Amendment to the Czech Competition Act
Focus on large companies
Dawn raids on the rise
Leniency for vertical agreements
Compliance programmes
New sector investigation on the horizon
The Czech Competition Authority (CCA) held an annual conference on 9 and 10 November 2022, providing an informative overview of both its current practice and expectations for the near future. In 2022, the CCA's representatives presented news and practical insights on a wide range of topics, the most important of which are summarised below.
Amendment to Czech Competition Act
At the 2021 conference, the draft amendment to the Czech Competition Act was heavily discussed. The period to harmonise the EU European Competition Network+ Directive lapsed long ago, but the Czech Competition Act has not yet been updated. The bill currently being discussed in Parliament is not just a simple harmonisation but implements other procedural novelties. For example, the CCA will not have to specify the address of the business premises in which it aims to conduct a dawn raid, which could result in dawn raids being spread over various office buildings and premises, becoming harder for the investigated companies to control. The bill also gives the CCA broader discretion to reduce fines and the ability to prohibit participation in public tenders in the settlement procedure.
The CCA's representatives repeatedly emphasised that they intend to focus on large companies (in terms of turnover and market share) in all areas of enforcement. Investigations and formal proceedings in abuse of dominance, which has been neglected in recent years, can be expected. The CCA's long-standing focus on resale price maintenance will continue. Given the attention paid to large companies, it would not be a surprise if the recently awarded record fine of almost 100 million koruna (approximately £3.5 million) were exceeded in 2023. On the other hand, the CCA could be seen to resolve "smaller" cases by advocacy measures.
In 2021, the number of dawn raids conducted by the CCA picked up compared to the covid-affected 2020. This trend is likely to continue in 2022, while the numbers presented at the conference are clearly not final. CCA personnel hinted that a certain number of dawn raids will still be conducted in December 2022 and that there will not be a slowdown in 2023.
Leniency for vertical agreements
The current Czech Competition Act allows for a leniency procedure only in horizontal cartel scenarios. This will change with the aforementioned bill, which will remove the requirement for the agreement in question to have a horizontal character. Nevertheless, the CCA has already begun to accept quasi-leniency applications even in cases of vertical agreements. Until the bill comes into force, these applications will lack a clear legal position, and even after it, there will be no legal basis for accepting leniency requests for non-secret agreements (non-cartels) and abuses of dominance. The CCA nevertheless expressed its interest in receiving leniency requests even in these cases.
Until recently, the CCA did not consider whether the investigated company had a competition compliance programme in place. This has now changed, as shortly before the conference the CCA published guidelines with respect to compliance programmes. The CCA is willing to consider not only already existing programmes, but also new programmes implemented in response to illegal activities being uncovered. To be given consideration, compliance programmes must reflect the size of the company, its market power and the markets in which it operates. A small wholesaler is not expected to have the same compliance programme as a dominant retailer. Another condition for obtaining a reduction to an antitrust fine is that the statutory body or the company's management did not participate in the illegal conduct and the company used either the leniency or settlement procedure in the proceedings. The CCA's representatives clarified that the reduction in the fine may be up to 20%.
New sector investigations expected
Finally, the CCA announced that it expects to complete its pending sector investigation into pharmaceuticals by the end of 2022 and issue a report in early 2023. This also means that the CCA will be able to use its resources for a new sector investigation. The sector of the investigation has not been determined yet and the CCA will welcome suggestions in this respect.
For further information on this topic please contact Jan Kupčík at Schoenherr by telephone (+420 225 996 500) or email ([email protected]). The Schoenherr website can be accessed at www.schoenherr.eu. 7755379