Initiation of procedure on investigating the violation of competition on the ceramic tiles wholesale market

23.05.2022.

The Commission for Protection of Competition (the Commission) has conducted an unannounced investigation and initiated an ex officio investigation into the violation of competition against the company Polet-keramika Novi Bečej, in order to determine the existence of a restrictive agreement under the Article 10 of the Law on Protection of Competition in the wholesale market of ceramic tiles in Serbia.

The Commission conducted an analysis of the competition in the distribution channels of ceramic tiles and sanitary ware in the period from 2018 to 2020. During this sector analysis, the Commission obtained sales contracts that the manufacturer Polet-keramika Novi Bečej concluded with buyers for further sale (such as Koral Pančevo, Ornament Veternik, Raša Župski Aleksandrovac, Merkur-komerc Zrenjanin, Noks n.j Zemun, Unimetal plast BiH). Analysis of the provisions of the contracts, as well as their annexes and appendices, identified the provisions that indicate the existence of practices known as pricing determination in resale by producers/sellers, which restricts the buyer to independently make business decisions related to pricing policy, which represents a restrictive agreement and constitutes a violation of competition under Article 10 of the Law.

Namely, Article 14 of the sales contracts concluded by Polet-keramika with its buyers contains the following: “It is recommended to the buyer to form its retail prices in accordance with the applicable price list of the seller, both in its own retail units, as well as in the retail units from its sales network. Complying with the recommended retail prices is in the interest of both the buyer and the seller. If the buyer does not comply with the recommended retail prices, the seller reserves the right to react in order to maintain market stability.”. Further analysis found that in the Annex A of the contract, which contains the cited Article 14, the basic rebate has been agreed on the whole assortment of the Polet-keramika in the amount of 29%, and that the aforementioned rebate is stated on the invoices in the column as a “stimulative rebate”. As stated in the Conclusion of the Commission, such provisions suggest that the amount of rebates from contracts represent an incentive to comply with the recommended retail prices, especially when compared with the contract of sale – export, which does not contain the provisions of Article 14 and which annex provides for lower rebates (15%).

The Commission is now in the process of examining and determining the facts, as well as concluding the procedure in which it will make the final decision on whether or not the competition in the relevant market has been violated by the contracts and practices of the participants.