Call-in model – control beyond the thresholds
source: Legal Industry Review
authors: Mgr. Jiří Mňuk, LL.M., Mgr. Michael Svoboda
In the previous issues of Legal Industry Review, we reported on the draft amendment to Act No. 143/2001 Coll. on the Protection of Competition (Parliamentary Document No. 853/0), which remains in the legislative process. If adopted, the amendment would introduce several significant changes to the powers of the Czech Office of Protection of Competition (the “Office”).
We have already covered the “New Competition Tool” and sanctions for individuals. In this issue, we focus on the third main pillar of the proposal – a call-in model for mergers.
European Trends in Below-Threshold Merger Control
It is no surprise that the Office wants the power to review below-threshold. This move follows a broader European trend. Several EU Member States (e.g. Denmark, Hungary, Italy, Ireland, Slovenia or Sweden) already allow their national competition authorities to review mergers that do not meet standard thresholds, where concerns about anti-competitive effects exists. However, the scope, timing, and procedural rules vary from country to country.
This trend was reinforced by the Court of Justice Judgement of 3 September 2024 in Illumina v. Commission (C-611/22 P). The Court clarified that the Commission may only accept referrals under Article 22 of the EU Merger Regulation (Regulation No. 139/2004) from national competition authorities that have jurisdiction under their own laws, highlighting the importance of national call-in rights.
Conditions for Call-In Notification Under the Draft Amendment
Under the draft amendment, the Office may call upon undertakings to notify a merger if the following cumulative conditions are met:
- the Office suspects that the merger may significantly distort competition,
- the combine net turnover of the merging undertakings in the Czech Republic exceeds CZK 1.5 billion (same as in the standard regime), and
- at least two merging undertakings each achieved turnover exceeding CZK 100 million in the Czech Republic (standard regime: CZK 250 million).
The Office may intervene within 6 months of the implementation of the merger or the acquisition of control. If the above conditions are met, undertakings may notify voluntarily. This could lead to a wave of “precautionary” notifications, potentially burdening the Office. However, since no simplified procedure is available under the call-in model, many undertakings may prefer to take the risk and uncertainty rather than notify voluntarily and go through the effort of preparing a full-form, non-simplified filing.
Whether the call-in model is necessary is debatable. The draft bill also includes the New Competition Tool, allowing the Office the to set specific notification criteria for certain markets. On the one hand, this targeted approach may be more proportionate and provide greater legal certainty. On the other hand, it might still miss problematic below-threshold mergers in otherwise competitive markets.
The Office has not yet clarified how frequently it intend to use call-in powers. What is clear, however, is that the bill is highly unlikely to pass before the upcoming parliamentary election in early October. It will be up to the new government to resubmit the proposal.
