Openness of Croatian regulatory framework to innovations in passenger road transport
Authors: Martina Prpić, Tomislav Sadrić
Key words: road transport, competition, apporval, license
Over the last years new and fast growing business models appeared in the world in the area of transport services that have greatly changed traditional approach to road transport of passengers, challenging standard business models through competition by entrepreneurs using innovative business models based on modern technology and sharing economy principles.
New business models are not limited to markets where they have initially been developed and have spread, due to their initial business success, over many national and regional markets. Recently, entrepreneurs using modern technology and innovative business models, offering customers transport services significantly differing from routine transport services, appeared in Croatia.
Innovative business models of providing transport services at the global level can no longer be considered as a passing trend, and it is quite clear that passengers’ road transport has permanently changed, it should be questioned to what extent is Croatian legal system open to adoption of such transport practices. In that sense, it is necessary to analyses legislation regulating passengers’ road transport in the Republic of Croatia in order to establish is there de lege lata possibility to implement modern transport models into Croatian business environment, are new entrepreneurs overburdened with administrative barriers when entering the transport services market and are regulatory corrections required for modern business models smooth application in Croatia.
Basic legal source with respect to passengers’ road transport in the Republic of Croatia is the Act on Road Traffic Transport (Official Gazette No. 82/13, further: the Transport Act). The Transport Act regulates, with respect to passengers transport, conditions and manner of performing the activity prescribing conditions for drivers and vehicles, regulating rules on issuing licenses and permits, and defining types of passengers’ transport listing special preconditions that an entrepreneur has to fulfill for performance of specific type of transport.
The analyses of the Transport Act shows that passengers’ road transport in the Republic of Croatia is regulated as closed and rigid system based to the great extent on the public limitations of market competition, in the view different permits and licenses that an entrepreneur has to obtain in order to provide transport services. Transport types defined by the act can, in certain sense, be considered as numerus clausus outside of which it is not permitted to perform activity of passengers’ road transport. Such closed list of transport types together with the earlier mentioned public limitations additionally burden development of innovative entrepreneurial approach in transport sector. Such legal provisions in essence represent administrative barriers to entry of new entrepreneurs on the market thus significantly aggravating development of market competition.
In addition to burdening entry of new entrepreneurs on the market, provisions of the Transport Act significantly close the market to entrepreneurial innovations, since they force entrepreneurs to develop only those business models that can be categorized as one of transport types envisaged by the law. In this manner, the Croatian market of transport services remains significantly detached from positive effects of implementing innovative transport models on foreign markets. This to the greatest extent represents a loss to consumers as end users of transport services.
It is important to stress that the whole sharing economy concept is mainly based on re-regulation of activities that have, until recently, been highly regulated. The request to de-regulate applies not only to issues directly connected to the entrepreneurs’ activity but extends also to labor and tax regulations. Innovative models of providing services are based on simplicity and availability to the broadest scope of users, and are impeded by any regulatory intervention. Since protection of public interest necessary entails certain level of regulation, in order to guarantee minimum quality and safety standards for services provided on the market, it is clear that the top challenge in the near future will be to establish ideal ratio between space for entrepreneurs offering new and innovative services to be created by de-regulation, on one side, and regulatory limitations required for protection of public interest, on the other side.
