Competition Agency upholds government ban on hiring PR agencies - International Law Office

On July 26 2012 the Competition Agency issued its opinion on a recent government decision declaring that state administration bodies and other state-owned companies may no longer enter into contractual arrangements with public relations (PR) agencies. However, in exceptional cases the government may issue a special decision to allow the hiring of PR agencies or PR experts from the private sector – but only for large-scale economic projects, programmes or activities.

Following a complaint by the Association of Communication Agencies, the agency assessed this contentious government decision from a competition law perspective, and established that it does not have an anti-competitive effect on the PR services market. In the agency's view, on the basis of this decision, no single undertaking or group of undertakings has been granted an exclusive right to provide PR services to ministries and state-controlled bodies. Furthermore, the agency found that this decision is non-discriminatory, as it affects all agencies that provide PR services equally.

The agency rejected the association's argument that this decision distorts competition between PR agencies and other providers of intellectual services (eg, lawyers), as they are not active on the same market and thus cannot be regarded as competitors.

However, the agency has warned that before individual exemptions from the ban can be issued, it will be necessary to establish and publish procedural rules or detailed criteria for such exemptions. In other words, the agency highlighted that service contracts in individual cases relating to large-scale economic projects must be awarded through open, fair, competitive and transparent proceedings in line with public procurement law.

For further information on this topic please contact Gabriele Wahl Cesarec at Petres & Cvirn by telephone (+385 1 4813 244), fax (+385 1 4813 073) or email (g.wahlcesarec@pc-lawfirm.com).