The largest law firm in the Czech Republic Ranked by clients as the best law firm in the Czech Republic Czech law firm of the year (2012) No. 1 legal advisor.

The largest law firmin the Czech Republic

Ranked by clientsas the best law firm

in the Czech Republic

Czech law firm of the year

(2012)

No. 1 legal advisor according to the number of M&A

deals in the Czech Republicand Eastern Europe

(2012)

No. 1 among Czech law firms

(2012)

Fifth Annual Conference on Competition Enforcement in the CEE Member States, Bratislava, 21 February 2014

Recent developments in CEE Member StatesThe Czech Republic

Robert Neruda

1. Private enforcement

2. Criminal enforcement

3. Administrative enforcement

1. Activities of NCA

1. Cartels

2. Other agreements

3. Dominance

4. Mergers

2. Legislation

3. Courts (Due Process)

4. General / policy observations

AGENDA

2

• No specific provisions in the Czech law … but

• The possibility to seek damages has always been recognized

• No/scarce case law

• Reasons (similar to other jurisdictions):

• Uncertainty

• Lack of incentives

• Access to evidence

• The role of public enforcement (protection of leniency, settlements, access to file)

PRIVATE ENFORCEMENT

3

• Individual criminal liability

• 2010 – new Criminal Code

• Criminal liability for cartel behavior (no other anticompetitive practices)

• Very strict – up to 8 years of imprisonment

• No decisions, but seemingly some investigations pending, incl. stand alone

• Criminal liability of companies

• 2012 – new Act on Criminal Liability of Companies

• Not applicable to cartels, except for bid rigging

• despite the wide reach of the new legislation

• Parallel investigations by the Czech NCA and the police avoided

CRIMINAL ENFORCEMENT

4

• No changes in powers/competences of the Czech NCA in the field of antitrust

• Anticompetitive behavior of public authorities (not desired by the Czech NCA)

• But other areas

• Significant Market Power Act (supermarkets)

• Public procurement

• Relative decrease of importance?

• Significant divergence in the level of activity among sections (cartels v. dominance and verticals)

• Cartels – lot in pipeline, but lack of decisions

• Stable merger control

ADMINISTRATIVE ENFORCEMENTIN GENERAL

5

1. Cartel Department of the Czech NCA

i. Well resourced and stable, most active

ii. Disproportion between the number of opened cases and decision – ever increasing workload?

iii. Difficult procedural aspects – rules of third parties, access to file

6

Decisions Cases opened Dawn Raids

41 34 3 31

5

20

14

14Cases – Decisions – Dawn Raids

2010 2011 2012 2013

ADMINISTRATIVE ENFORCEMENTCARTELS

• Series of fining decisions in 2007- 2010, then silence

• The declarations of economists („no hard core restrictions“) vs

• Recent decisions of the Office („RPM hard core infringement and not likely to be exempt“ – Candy) vs

• Case law (strict approach, RPM almost per se prohibited)

= uncertainty

• No decisions (guidance) as to non pricing vertical agreements

= uncertainty

• Despite distribution is of a key importance for majority of businesses

ADMINISTRATIVE ENFORCEMENTVERTICALS

7

• The least activity

• Last (real, new) decision in 2010

• predatory pricing, bus transport, 5 mio CZK (EUR 185.000)

• Investigation of margin squeeze in telco lasts almost five years

• Pending investigations of (alleged) non pricing abuses (probably less demanding) without decisions

• Tricky signal for the business

ADMINISTRATIVE ENFORCEMENTABUSE OF DOMINANCE

8

• Flexible, predictable, well functioning system

• No intervention (prohibition, commitments) in 2013

• Last prohibition in 2004

• NEW: third parties' right to appeal may delay the closing

ADMINISTRATIVE ENFORCEMENTMERGERS

9

57

140

204

239

134

5661 61 57 40 45 50 53

33

0

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

• Substantive changes

• Full leniency available for initiator and leader of the cartel

• Immunity from criminal prosecution and from ban on public contracts and concession agreements

• Procedural changes

• Leniency application outside the administrative file

• Duty to continue in cartel activity (to avoid jeopardizing a dawn raid)

ADMINISTRATIVE ENFORCEMENTSOFT LAW – 2013 LENIENCY PROGRAMME

10

• Confirmation of the practice so far

• Available also outside cartel area

• Fixed discount 20 %

• Short decisions, no details (affected customers)

• Immunity from ban on public contracts and concession agreements (but not from criminal prosecution)

• No hybrid settlements

• Practical observations

• Is 20 % enough? Is it really only 20 %?

• A deathblow for private enforcement?

• Effects on the competition doctrine?

ADMINISTRATIVE ENFORCEMENTSOFT LAW – 2013 SETTLEMENT NOTICE

11

• Prioritisation, commitments outside and within the administrative proceedings

• No declaration of illegality

• Prioritisation

• If no public interest in conducting the proceedings due to the low harmful effect

• No review available for complainants

• Commitments (both types)

• Relaxation of former strict (prohibitive) rules

ADMINISTRATIVE ENFORCEMENTSOFT LAW – 2013 NOTICE ON ALTERNATIVE SOLUTIONS

12

• The complainant has no standing to appeal/challenge the fact the Czech NCA does not open the investigation (SAC Mediaservis, Regio Jet)

• The Czech NCA may use the evidence collected and provided by the Police (Regional Court in Brno in Litoměřice)

• Bid rigging per se prohibited, even in case the agreed price is the same/lower than the competitive price (Regional Court in Brno in Litoměřice)

• The Czech NCA is not obliged to define the relevant market with the use of economic and empiric analyses (Regional Court in Brno in Litoměřice)

COURTS

13

• The Czech NCA

• Lack of decisions in cartels, dominance, verticals

• The Czech NCA probably needs more resources (financial, human)

• The relative importance of the antitrust agenda within the Czech NCA

• Judicial review

• Is the recent decentralization and de-specialization the right step for competition cases?

POLICY ISSUES

14

• The judicial review probably Art. 6/1 ECHR compliant

• The courts de facto review the assessment of the complex economic evidence made by the Office (See Student Agency case but Litoměřice)

• But there is still a need to:

• Balance the protection of leniency applicant and

• other parties to the proceedings

• injured parties

• Find the right balance with the rights of third parties

• prioritisation, mergers, possibility to appeal

• Find the room and incentives for private enforcement

• settlements (and other alternative solutions) problematic in this regard

DUE PROCESSSTATUS AND ISSUES TO SOLVE

15

• The Czech administrative system based on the on the permanent access to file

• Not suitable for leniency

• Review court surprisingly approved the Office's approach of denying access of other parties to the application

• the Supreme Administrative Court?

• 2012 Amendment

• The limited access part of the hard law

• Practical observations

• LA accessible (for reading only) for 1/10 of the investigation.

• Is it Art. 6/1 ECHR compliant?

• Third parties‘ access to the file granted by the courts

DUE PROCESSACCESS TO FILE

16

• The hard law - right to be heard only

• 7/2012 Regional Court in Brno Litvínovská uhelná

• Any third party that duly exercised its rights (complained) during the proceedings has a right to appeal the clearance decision

• But no procedural details (eg. only participant receives the decision)

• The right to appeal within 1 month/1 year – the decision does not become final

• Risk of abuse - risk for closing

• Possible solution

• Short term – Supreme Administrative Court

• Long Term – an amendment tothe Competition Act enabling to challenge the final decision

DUE PROCESSCASE STUDY – RIGHTS OF THIRD PARTIES IN MERGERS

17

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