CROATIA Law and Practice Contributed by: Mirna Mišetić, Mišetić & Partners
market structure, market shares, barriers to entry and the elimination of potential competition. In addition, the Agency is required to assess whether a concentration may have significant effects on other markets, including neighbouring or closely related markets. This encompasses situations involving potential competition, significant intellectual prop - erty rights or complementary products and services. As a result, conglomerate or portfolio effects are not excluded from the substantive assessment and may be examined where the statutory criteria for affected markets are met, in line with EU merger control prin - ciples. 4.5 Economic Efficiencies In assessing a concentration, the Agency consid - ers not only its potential anti-competitive effects but also any countervailing factors, including efficiencies claimed by the parties. Such efficiencies may include contributions to technical or economic progress, cost reductions, or innovation or improvements in produc - tion or distribution, provided that they are substanti - ated, are likely to be passed on to consumers, and do not eliminate or significantly restrict competition. In line with EU merger control principles, efficiencies are taken into account as part of the overall competitive assessment, but they are rarely decisive on their own. 4.6 Non-Competition Issues The merger control regime in Croatia is concerned pri - marily with the protection of competition. As a rule, the Agency’s assessment is limited to competition-related considerations, and the legislation does not expressly permit the balancing of merger effects against broad - er public interest objectives such as industrial policy, employment, environmental protection or national security. In practice, such non-competition issues are not taken into account as independent grounds for approving or prohibiting a concentration. That said, certain factors with an economic dimen - sion – such as the preservation of intellectual property, brands, technology or know-how – may be relevant insofar as they form part of the competitive assess - ment, particularly in the context of the failing firm defence, where one of the parties would otherwise exit the market absent the transaction.
In exceptional cases, recent practice shows that, within the competition analysis itself, the Agency may adopt a broader, context-sensitive approach in geo - graphically constrained markets, taking into account the wider economic ecosystem and imposing invest - ment-based commitments where high concentration risks cannot be adequately addressed through tradi - tional remedies alone. Foreign direct investment screening and foreign sub - sidy control are regulated separately from merger con - trol. Croatia has implemented a foreign direct invest - ment screening mechanism pursuant to Regulation (EU) 2019/452, which operates independently from the competition law review and focuses on security and public order considerations. Where applicable, transactions may therefore be subject to parallel FDI screening, in addition to merger notification. Rules on foreign subsidies are governed at EU level and are likewise separate from national merger control. 4.7 Special Consideration for Joint Ventures In the substantive review of joint ventures, the Agency pays particular attention to potential co-ordination effects between the parent companies. As a prelimi - nary matter, the Agency assesses whether the joint venture qualifies as a full-function joint venture and therefore constitutes a concentration. Where a joint venture does not perform all the functions of an auton - omous economic entity on a lasting basis, it does not qualify as a concentration and may instead be assessed under the rules on restrictive agreements. Where a joint venture constitutes a concentration, the Agency nevertheless examines whether its crea - tion may give rise to co-ordination or aligned conduct between the parent companies, particularly where the parents remain active on the same market as the joint venture, on upstream or downstream markets, or on closely related neighbouring markets. In such cases, the Agency assesses the economic significance of the joint venture, the market positions and market shares of the parent companies, and whether the transac - tion is likely to reduce their competitive independence. Where relevant, co-ordination effects are assessed in line with EU competition law principles.
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