On October 7 2010 the Croatian Competition Agency published the results of its market research on the supply of groceries from Velpro wholesales centres under the Plus Market project. The project is based on a strategic partnership and business cooperation agreement concluded between the Croatian Chamber of Trade and Crafts, the company Konzum dd (owner of the Velpro centres) and 12 undertakings engaged in production. The project relates to action sales of designated products, whereby the members of Plus Market compete with Konzum, as well as with other trade chains.
According to the initial results and conclusions published by the agency in June 2010, the project was preliminarily assessed as not compatible with basic competition rules and principles, given that members of the Plus Market project do not compete among themselves regarding the designated products during the action sales. Thus the agency ordered that this business practice be stopped without delay.
However, in September 2010 the chamber delivered additional explanations with respect to the Plus Market project and its importance for small traders and craftspeople, stating that, among other things:
- more than 800 small traders are involved in the Plus Market project;
- action sales are short term (up to 10 days);
- action sales are limited to seven products only;
- traders do not have to participate in action sales;
- the traders compete with Konzum and other tradespeople during the action sales, and although the prices of products in action sales are substantially lower than their normal prices, the total sale value of the products sold is still insignificant;
- the share of the products included in the action sales amounts to less than 5% of the total sales of Velpro centres;
- the companies involved in the Plus Market project are usually companies in small and sparsely populated cities; and
- the main goal of the tradespeople is the reduction of their business expenses.
In addition, in August 2010 a new project (organised by Metro Cash&Carry) emerged on the same market and can be considered as a competitor to the Plus Market project. The agency has therefore determined that the positive effects of these projects prevail over the negative ones - namely, they help small traders to preserve themselves and are in the direct interests of end consumers.
Thus, according to the recent opinion of the agency, the Plus Market project does not constitute activity which would be prohibited under the competition rules. It is deemed that such conduct on mutual sales actions within similar projects will not be prohibited as long as the common market share and the market power of traders involved in such projects do not become significant.
For further information on this topic please contact Gabriele Wahl Cesarec at Petres & Cvirn by telephone (+385 1 4813 244), fax (+385 1 4813 073) or email ([email protected]).