Category: Croatia

Savoric & Partners has advised the consortium of APM Terminals and Enna Logic on the 50-year concession agreement for the development and operation of the Zagreb Deep Sea container terminal with the Rijeka Port Authority.

According to Savoric & Partners, “the construction of a new container terminal at the Zagreb Deep Sea terminal at the Port of Rijeka is the most important and largest project within the Project of reconstruction of the Rijeka traffic route, the so-called Rijeka Gateway project (RGP I and II) launched by the Government in 2003, in cooperation with the International Bank for Reconstruction and Development.”

The construction of a new container terminal is being realized through two phases. The first included the construction of a 400-meter coastal wall and was completed in May 2019. The plan for the second phase is to build a 280-meter extension of the coastal wall, including all necessary infrastructure and equipment. According to the firm, the new terminal should start operating in 2024.

Savoric & Partners’ team included Senior Partner Boris Savoric and Senior Associate Antonia Curkovic.

On July 21, 2021, the Croatian High Administrative Court confirmed the Croatian Competition Agency’s (CCA) cartel decision adopted against 14 Croatian driving schools. In its infringement decision dated December 30, 2019, the CCA established the existence of a price-fixing cartel between 14 Croatian driving schools and imposed fines in the total amount of HRK 415,000 (approximately EUR 55,500). During this cartel investigation the CCA conducted several dawn raids and established the existence of a price-fixing cartel based on, inter alia, WhatsApp correspondence exchanged between representatives and employees of cartel members. Based on CCA’s infringement decision, the content of exchanged WhatsApp correspondence between cartel members referred to the coordinated price increases for driving lessons starting from the beginning of 2018.

Upon challenge of CCA’s infringement decision by several cartel members, the court dealt with the admissibility and probative value of the evidence, which recently seems to be one of the successful winning arguments used by claimants disputing the CCA’s decisions in cartel cases. The claimants argued without success that WhatsApp correspondence between cartel members’ representatives and employees constituted inadmissible evidence and that such correspondence was not sufficient to establish the relevant facts proving the existence of a cartel, due to its ‘benign’ content and the way the correspondence was exchanged between driving schools’ representatives and employees. Although the court did not analyze in detail the facts established on the basis of cartel members’ WhatsApp correspondence, in its statement of reasons it briefly explained that electronic communications exchanged via WhatsApp constitute business documentation validly obtained within the dawn raid procedure which the CCA conducted during its investigation. The above court’s reasoning is in line with the Croatian Competition Act, which expressly allows CCA’s officials conducting the dawn raid to review business and other documents that relate to the undertaking’s operations, irrespective of the media on which such documents are stored (for example, computers, servers, mobile devices). Furthermore, the court’s decision to treat WhatsApp correspondence as admissible and credible evidence is in line with Croatian general administrative laws, which are also relevant and applicable in proceedings before the CCA. Specifically, under the Croatian General Administrative Act, an electronic document has the same probative value as a written document.

Unlike in the Croatian Constitutional Court’s 2018 ruling, in a separate case, where the court annulled the CCA’s cartel decision – because it held that a newspaper article writing about a cartel and the failure of alleged cartel members to dispute the newspaper article were not sufficient to establish the infringement – here the court was satisfied that the CCA established with a sufficient degree of certainty the existence of the driving schools’ cartel. Based on the text of the CCA’s infringement decision, electronic documents (in this case, WhatsApp correspondence) obtained during the dawn raids seem to be in close connection with the investigated events, which should qualify them as reliable evidence of clandestine agreements.

Contrary to the argument raised by claimants during this judicial review procedure, the way in which the documents are written should not deprive them of probative value. Even though the court’s thought process on the examination of evidence was not covered in detail in the judgment, and the court did not address the claimants’ arguments related to the tone of WhatsApp communication, the wording of the judgment implies that the court qualified WhatsApp messages as evidence having high probative value, irrespective of their tone or how they were written (contrary to what claimants had argued). The court established that, because the electronic correspondence in question constituted legally obtained business documentation within the meaning of the Croatian Competition Act, the CCA was correct to adopt its infringement decision based on such electronic documents.

In this regard, the court’s evaluation of evidence seems to be in line with the principles laid down in Croatian competition and administrative laws governing probative value of evidentiary means, even though the court fails to provide clear guidance on the credibility of different types of evidence in cases dealing with anti-competitive agreements.

