Development of Regulation of Vertical Agreements in Croatian Competition Law

Abstract

This paper provides an overview of the changes in the regulation of vertical agreements in Croatian competition law from the adoption of the initial legislative act to the present day. Croatian competition law has evolved significantly since the 1995 enactment of the original Act on the Protection of Market Competition (ZZTN), which aligned with European Union practices and standards, particularly former Article 81 of the EC Treaty and its associated regulations. Vertical agreements, which are contracts between companies operating at different levels of the supply chain (e.g., manufacturers and distributors), have been subject to regulatory scrutiny due to their potential to limit competition. However, these agreements also have the potential to increase market efficiency, particularly by allowing new entrants to penetrate the market. The initial adoption of the block exemption regulation for vertical agreements marked the beginning of Croatia’s alignment with the EU’s economic approach, focusing on the balance between the pro-competitive and anti-competitive effects of these agreements. The evolution of the regulation of vertical agreements in Croatian competition law from the adoption of the block exemption regulation to the present day reflects a shift toward a more flexible, economically driven approach. Key milestones from 2003 to 2023, specially the amendments in 2009, 2013 and 2021, highlight a consistent effort to align with EU standards while fostering market competitiveness and reducing regulatory burdens. This shift aims to balance regulatory control with market freedoms, particularly for SMEs. Moving forward, the effective implementation of these changes will depend on how well stakeholders adapt to the new system of competition law enforcement, which emphasizes economic analysis and proactive compliance. Above amendments have further streamlined the regulatory process, removing the requirement for mandatory notifications of vertical agreements to the competition authority, thus fostering a culture of compliance among businesses. These changes are intended to promote greater efficiency, reduce administrative burdens and encourage companies to take an active role in ensuring compliance. The current regulatory approach maintains a focus on limiting anti-competitive effects while promoting market efficiencies and recognizing the importance of economic assessment over formal criteria. Companies are now responsible for conducting their own economic assessments to determine compliance, which requires a deeper understanding of the competitive impact of vertical agreements.