WORLD TRADE
ORGANIZATIONWT/WGTCP/W/158
20 March 2001
(01-1338)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM THE REPUBLIC OF CROATIA
The following is the final text of a pape r received from the Permanent Mission of the
Republic of Croatia which was circulated as a non-paper for the Working Group's meeting of
2-3 October 2000.  It is being circulated as a formal contribution with the approval of the Working
Group, given at the Group's meeting on 2-3 October (WT/WGTCP/M/12, paragraph 19).
_______________
Existing Instruments, Standards and Activities regarding the Implementation of
Competition Law and Policy and their Relevance to Fundamental WTO Principles
of National Treatment, Transparency and Most-Favoured-Nation Treatment
1. Competition Law and Policy in the Republic of Croatia
Croatian Law on the Protection of Market Competition was approved by the Croatian
Parliament on 27 June 1995 and published in the Official Gazette No. 48/95.
The starting premise for the enactment of the Competition Law in Croatia was the
establishing of free and efficient market competition which is the basic feature of a market economy.
The Law on the Protection of Market Competition contains regulations that safeguard free
market competition and market equity in the public interest.
The purpose of the Competition Law is not only to improve market competition, but also to
ensure that every entrant to the market, irrespective of its economic strength or size, or whether it is
domestic or foreign, has access to the market and can participate in the exchange of goods and
services traded in the markets.
By enacting and implementing the Competition Law, it was intended to decrease the adverse
effects of monopolistic and other illegal actions taken by entrepreneurs in the market.
Furthermore, relating to the implementation of the Competition Law, it should be pointed out
that the Law was modelled according to Articles 84, 86 and 90(2) of the Treaty Establishing the
European Community (Treaty of Rome).  The Competition Law also is adjusted to the CouncilRegulation (EEC) No. 4046/89 of 21 December 1989 on the control of concentrations between
undertakings (1990) O.J. L257/14.WT/WGTCP/W/158
Page 2
The Bylaws on the Methods of Keeping a Register on Concentrations are modelled according
to the Form Co-relating to the Notification of a Concentration Pursuant to Council Regulation (EEC)
No. 4046/89.
2. Powers of Agency for the Protection of Market Competition
Considering the fact that before the enactment of the Law on the Protection of Market
Competition, there was no similar legislation in the country's legal system, and also the fact that the
country was in process of transition and within a very short period was obliged to adopt a variety of
legislation in order to reform the new economic system, the main aspects that influenced the  creation
of competition culture through Croatian Law on the Protection of Market Competition, were modelled
according to the provisions of Articles 85, 86 and 90(2) of the Treaty of Rome.
Creating a competition culture was found to be a very important issue for the legal system as
a whole, considering the status of the country in transition.  Furthermore, it was a fact that no investorwould be willing to invest in the economy without an established competition framework, that could
provide the guarantees relating to the equal trea tment of the company in its operation and access on
the market.
The Law on the Protection of Market Competition stipulates the rules of conduct and the
system of measures aimed at protecting free and effective market competition.  The law deals withthree areas:
First:  evaluation of contracts  or individual contractual stipulations, explicit or implicit
agreements, concerted practice decisions of entrepreneurs' associations, the object and effect
or possible effect of which is to restrict market competition;
Second:  monopolistic practices , namely abuse of dominant or monopolistic position on the
market; and
Third:  merger control , namely the affiliation, merger by acquisition and merger by forming
a new company of entrepreneurs resulting in a new, or strengthening an existing, monopolistic
and dominant position.
3. The Role of Competition Policy in Economic Development
Perhaps the most important issues that a competition authority faces are to ensure free market
access, to take care of the conditions on the market after the entry to the market is achieved, as well as
to take care to eliminate and/or decrease any kinds of private barriers to the market.  The above-stated
conditions make the condition sine qua non  to the starting-point of economic development of the
entire country's economy and to attract and keep the investors.
3.1 Preconditions for Market Access
The Law on the Protection of Market Competition of Croatia (1998) establishes firm
protection to the market access and deals with various kind of abuses of monopolistic or dominant
position on the market in relation to the abuses of the economical strength of the company, in order to
prevent other companies and/or individuals from freely entering and operating in the domestic market.