By Iva Basaric, Partner, and Lovro Klepac, Senior Associate, Babic & Partners

This Article was originally published in Issue 8.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Political stability and predictability, shake-ups for the corporate and banking legislative frameworks, and a solid economic situation despite the pandemic – these are the current highlights in Croatia, according to Divjak, Topic, Bahtijarevic & Krka Partner Martina Kalamiza.

“The political and media discourse is dominated by all the protests against COVID-19 passes and the new restrictive measures that aim to combat the virus, as well as the implied division of citizens based on their vaccinations status,” Kalamiza begins, adding that it appears as though business activities in Croatia have been relegated to the background. “Still, we expect no major political changes that could impact the markets and the business sectors – the status quo is stable and predictable.”

Speaking about legislative changes and updates, Kalamiza says that developments in energy and the wider corporate sector are of interest. “The Ministry of Justice has recently issued a request for public input on the proposed changes to the Companies Act. These changes seek to streamline and enable a number of procedures by allowing them to be completed remotely,” Kalamiza reports. Another important change on the horizon is the “cancellation of the requirement to execute an agreement for the transfer of shares in the form of a notarized act, which will likely make cross-border M&A deals much easier,” she says.

Furthermore, Kalamiza says that “by the end of this year or the beginning of the next one, a new EU Directive by the European Parliament and Council is expected to be adopted, focusing on credit services and collateral.” This new Directive seeks to prevent the accretion of NPLs in bank books and to enable a more efficient way of NPL management. “Also, the Directive ought to contribute to the development of the secondary market for bad loans. After it’s adopted, there will be a two-year period for all EU member states during which the Directive is to be implemented in national legal frameworks.”

Additionally, Kalamiza says that “fintech and ESG compliance could also become hot topics in the near future, seeing how the National Development Strategy of Croatia for 2030 seeks to direct all national and EU financing sources towards incentivizing sustainable business and societal development.” This strategy also aims to increase battle-readiness for and resistance to crises, facilitate green and digital transitions, and balance out regional development for the next decade. “To that extent, I believe the Crypto-Assets Regulation will introduce a lot of innovations,” she says.

Finally, describing the current status of the economy, Kalamiza says “all is quiet on the western front. Even though the pandemic implied an increase in the number of bankruptcy and insolvency proceedings, as well as restructurings, this was just not the case yet.” She reports that the most active business sectors are real estate, IT, tourism, and renewable energy. “Also, it is important to underline two projects that have been completed recently: the long-awaited completion of the Peljesac bridge in the south of the country and the withdrawal of Sberbank from the CEE region that saw AIK Banka, Gorenjska Banka, and AGRI Europe Cyprus expand,” Kalamiza concludes.

Divjak, Topic, Bahtijarevic & Krka has advised M7 Real Estate Croatian subsidiary M7 Central European Real Estate Fund I on its sale of the Mani Business Center to the Raiffeisen Pension Insurance Company. Macesic & Partners advised Raiffeisen Pension Insurance.

According to DTB, the Mani Business Center is a 12,900-square-meter multi-let office building. “M7 will continue to asset manage the property on behalf of the new owner. The sale completes the divestment of M CEREF I, a value-added fund comprising a portfolio of 21 logistics, office, and retail assets in key Central European markets, generating total sale proceeds of EUR 182 million and an IRR of 25%, significantly ahead of the Funds’ business plan.”

DTB’s team included Partner Martina Kalamiza and Associate Marta Hren.

Macesic & Partners’ team included Partner Ivana Manovelo and Attorney Zrinka Buzatovic.

Savoric & Partners has advised Agrofert on the acquisition of Agronom in Croatia. Kovacevic Prpic Simeunovic advised Agronom on the deal.

According to Savoric & Partners, Agrofert has acquired 70% of Agronom’s shares, with the current owner, Darko Aracic, keeping the other 30%. “This transaction is the direct entry of Agrofert into the Croatian market with agricultural inputs and goods, and it is the first capital investment of Agrofert in Croatia. Agrofert, based in Prague, which is active in the chemical industry, fertilizer production, agriculture, food production, and forestry, has an important place in Central and Eastern Europe.”

