CONCLUSIONS OF the 86TH SESSION OF THE COUNCIL OF COMPETITION

In SARAJEVO, on 8th April 2009, 86th session of the Council of Competition was held. The following was adopted:

1. Opinion on Proposal of the Rulebook on conditions, manners and specific features of the organization of regular public transport of passengers in the area of the Sarajevo Canton;

2. Opinion on Proposal of Decision on regular public transport of passengers in the area of the Sarajevo Canton.

3. Decision assessing a concentration as incompatible in the market of bakery products and half-ready meals based on dough in the area of the Sarajevo Canton to arise from merging economic entity SPRIND Sarajevo food processing industry Joint Stock Company Rajlovac, Rajlovačka cesta bb, 71000 Sarajevo, to economic entity Company for corn and flour processing production of food and confectionary products, tourism, foreign trade and whole and retail trade Klas Joint Stock Company Sarajevo, Paromlinska 43, 71000 Sarajevo.

Aimed at fulfilling obligations from previously adopted decision of the Council of Competition No. 01-01-26-172/05 dated 27.12.2005, the Ministry of transport and Communications of the Sarajevo Canton submitted to the Council of Competition Proposal of the Rulebook on Conditions, Manners and Specific Features of the organizing regular public transport of passengers in the area of the Canton Sarajevo. The Council of Competition assessed that both proposed acts were not harmonized with the Law on Competition of BiH. Namely, through these acts, equal access to the relevant market to all economic entities registered for providing services of regular transport of passengers was not secured regardless of the ownership form (state or private ownership). However, public enterprise established by the Sarajevo Canton was placed in a more favorable position than its competition

Regarding inadmissibility of concentration between undertakings Klas and SPRIND, the concerned Decision provided for fines in the amount of 15,000.00 KM to the economic entity Klas and 5,000.00 KM to responsible person Mr. Vahidu Pašoviću being director of the company Klas for submitting incorrect and wrong information to the Council of Competition of Bosnia and Herzegovina in the procedure of concentration assessment.
Through analysis of the relevant data, the Council of Competition ascertained that parties to the concentration have a joint market share in the market of bakery products over 50.0%, and in the relevant market of half-ready meals based on dough over 51.0%, and thereof had been determined that the parties to the intended concentration create or strengthen dominant position in the relevant market in the Sarajevo Canton which may, as a consequence, result in restriction, prevention or distortion of market competition.

Also, the Council of Competition determined within the procedure it is about the market with many operational economic entities having small market shares and poor economic and financial power, namely, there are 130 independent bakeries with the overall market share of 41.72%, whereas their specific market shares are below 0.32%, and the biggest market share, beside market share of the parties to the concentration, has the undertaking Aspek Ltd. Sarajevo with the market share of 6.0%.

Furthermore, through analysis of the overall income of the undertakings Klas and SPRIND, within the meaning of disposal of resources impacting conditions on performing business activities in the market of competition in the Sarajevo Canton, such are access to resources (economic entity Klas is the largest producer of flour in Bosnia and Herzegovina etc.), production capacities (installed capacities of the parties to the concentration are not completely in use and there are significant possibilities to increase production), and access to distribution channels of the relevant products (big selling chains supplied by the parties to the concentration, big retail network owned by themselves, supplying of many independent shops), the Council of Competition assessed that the intended concentration could consequently result in further strengthening of dominant positions if the parties to the concentration in the relevant market of the Sarajevo Canton.

Under market power, economic entity Klas, if the concerned concentration was approved, would have been in position to control market prices, in terms of independent identifying the level of market prices of the relevant products for the final consumers and issue independently other acts on acting in the market without any significant restrictions imposed by the market competition in the relevant product market in the Sarajevo Canton, for there are no economically strong market competitors.

However, if concerned concentration approved, it would prevent efficient market competition that would have as a consequence extremely negative effects on final consumers since it is about the primary products having social character beside the economic one.

The President of the Council of Competition
Mr. Ibrica Lakisic

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