All questions
Year in review
In 2023, the CCA initiated 57 merger control proceedings. The majority of the proceedings (41) were subject to the simplified procedure with a short-form filing. Twelve proceedings were cleared in a classic (long-form) procedure in Phase I and two cases were moved to Phase I. Another two cases were dealt with under sanction proceedings because of suspected gun-jumping.
The past year marked an extraordinary year for Czech merger control review as the CCA prohibited a concentration. The previous instance of a concentration prohibition dates back to 2004, so it took 19 years for another prohibition decision. The case concerned an acquisition of a part of the undertaking První novinová společnost AS (PNS) by Česká pošta, SP (Czech Post), a postal sector incumbent owned by the Czech state. The case ran for almost two years when the CCA examined the concentration in detail. It concerned a classical horizontal theory of harm as PNS is a competitor to Czech Post in delivery of postal items to final addressees.
The CCA identified a number of relevant markets where it found Czech Post to be dominant. As the dominant position of Czech Post would be strengthened and in some relevant markets Czech Post would effectively gain a monopoly by acquiring the only significant competitor, the CCA applied the extraordinary and last-instance measure of prohibiting the concentration. It also pointed to a combination of numbers two and three in the unaddressed mail delivery market resulting in a loss of significant competitive pressure. The theory of harm also concerned an elimination of a potential competitor in the subscription distribution market. The parties also did not succeed with a failing firm defence. The decision technically did not become final as Czech Post withdrew its filing after the first-instance decision and abandoned the transaction.
In another Phase II case (Cetin/Nej.cz), the CCA only approved the concentration after behavioural commitments concerning a wholesale fixed internet access were offered. Cetin's commitments were related to the provision of an open and non-discriminatory wholesale offer on an economically justified cost-plus level in a geographical footprint of the acquired provider for the next five years, combined with a commitment to invest a significant amount into development of new technologies in its network. It is noteworthy that the CCA issued its decision without market testing of the suggested commitments.
The past year saw a continuing focus of the CCA on gun-jumping cases. In 2022, the CCA set the tone with two gun-jumping decisions. First, the CCA fined Natland Group for breaching the stand-still obligation by adopting decisions at the annual meetings of the target. The case stood out because the shares of the target had been transferred to Natland Group in the past as a collateral and were only forfeited after the target broke the loan agreement. The mere transfer of the shares did not require prior notification, which is based on a standard practice of the CCA not considering the transfer of shares without a transfer of voting rights as a concentration. Nevertheless, Natland Group failed to notify at the moment when it actually started executing the voting rights, which resulted in a sanction of 1.4 million Czech crowns after a settlement. Second, the CCA also imposed a fine of 0.14 million Czech crowns (after a settlement) for a classical gun-jumping instance where the acquirer simply overlooked a notification obligation.
In 2023, the CCA initiated another two proceedings, which both resulted in a decision imposing fines in 2024. In Auto UH Group/C & K člen skupiny AUTO UH, the CCA dealt with another instance of overlooking the notification obligation. The acquirer exercised control for about two years before a notification and a clearance, resulting in a sanction of 1.8 million Czech crowns. The second case of EP Energy Trading/Gazela Energy was more complex. According to the CCA, the acquirer exceeded simple value protective measures during negotiations of the acquisition as it effectively nominated two representatives of the acquirer into the board of directors and one member of a supervisory board of the target. The fine reached 18.8 million Czech crowns.
Finally, the CCA also issued a decision last year on breaching of commitments previously approved by the CCA. In XLCEE-Holding, the first instance imposed a fine of 20.3 million Czech crowns last year for not fulfilling a commitment of selling one retail store. The merger control part of the case took place in 2019, when the acquirer suggested a commitment to sell one store in a given time frame. Possibly also because of the covid-19 crisis, the acquirer had not succeeded. It asked for a prolongation of the time limit and it was, at first, granted. However, XLCEE-Holding apparently did not approach the CCA when the extended deadline was expiring. For that behaviour, the first instance of the CCA saw a need to impose such a large fine. However, the second instance (chairman of the CCA) significantly decreased the fine mainly because of the covid-19-related aspects of the case to 0.3 million Czech crowns.
Apart from decision-making practice, the CCA was active in the legislative field. In November 2023, it announced the intention to review the current merger control regime, mainly focusing on the merger control thresholds, which have not seen a change for 20 years. The representatives of the CCA stated that they have no specific expectations from the consultation and mainly want to see if the regime is still fit for purpose. According to the latest statements, the public consultation is expected to be initiated in the autumn of 2024.
Apart from that, the CCA launched another initiative concerning the merger control sphere. On 15 January 2024, it published a press release about its suggestions for legislative proposals. The CCA used this unusual concept, which does not yet amount to a legislative proposal (which the CCA may, as a special independent body under Czech constitutions, itself prepare), to test public opinion on various rather innovative ideas. Among the list of suggestions, the CCA mentioned a new competition tool, a call-in model, liability of natural persons for competition law infringements or an ability to gain access to various data.
According to the latest information, the CCA is currently working on an actual legislative proposal with a more limited scope than the original set of suggestions, but still a ground-breaking proposal possibly causing a revolution in Czech competition law with a significant impact on the merger control regime as well.
The new competition tool will be designed in a way that, following a sector inquiry, the CCA will be allowed to identify a specific relevant market in which it could impose remedies on market participants without a need to prove any infringement. Among the possible remedies, the CCA suggests an extension of the merger control thresholds, which would capture a larger amount of transactions that would be required to be notified to the CCA. It is expected that the tool would not be specifically limited, and therefore the CCA could possibly require certain or all market participants to notify any concentration with respect to the market, or modify the turnover thresholds for the identified market.
Moreover, the legislative proposal in the making also contains a limited call-in model. Following public discussions, the model would still be based on turnover thresholds. These thresholds would, however, be lower than the standard thresholds and exceeding them would not set a notification obligation, but just a possibility of the CCA to require a notification. According to the CCA representatives, the CCA's power would be limited timewise to six months after the transaction being signed, announced or closed (the exact moment remains unclear at the moment).
Another measure that will likely be included in the final legislative proposal is a liability of natural persons for competition law infringement, possibly also including gun-jumping. The proposal assumes an administrative law liability, which would be investigated and sanctioned by the CCA. Currently, natural persons are subject to a criminal liability that, however, does not reach to gun-jumping matters. The proposal could, therefore, for the first time make members of the management face sanctions directly against them, which is a very important deterrent in practice, as we see in other jurisdictions.
Finally, the original set of ideas included financial rewards for whistleblowers and a power of the CCA to collect data from a more extensive list of public institutions, which could strengthen the CCA's ability to discover gun-jumping cases.
The draft proposal remains to be finalised and published for comments of various stakeholders. It would be premature to presume that the above-listed new powers will be passed to law and take effect, but it clearly requires paying attention to further updates from the legislative process.