Agronom is one of the largest companies operating in Croatian agriculture through raw materials and contracting agricultural production with farmers, grain and oilseed stores, managing its own primary agricultural production, as well as the distribution of tractors and agricultural machinery.

Savoric & Partners’ team included Partners Nina Radic-Kuzik and Mia Lazic, Senior Associate Ivan Ivkovic, and Associates Dominik Zugaj and Martin Hren.

The Kovacevic Prpic Simeunovic team included Partner Dinka Kovacevic and Trainee Tin Anicic.

Croatian Parliament recently adopted the final draft of the new Electronic Media Act (the Act), which entered into force on 22 October 2021.

Even prior to the amendments to the Act, each concentration in the media sector had to be notified to the to the Croatian Competition Agency (CCA), irrespective of whether it met the thresholds set out in the Competition Act. However, under the old regime, parties to such concentrations first had to obtain the expert opinion of the Agency for Electronic Media (AEM) in order to determine that the proposed transaction was not prohibited under the Electronic Media Act; only thereafter could parties notify the CCA of the proposed concentration.

The new Act has simplified this procedure to a certain extent, as the CCA must now request the expert opinion from the AEM, rather than the relevant parties. If the AEM’s opinion is not delivered within 30 days of the receipt of the request, the CCA will deem that the AEM has no objection to the proposed concentration and it may continue with the procedure under the standard competition regulations. In practical terms, this procedural change will have a positive effect on the relevant parties as it will relieve them from an additional administrative burden. It also seems more appropriate for this procedure to be regulated by the Electronic Media Act, rather than competition bylaws.

Another of the few improvements that has been implemented by this Act is the elimination of the provision on the vertical integration. Consequently, operators can now also be broadcasters, which was prohibited by the previous version of the Act. This amendment was welcomed by both broadcasters and operators, since it is one step closer to liberalising the legislation.

The new Act also introduced the turnover threshold for determining the dominant undertakings in the electronic media sector – namely, if one media service and/or electronic publications provider has a 40% market share based on the total annual turnover generated on Croatian territory, such a provider will be deemed to be in a dominant position and will not be allowed to:

• acquire new shares or new concessions; or
• do business with a new electronic publication service.

The turnover referred to above will include only the turnover that is generated by the national public radio and television broadcaster, based on the performance of its commercial activities.

To protect pluralism and electronic media diversity, the following situations will be considered as impermissible ownership change (ie, prohibited concentrations, as previously defined by the original act):

• the broadcaster has a state concession and shares of more than 25% in another broadcaster of the same or lower level of concession (concession levels being state, regional or local) and vice versa;
• the broadcaster has a state concession and shares in the capital of a daily newspaper publisher with a print circulation of over 3,000, with shares of more than 10%, and vice versa;
• the broadcaster has a state concession and a daily print circulation of over 3,000, and vice versa;
• the broadcaster has regional or local concession and shares in another broadcaster in the same domain, or of a higher or lower level, with more than 30%, and vice versa; and
• the broadcaster has concession and shares in marketing agencies (ie, legal entities that provide advertising, design and mediation services) with more than 10%, and vice versa.

By Ana Marjancic, Attorney at Law in Cooperation with Schoenherr

Divjak, Topic, Bahtijarevic & Krka has advised KJK Fund III on the acquisition of Gumiimpex, with OTP Bank Croatia providing transaction financing. Solo practitioner Hrvoje Matic advised the sellers. Kovacevic, Prpic & Simeunovic advised OTP.

KJK Management is an asset manager focused on servicing the needs of institutional investors. The company manages assets in excess of EUR 600 million.

According to DTB, “Gumiimpex is a family-owned company [that manufactures] technical rubber products, recycles tires, and sells and distributes tire-related products for commercial vehicles. The company currently operates in Croatia and several neighboring countries and is a market leader in its sector, with a consolidated turnover of close to EUR 60 million in 2021.”

According to the firm, “KJK’s future vision for the Company includes expanding geographically and utilizing expertise and infrastructure possessed by the Company to develop a robust R&D strategy and broaden the product offering for the years to come.”

DTB’s team included Senior Partner Damir Topic, Partner Martina Kalamiza Grozdek, Senior Associates Dina Salapic, Dominik Glavina, and Iva Olujic, and Associates Antonia Mihaljic, Marta Hren, and Lorena Micik.

