Zagreb, May 19, 2025 — The Croatian Competition Agency (AZTN) has released the results of a comprehensive sectoral study into the business practices and relationships between retailers and suppliers in Croatia’s food, beverage, and hygiene products supply chain. The research, covering the period from January 2022 to July 2024, sheds light on pricing dynamics, contracting practices, and negotiation positions amid a period of notable inflation and consumer price increases.
The AZTN launched the investigation in response to a steep rise in retail prices seen over the past two years. According to Eurostat, food prices in Croatia rose by 26.1% over the research period—outpacing the EU average of 24.3%. While producer prices in Croatia rose more modestly (18.5%) compared to the EU average (21.3%), import prices surged by 26.3%, suggesting a strong impact from international supply chains.
Frequent Price Changes Led by Distributors
A major finding of the research was the frequency of price list changes, particularly by distributors. Distributors, who often operate under contracts with principals based outside Croatia, altered their price lists far more often than domestic manufacturers. These wholesale price fluctuations were quickly reflected in retail prices, further fueling inflationary pressures.
Suppliers typically gave 15 to 60 days’ notice before changing wholesale prices, with most notifying retailers 30 days in advance. Contracts generally included these price lists, which changed multiple times annually.
Retailers Set Final Prices Independently
The AZTN found that, in most cases, retailers independently set final retail prices and profit margins without input from suppliers. However, suppliers occasionally proposed promotional pricing. Margins were typically determined based on market trends, competitive pricing, and target profitability. Food products tended to carry lower margins than non-food items, with private label goods often yielding higher mark-ups.
Mixed Power Dynamics in Negotiations
While most large retailers reported balanced negotiating positions with suppliers, smaller regional chains indicated they faced greater pressure in procurement negotiations. Some even pointed to potential “tied selling” practices by suppliers—bundling less desirable products with high-demand items—a practice the AZTN says warrants further scrutiny.
Suppliers, for their part, largely described their negotiating position as satisfactory. However, several raised concerns about unfavorable terms, particularly for perishable items like eggs, which are sensitive to pricing and shelf-life constraints.
Input Costs Driving Price Inflation
Price increases throughout the supply chain were primarily attributed to rising input costs. Manufacturers cited higher prices for raw materials and energy, while distributors pointed to cost hikes from their own suppliers. Products like sunflower oil, milk, eggs, and bakery goods saw particularly sharp and frequent price changes in 2022 and 2023.
Contracts were typically annual, signed in the last quarter of the preceding year or early in the year they covered. For commodities with variable market prices—such as fresh produce or meat—prices were often agreed upon shortly before delivery.
No Evidence of Structural Collusion
Importantly, the AZTN’s investigation did not uncover evidence of structural competition violations, such as price-fixing or other prohibited agreements. While some commercial practices—like the alleged tying of products—will be examined further, the agency concluded that no single player could be held solely responsible for the rise in prices.
“The data indicate that the price increases were largely a result of broader market conditions, especially those involving international supply chains,” the AZTN stated. “Retailers and suppliers alike were responding to external pressures, and the import component played a significant role.”
Limited Engagement from Market Participants
Despite a public invitation to participate in the study, no responses were received from industry groups, associations, or the public. The AZTN relied primarily on questionnaire responses from 49 retailers and 23 suppliers, which included 16 manufacturers and 7 distributors, representing the key segments of the Croatian market.
Next Steps
While the agency found no structural breaches of competition law, it emphasized the importance of continued monitoring, particularly around commercial practices like tied selling and the potential for asymmetries in negotiation power.
The AZTN’s findings offer a detailed picture of how inflation and global supply pressures have impacted Croatia’s food and consumer goods sector, and the agency hopes the report will inform future policymaking and improve transparency in the market.
