting leading to the beach will be renovated, a new WIFI network will be introduced throughout the bay, the sewage system will be upgraded as an enhancement of environmental protection and sea cleanliness, and new facilities such as a beach café bar, a children’s corner, and a new public sanitary facility on the beach will be introduced.
Supplier Relations
The remaining two conditions are related to supplier relations. First, AZTN requires the companies Sunčani Hvar and Sunčani Hvar nekretnine, as entrepreneurs under the control of Eagle Hills, to maintain all contracts they have entered into with suppliers of all types of products and services that are based in the Republic of Croatia. The commercial terms (including payment terms and conditions) must essentially be equal to or more favorable than those agreed upon in the currently valid contracts.
Second, Sunčani Hvar and Sunčani Hvar nekretnine must increase the value of the subject of contracts concluded with suppliers of goods and services based on the island of Hvar, which does not exclude other suppliers from the remaining relevant market and generally the market of the Republic of Croatia, by at least ten percent in relation to the annual value of contracts concluded with suppliers of goods and services based on the island of Hvar during 2024. The annual value of contracts concluded with suppliers of goods and services based on the island of Hvar during 2024 amounted to between 20 and 30 percent of the total annual value of contracts concluded with all suppliers.
As stated in the AZTN decision, Eagle Hills believes that maintaining all contracts with existing suppliers based in the Republic of Croatia, including those based on the island of Hvar, will shorten the distribution chain, reduce transportation and distribution costs, and maintain product specialization. Furthermore, this measure will ensure that existing suppliers are not replaced by other suppliers that Eagle Hills engages at other locations in the relevant geographical market. Additionally, maintaining the existing supply chain ensures that potential market distortions, barriers to market entry, disruptions, and imbalances in negotiations are minimized. By preserving stability, market access, and market efficiency, this approach supports a competitive environment in which entrepreneurs can operate under equal conditions, achieving long-term economic benefits and consumer welfare.
By developing and increasing the existing supply chain in terms of the annual value of the subject of contracts with suppliers based on the island of Hvar and the Republic of Croatia, the competitiveness of the local suppliers’ market will simultaneously increase. This measure will shorten the distribution chain, reduce transportation and distribution costs, and maintain product specialization. Ultimately, by promoting a diverse, high-quality local supply chain, the market becomes more resilient, efficient, and aligned with long-term economic and competitive principles.
Significant Impact of the Concentration
The complete application for the concentration of Eagle Hills and Sunčani Hvar was received by AZTN on June 11, 2024, after which a public call was issued to all interested parties to submit opinions and comments to AZTN regarding the implementation of this concentration in the hospitality sector of accommodation and food services for guests in hotel-type accommodation facilities and in the hospitality sector of accommodation and food services for guests in camp-type accommodation facilities in the Split-Dalmatia County area. One opinion from an interested party was received in response to the public call.
However, based on the evidence submitted with the application, other available data and knowledge, and the opinions submitted, AZTN assessed that the concentration could have a significant effect on market competition in the relevant market and that a thorough economic and legal analysis is necessary in this case to possibly determine the relevant market in a geographical sense in a narrower area, as well as in terms of hotel accommodation segmentation according to service quality, in order to determine the impact on effective market competition.
Consequently, AZTN initiated a second-level concentration assessment procedure and sent questionnaires to a wide range of stakeholders (Ministry of Tourism and Sports, hotel chains, independent hotels, tourist boards, local government units, travel agencies, independent tourism associations, etc.), resulting in the procedure being extended from the initial three months to six months.
