Czech competition law in 2022 and what's ahead

Amendment to the Czech Competition Act

Like at last year's conference, the draft amendment to the Czech Competition Act was heavily discussed. The period to harmonise the EU's ECN+ 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 and 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.

Focus on large companies

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. We may therefore expect investigations and formal proceedings in the area of abuse of dominance, which was neglected in recent years. 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 CZK 100m were exceeded in 2023. On the other hand, we could see the CCA resolving more "smaller" cases by advocacy measures.

Dawn raids on the rise

Last year, the number of dawn raids conducted by the CCA picked up compared to the Covid-affected 2020. This trend is likely to continue this year, 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 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.

Compliance programmes

Until recently, the CCA did not take into account 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 investigation on the horizon

Finally, the CCA announced that they expect to complete their 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.

author: Jan Kupčík