In recent months the Competition Agency has issued two interesting decisions relating to the telecommunications sector. Both decisions will significantly influence the future implementation of competition rules in Croatia.

In the first decision, the agency dismissed a request filed by Amis Telekom to determine predatory pricing on the retail broadband market allegedly committed by Hrvatski Telekom and its affiliated undertaking Iskon Internet. The decision explained in detail that the alleged predatory pricing strategy applied by the incumbent, often criticised in business and expert circles, was not factually established (ie, it could not be proven). In the course of protracted proceedings, which began in April 2009, the agency carried out a thorough economic analysis in full compliance with EU practice. Therefore, the agency has clearly demonstrated its intent to observe the relevant EU criteria even in factually complex and purely national cases.

While the first case is interesting with respect to substantive law, the second has significant procedural implications for future cartel cases. The agency determined that mobile operators VIPnet, Hrvatski Telekom and Tele2 did not undermine the competitiveness of the mobile telecommunications industry in Croatia, given that there was no direct evidence that they had fixed the billing units for calls on mobile networks from July 2009 to October 2009, either directly or indirectly, or by concerted practice.

This decision is important because it is the first time that the agency has modified its assessment of the value of certain evidence during the proceedings. Moreover, the agency clearly stated its intent not to determine the existence of a cartel agreement without direct evidence of illegal contact and agreement between operators, regardless of any factual evidence of parallel pricing. This stance has cleared up longstanding doubts regarding the agency's willingness to comply with such a clearly defined and strict criterion, and fears that it may rely exclusively on economic evidence when conducting proceedings.

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 (g.wahlcesarec@pc-lawfirm.com).

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