Brussels, 24 February 2025
The European Commission has opened an in-depth investigation to assess whether public support that Croatia has allegedly granted to Hrvatske Šume d.o.o. (‘HŠ’) and certain Croatian wood processing companies is in line with EU State aid rules.
HŠ is a 100% State-owned company that since 1990 has been granted exclusive rights to manage and commercially exploit all publicly owned forests in Croatia.
The Commission’s investigation
The Commission’s investigation started following the receipt of a complaint alleging that HŠ and certain Croatian wood processing companies benefitted from State aid incompatible with the internal market.
The support has been allegedly granted through: (i) the absence of remuneration by HŠ to the Croatian State in exchange for the exclusive rights to manage and commercially exploit the Croatian public forest; and (ii) the non-market conform prices offered by HŠ to certain Croatian wood processing companies that have signed contracts with HŠ for the purchase of wood.
Based on its preliminary assessment, with regards to the exclusive rights to commercially exploit the public forest granted to HŠ, the Commission has doubts as to whether the absence of remuneration might confer an economic advantage to HŠ as compared to private forest owners that need to buy or lease the forest to compete with HŠ. Similarly, in respect of the non-market conform prices offered to certain Croatian wood processing companies, the Commission has doubts as to whether they are autonomous commercial decisions of an independent company (HŠ), or rather decisions of the Croatian State, resulting in an economic advantage to a selected group of customers of HŠ.
The Commission will now investigate further to determine whether any of these initial concerns is confirmed. The opening of an in-depth investigation gives Croatia and interested third parties, including the alleged beneficiaries of the aid and the complainant, the opportunity to submit comments. It does not prejudge in any way the outcome of the investigation.
Background
According to Article 107(1) of the Treaty on the Functioning of the European Union, a measure shall constitute State aid if the following four cumulative conditions are met: (i) the measure has to be granted by Member States through State resources; (ii) the measure has to confer a selective economic advantage to certain companies; (iii) the advantage has to distort or threaten to distort competition; and (iv) the measure has to affect trade between EU Member States. If any one of these elements is not fulfilled the measure does not constitute State aid.
For More Information
The non-confidential version of the decision will be made available under the case number SA.63845 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
Source – EU Commission