In recent years the Competition Agency has discovered several cartels operating within associations of undertakings. The associations were exploited as a framework which provided logistical support to the cartels and facilitated their illicit existence. In most cases the associations merely followed the plans of their main members. However, a recent Competition Agency decision confirms that associations themselves can also initiate price-fixing cartels.
The Croatian Association of Orthodontists, which has 75 registered members, adopted a price list which included minimum prices for various dental services. The price list was even published on the association's website, thus promoting price harmonisation across the industry. The agency concluded that the association's adoption of this minimum price list amounted to a prohibited agreement, which was in force from October 1 2010 until October 9 2013.
The agency did not analyse the effects of the minimum price list, but merely stated that this practice was restrictive by object. During the proceedings, it was established that the Association of Orthodontists had established a price list without any legal basis to do so. On the other hand, sector-specific regulations provide that prices can be set only by the Chamber of Dental Medicine, under a separate law. It appears that the chamber did not authorise the association to set minimum prices, which would have justified this prohibited behaviour.
As expected, the agency rejected all lines of defence, confirming that the following factors were irrelevant to the existence of the prohibited agreement:
- the non-binding nature of the minimum prices;
- the lack of market monitoring and sanctioning practice; and
- the option envisaged in legislation for prices to be regulated by the Chamber of Dental Medicine.
However, in determining the applicable penalty, the agency took into account a mitigating factor it had discovered by examining statements and documentation collected from sample members of the association: it transpired that those members had not in fact applied the minimum prices.
In another twist to the tale, the Chamber of Dental Medicine (which is authorised by law to impose minimum prices) submitted a statement confirming that it had previously contacted the Association of Orthodontists in the process of adopting standards and pricing mechanisms for the industry, in order to request its expertise in this endeavour.
It thus came as no surprise in the Competition Agency proceedings when the Association of Orthodontists proposed that an expert witness be heard regarding the practical significance of the minimum prices, implying that they merely resembled the existing methodology applied by the chamber. However, the agency did not accept this evidence, confirming its long-established practice that expert witnesses can be heard only in exceptional cases.
The presentation of expert witness is a legitimate option for a party in antitrust proceedings before the agency, based on Article 65 of the General Administrative Procedure Act (Official Gazette 47/09).(1) However, convincing the agency that hearing an expert will assist in establishing the facts is a difficult task, as the agency will carefully scrutinise every attempt by a party to burden the proceedings with redundant or irrelevant evidence. It remains to be seen whether the party will challenge the agency's procedural practice of the Agency before the High Administrative Court.
For further information on this topic please contact Gabriele Wahl Cesarec or Mislav Bradvica at Wahl Cesarec & Partners in cooperation with Schoenherr by telephone (+385 1 4813 244), fax (+385 1 4813 073) or email (firstname.lastname@example.org or email@example.com). The Schoenherr website can be accessed at www.schoenherr.eu.