The determination of the market access is co-related to the understanding of the principle of freemarket access as defined in GATS, but it is not explicitly defined in the legislation, perhaps for the
same reasons that such definitions were never contained in GATS either.WT/WGTCP/W/158
Page 3
Although market access was not explicitly defined in GATS it is secured by reference to
specific policies which are prohibited as the restrictions of the market access.  Article XVI:2(a) – (f)
provides the limitations on the number of service suppliers, total value of service operations or natural
persons that may be employed, on the participation of foreign capital and measures that restrict the
market access or require specific types of legal entity or joint venture for the supply of service.
Only in the process of enforcement of competition legislation and policy in the area of
elimination of barriers to market access, the binding commitments of Member states are supposed to
secure desirable market entry conditions.  This should create conditions for both domestic and foreign
suppliers, which are automatically not discriminatory, but are fair and equitable.
3.2 After Market Entry:  Means and Measures of Protection of Free Entrepreneurship on
the Market
The market access is further on, completed, if relevant conditions are secured also after
market entry.  This is addressed by the traditional national treatment commitments.  National
treatment commits Members to accord to services  and service suppliers of any Member state, in
respect of all measures affecting the supply of services, treatment no less favourable than it accords to
its own like services and service supplier.
There are different arguments explaining that unlike in the case of goods, national treatment
applied to services is not sufficient to ensure the effective market access.  Among others, it is pointed
out that domestic regulators could be very strict in their own right and represent effective tariff barrier
equivalents.  There are also considerable differences in regulatory structures between service sectors
depending on the extent of deregulation accomplished.
The GATS, but also the WTO legal discipline, is predominantly focused on:
- Governmental measures, while non-governmental practices are not addressed;
- Measures on foreign rather than domestic economic policies; and
- Negative approach in regulating desired conduct by prohibitions rather than positive
approach designing expected behaviour.
As a consequence, many business practices restrict trade in services and in goods and distort
both domestic competition and international trade.  This statement applies particularly to newly
emerging areas of distribution economy, law and business practice.
3.3 Private Barriers as new arising and existing obstacles to Market Entry
Distribution services, and business in general, are all contractual forms and may and, as a
matter of fact, often do very effectively create private barriers to market access for domestic as well asforeign companies.  The concept of distribution itself is developed as a commercialization of goods
and partly of services.  Even in franchising any detailed analysis of particular practice reveals that in
the "package deal" there are legal and economic arrangements related to the sale of goods.
In regard to that, the liberalization of this service sector would have a strong impact on the
free trade of goods, goods of large consumption and national policies of consumer protection andbusiness community.WT/WGTCP/W/158
Page 4
Nevertheless, the distribution services constitute an indispensable part of distribution
channels, networks through which services and goods are distributed on a large scale, providing a
higher level of satisfaction to consumers' needs under moderate prices.
The Agency for the Protection of Market Competition of the Republic of Croatia supports the
assumption that private investments are very much related and also conditioned upon the appropriateenforcement of competition legislation and policy.
The Agency has previously elaborated in detail the problems of market access, as the other
side of the coin of inhibited private investments, i.e. access of foreign entrepreneurs to domestic
market.
4. Technical Assistance and Cooperation
For the purposes of improvement of international cooperation in the field of implementation
and enforcement of competition law and policy, the Agency for the Protection of Market Competitionof the Republic of Croatia started a project to establish a Competition Documentation/Information
Centre in Zagreb, that could be used as a field logistic and supporting office for exchange of
information within the neighbouring countries, since international mergers are frequently assessed
with the aid of the counterpart offices of nearby countries.  This project is at its outset, and subject to
further development.  The Agency would need to find additional financing, which is now at the stageof discussion.
5. Concluding Remarks
Perhaps the most important issue that influences the improvement of the competition policy is
reflected in the extent of international cooperation in the field of competition.  The promotion of the
competition culture and advocacy is important in order to attract investments and to provide thesafeguards for investors relating to their access and remaining in the market.  Competition advocacy
especially promotes the granting of resources and mechanisms for preventing anti-competitive
practices.
__________