The Czech Chamber of Deputies has recently passed a long expected draft of an amendment to the Act on Protection of Competition (the “Act”). The major change to the Act consists of the adoption under Czech law of a legal basis for the leniency programme and settlement.

The leniency programme, which is an important tool in the detection of a cartel, was put in place in 2001, and in 2007 was amended to reflect current practice within the EU. The principle of the programme is to cancel, or reduce penalties for cartel participants who cease the illegal practice and provide the Competition Office with information about the cartel in which the participant was involved. The information provided must be of an important nature which enables detection and destruction of the cartel, or information which provides specific and significant evidence regarding ongoing investigations into the cartel.

In practice, the amendment to the Act will improve the legal position for those who apply for leniency. So far, the leniency programme has worked more or less as an agreement between the leniency applicant and the Competition Office, without any legal basis. Therefore, applicants for leniency have had no certainty that the Competition Office would fulfill promises to cancel penalties. The protection of applicants’ procedural rights has been also uncertain. With the introduction of a legal basis for leniency, the motivation for cartel participants to use the leniency programme should increase. This also relates to the new regulation regarding access to files of proceedings, which so far has been unclear under Czech law. The need for an answer to this question has also been urged by the recent Pfleiderer Judgment of the Court of Justice (C-360/09). The amendment to the Act now expressly prohibits third parties from having access to files of proceedings (including the leniency application).

Furthermore, participants in the proceedings will not be able to access the leniency application until the statement of objections. The amendment to the Act also introduces a legal basis for settlement. The Competition Office will be authorised to reduce by 20% fines imposed for anti-competitive behaviour (i.e. not only cartels, but also abuses of a dominant position or implementation of a merger prior to its approval). However, this will apply only in cases where the proposed solution is sufficient for the elimination of the anti-competitive situation.

The introduction of this regulation is followed by further changes in the area of administrative offences and crimes.

Another innovation brought by this amendment to the Act is that it will be possible to exclude competitors who violate competition law from participating in public tenders for a period of three years. The draft of the amendment to the Act must now pass through the Senate and be signed by the President. It should come into force in the second month following its publication in the Collection of Laws.