Foreign companies increasingly win large tenders in Croatia

Croatia, through its public procurement system, contracts jobs worth approximately €12.7 billion each year, with more than half relating to contracts for the execution of works. However, an increasing problem is the fact that economic entities from third countries that are not signatories to the World Trade Organization Agreement on Public Procurement, aimed at opening markets among member states, are winning large infrastructure projects in Croatia.

As stated in the Focus of the Week by the Croatian Employers’ Association (HUP), in the first eight months of 2025, such bidders won contracts worth a total of €1.8 billion. These are projects with individual values exceeding €100 million, and funds that could stimulate the domestic economy and remain within the European Union are going outside it through public and European funds.

Companies from these countries have an advantage because they operate with the help of generous state subsidies, lower labor and social standards, and without the obligation to comply with European Union rules on market competition and transparency. Domestic and European contractors, who pay taxes, contribute to and invest in worker protection, find themselves in a disadvantaged position. HUP warns that such practices reduce the competitiveness and market share of domestic contractors, and in the next five years, domestic construction companies could lose the majority of jobs.

To prevent the collapse of the construction sector and ensure that strategic infrastructure projects truly become a driver of the domestic economy, HUP proposes the introduction of robust market protection mechanisms. Recommendations include the active application of the new Regulation on Procurement and Bid Documentation, which opens the possibility of restricting access to tenders for companies from third countries that are not GPA signatories. The principle of reciprocity is particularly emphasized – companies from countries that do not allow European companies free access to their own market should not have unrestricted access to the Croatian and European markets.

HUP also advocates for the introduction of corrective factors in public procurement procedures to neutralize the advantage of bidders who use dumping and subsidies. Additionally, the use of European funds should be linked to contractors from the European Union, ensuring that funds remain within the single market. Regular and transparent reporting on the share of domestic contractors in strategic projects is also important, as it would allow for monitoring the actual effects of policies and strengthen public trust.

Examples from other EU member states show that such measures are not uncommon. Some countries already use the Instrument for International Public Procurement and restrict access to companies from third countries, while others introduce protection against unfair competition and security threats in strategic transport and energy projects, and some use criteria of economic security and national interest, giving preference to domestic and European contractors.

Similar views are confirmed by the practice of the Court of Justice of the European Union, according to which member states have the right and obligation to protect market balance, public interest, and the security of supply chains, including projects financed from European funds. As HUP concludes in the Focus of the Week, only through consistent implementation of these measures can public investments achieve their full effect – increasing economic growth, creating new jobs, strengthening the domestic industry, and stabilizing the construction sector in the long term.