October 2016 - On 19 October 2016, an amendment to the Act on the Protection of Competition (the “Competition Act”) enters into force. The Amendment introduces significant changes in several areas of competition law. Below we summarise the most important changes brought by the Amendment:
1 Stronger protection of undertakings against dawn raids of the Czech Competition Authority
The Act currently provides that the Czech Competition Authority (the “Authority”) is entitled to conduct on-site inspections and enter the commercial and other premises of undertakings. Following the well-known ECHR ruling in Delta Pekárny, the Amendment gives undertakings the option to file an action to a court, requesting it to review the process of the on-site inspection. An undertaking suspecting incorrect conduct by the authority will be entitled to file an action within two months after discovering such conduct. Currently, undertakings can file an action, but only for the court to assess whether the conditions existed for commencing the on-site inspection. The Amendment aims to provide undertakings with more legal certainty and to strengthen their protection in relation to on-site inspections conducted by the Authority.
2 More precise definition of anticompetitive conduct of public administration authorities
The Act currently prohibits public administration authorities from distorting competition by favouring a certain undertaking with their support or in any other manner. The Amendment modifies this area by providing specific examples of anticompetitive conduct of the authorities.
Furthermore, the Amendment newly provides that if such conduct is justifiable (i.e. there is a legitimate goal to be reached and this cannot be done without distorting competition to certain extent), a public administration authority cannot be deemed to have breached the rules. Apart from imposing fines, the Authority will now also be authorised to impose remedial measures in order to restore competition, and it will be authorised to conduct on-site inspections on the premises of public administration authorities.
3 New regime for handling confidential information
The Amendment also provides some clarification for handling business secrets, banking secrets or any other secret protected by applicable law (the “Secrets”). Under certain conditions, in administrative proceedings the party accused of violating competition rules would be authorised, following receipt of a statement of objections, to inspect documents in the file, including those containing Secrets. That party would be obliged not to disclose such information and not to make any copies or extracts thereof. This authorisation would not apply to third parties.
4 Other changes
The Amendment introduces further changes. It modifies to some extent the provisions on administrative delicts and sanctions for breach of the Competition Act. It also newly introduces an option for the Authority to issue a decision – in the simplified proceedings – that the concentration in question is not subject to its approval. Thus far, this has been possible only in standard merger proceedings. The Amendment will in addition strengthen international cooperation between the Authority and foreign competition authorities outside the EU by enabling an exchange of Secrets under specific circumstances.
In general, the Amendment gives rather a positive impression. It sets out more precise rules towards both undertakings (or public administration authorities) and the Authority. The possibility for a judicial review of on-site inspections will be significantly expanded. There should also be more clarity in the future as regards the enforcement of anticompetitive conduct of public administration authorities. On the other hand, the Authority will be given a powerful tool in this regard and will be able to conduct on-site inspections on the premises of the authorities. Finally, the Amendment will also enable parties to proceedings to access Secrets in the case file, which may improve their defence (while it could discourage others from fully cooperating with the Authority).