The Kovacevic, Prpic & Simeunovic team included Partner Martina Prpic, Senior Associate Ana Novakovic, and Junior Associate Sebastian Krcamr.

These are dynamic times for the Croatian energy sector, as the legislative framework is expected to undergo major changes very soon.

Among others, Croatia is preparing a new energy reform by making amendments to the current Electricity Market Act.  The version currently in force was a part of the third package of energy laws of the European Union and has made significant contributions to the development of the internal electricity market, the growth of new business opportunities, more competitive prices, and sending clear and effective signals to attract investment and apply higher standards of service on the sustainability and security of electricity supply.

The new regulatory provisions are to more clearly define the overall framework related to consumer protection and strengthen the customer’s position, as well as better define supplier-consumer terms of contract. Namely, electricity bills would include additional information, enabling the customers to compare their current contract with the other offers available on the energy market. The suppliers will also be expected to prepare a free tool for comparing the pricing of services available on the market, allowing customers to make better-informed decisions.

Other important updates include electromobility, an important element of energy transition not only in Croatia but worldwide, and the introduction of an advanced metering system providing accurate feedback on energy consumption in real-time, resulting in improved energy management. All these changes are intended to cause significant reductions in electricity bills for the customer.

Additionally, there is an obvious need to adjust the existing electricity trading rules and market roles, to better reflect the reality of energy production shifting from large, centralized generation plants to decentralized, renewable sources and decarbonized markets. Investments and modernization of distribution networks and the introduction of advanced network systems will make this possible. The introduction of an advanced metering system will empower consumers to have a better insight into the consumption and production of electricity. With this in mind, special emphasis is to be placed on new unified provisions for all types of market participants, which would create a more flexible organization of the electricity market, with full integration of all market participants – including renewable energy producers, new energy service providers, energy storage – and support flexible demand. Sufficient physical connectivity within the national territory and with neighboring countries is also important to enable a higher level of security and offer increased market stability.

The biggest news is likely to be Croatian households being able to buy electricity from suppliers in other EU Member States, as well as Croatian suppliers offering Croatian-produced electricity to other EU households. This would enable cross-border access to new electricity suppliers, different energy sources, as well as new generation, energy storage, and demand service providers. It goes without saying that public service providers will be available to the customers as well.

Another convenient change will be allowing customers to enter into just one contract for several metering points with the same supplier: the customer will be able to have only one contract serving several of their properties.

To conclude, the ultimate goal of energy reform is to introduce new business opportunities and increase cross-border trade, in order to achieve greater efficiency, more competitive prices, and higher service standards, as well as contribute to the security of supply and sustainability. Although the current internal electricity market has already resulted in increased competition, especially at the wholesale level and cross-season trade, this is an area that will need to be further developed by the new legislation.

The final version of the new legislative framework is yet to be published, however, and one should not ignore the possibility that its practical implementation may be less ambitious than the letter of the law itself.

By Marina Kovac Krka, Partner, and Tea Misbrener, Trainee, Divjak, Topic, Bahtijarevic & Krka

This Article was originally published in Issue 8.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Bradvica Maric Wahl Cesarec has advised Eko Medjimurje on the acquisition of a majority share in Hittner from Stjepan HIttner.

Eko Medjimurje operates in the architectural and structural metals manufacturing industry. Hittner is a tractor production company.

Bradvica Maric Wahl Cesarec’s team included Partner Neven Maric and Attorney Edi Suljic.

Savoric & Partners has advised Eagle Hills Zagreb on its HRK 760 million acquisition of Sunce Hoteli. Bogdanovic, Dolicki & Partners advised the shareholders of Sunce Hoteli.

According to Savoric & Partners, Eagle Hills Zagreb Real Estate acquired 4.1 million stocks, representing 69.7% of the share capital of Sunce Hoteli, which acts under the brand Bluesun Hotels & Resorts. “The brand manages 11 hotels along the Adriatic coast, one camp, and one leased facility, with a total accommodation capacity of 2,973, which makes it one of the largest hotel companies in Croatia. In addition, the company owns 50.2% of the airport on the island of Brac.”

The Savoric & Partners team was led by Senior Partner Boris Savoric and Partner Lovro Gasparac.