Czech NCA published a press release outlining contemplated changes to the Czech Competition Act.
Source: Legal Industry Review, May 2024
Authors: Mgr. Jiří Mňuk, LL.M., Mgr. Michael Svoboda
High inflation in Czechia over the past several years has led to calls from the general public and political representation for an intervention by the Czech Office for Protection of Competition (the “Czech NCA”). Those call occurred in the context of presumably high food prices, which many considered to be a result of coordination by larger suppliers or supermarket chains. The scope of the competition authority’s powers, however, was often omitted in the debate and its role was confused with that of a price regulator.
In January 2024, the Czech NCA published a press release outlining contemplated changes to the Czech Competition Act. The indicative summary of amendments included, for example, the possibility to carry out dawn-raids not necessarily based on suspicion of competition infringement, to obtain location data from mobile operators or to assess mergers not meeting the applicable turnover thresholds.
The proposal was given a more streamlined outline in early April 2024 in a public forum by the Czech NCA’s leading representatives. Some of the rather controversial points (such as those concerning dawn-raids) seem to have been abandoned. The points which keep being explored and which may come into force and effect in mid-2025 include the following.
New competition tool
Inspired by the Italian or German competition authorities, the Czech NCA may benefit from an increase in its powers by way of a new competition tool. The tool would grant to the Czech NCA power to impose (temporary) obligations in certain sectors where market distortions have been identified (such as network industries or concentrated markets). The Czech NCA’s decision could concern, for example, an obligation to refrain from certain market conduct, a modification of merger turnover threshold, an obligation to disclose certain information or data, or a retrospective assessment of mergers that do not meet notification thresholds. However, unlike the German NCA the Czech NCA does not expect to possess the authority to order a divestiture.
Liability of individuals
Although a natural person can commit a criminal offense by entering a cartel on behalf of an undertaking, this provision of the Czech Penal Code is rarely used in practice. Therefore, a new administrative offence by individuals may be enacted. The offence would cover (even attempted) conduct to conclude a cartel. Sanctions may include a fine of up to CZK 10 million (approx. EUR 400 thousand) or a prohibition to act in legal entities’ bodies.
Unit of the Chief Economist and Other adjustments
The Czech NCA is about to set up a Chief Economist’s Department to increase its economic expertise and to be able to successfully handle cases that require complex economic reasoning. The unit should consist of 5-12 economists.
Proposal also contains some rather ‘cosmetic’ changes with a lower practical impact. For example, the law would explicitly state that excessive pricing can amount to an abuse of dominance. It would remove the rebuttable presumption that undertakings with market shares of less than 40% are not dominant. Even today, the Czech NCA can sanction excessive prices. It can also prove dominance of an undertaking with a market share below 40%. Rather than having a practical impact, such proposed changes are meant to convey a message. Some types of practices or situations, like those concerning high food prices, are prioritized in the public domain.
