The Dominance and Monopolies Review: Czech Republic
Generally, Czech competition laws follow EU law in all substantive matters, while also setting out national procedures for enforcement. There are several layers of provisions, each carrying differing levels of force. At the base is constitutional law, followed by EU laws and international treaties, and finally domestic legislation. The Office for Protection of Competition (the Competition Authority) has issued several guidelines, known as 'soft law', on the application, procedures and enforcement of competition law. This chapter focuses on domestic law, with the influence of international law being highlighted where relevant.
i Constitutional layer
Article 26, Paragraph 1 of the Czech Charter of Fundamental Rights and Freedoms2 establishes the right to engage in enterprise and pursue other economic activity, whereas Paragraph 2 of the same Article specifies that the exercise of certain professions or activities may be subject to special conditions or restricted by law. This Article is interpreted by the Czech Constitutional Court as an implicit obligation on the state to create and maintain the conditions for fair competition and a fair business environment.3 This Article is also the basis for the right of both individuals and legal entities to conduct business, although these activities may be restricted by law in certain cases. Competition law is considered to be one such way of restricting dominant businesses in pursuing their economic activities.4
ii Domestic legislation
The fundamental law establishing the rules governing dominant market position and the abuse of that position is the Act on the Protection of Competition,5 which protects competition in the products and services (goods) market. This Act is modelled on Articles 101 and 102 of the Treaty on the Functioning of the European Union.
Furthermore, Article 19a of the Act on the Protection of Competition prohibits public authorities from disrupting competition (unless the disruption is permitted or required by special laws). It can mainly be used in the case of discriminatory regulations or other measures adopted by municipal or regional authorities.
The Act on Significant Market Power in the Sale of Agricultural and Food Products and its Abuse8 (the Act on Significant Market Power) targets certain kinds of abuses of market power in contractual relationships9 in place with the overseeing Competition Authority. While the main purpose of the Act on the Protection of Competition is to deter conduct consisting in undue distortion of competition, the Act on Significant Market Power aims to regulate certain specific aspects of supplier–purchaser relations in connection with sales of agricultural and food products.10 In particular, it aims to protect the weaker contractual party (individual suppliers, or small or medium-sized enterprises) from systemic abuse by a retail market player with significant market purchasing power.
iii Soft law
The Competition Authority has published several guidelines. Where possible, these guidelines follow the model set up by the European Commission. The relevant guidelines that remain applicable to date are as follows:
- Notice on alternative solution of certain competition issues;
- Guidelines on determining fines for breaching the Act on the Protection of Competition;
- Guidelines on applying the leniency programme in accordance with Article 22ba of the Act on the Protection of Competition; and
- Guidelines on applying the accelerated procedure in accordance with Article 22ba of the Act on the Protection of Competition.
Year in review
On average, the Competition Authority only opens one case on abuse of dominant position and two to three cases on abuses of significant market power per year.11 This small number of cases is due to the Competition Authority focusing more on cartels and other types of breaches of competition law.12
Indeed, in 2020, the Competition Authority did not issue a single decision on abuse of dominant position, although it did issue one appeals ruling.13 Furthermore, the Competition Authority has issued a handful of decisions14 regarding Article 19a of the Act on the Protection of Competition. In all cases, these have concerned the regulation of lotteries that were found to be discriminatory and therefore in breach of competition law. For example, in Decision No. ÚOHS-S0232/2018/VS-35131/2019/830/VVo, the statutory city of Brno was found guilty of distorting competition by issuing a discriminatory lotteries regulation (discriminatory because it prevented one competitor from operating its lotteries business without any justifiable reason), with a fine of 828,000 Czech crowns imposed. In the most recent decision, dated 30 March 2021, the Head of the Competition Authority rejected an appeal filed by the city of Ostrava and upheld the first-instance decision in which the city was found guilty of regulating lotteries in a discriminatory manner. However, in the second instance, the Authority reassessed the period in which the unlawful conduct had occurred and reduced the penalty to 869,000 Czech crowns accordingly.
No decisions relating to abuses of dominance or significant market power were issued by the administrative courts in 2020. However, the Constitutional Court finally ruled on a petition by a group of senators to repeal the Act on Significant Market Power, or certain of its provisions, due to its unconstitutional nature.15 The Constitutional Court stated that the Act on Significant Market Power complies with the constitutional rights and freedoms, with one exception.16 The Court also stressed that the aim of eliminating the undesirable practice of a retailer (i.e., food retail store owner) that is in breach of fair competition is a legitimate basis on which to restrict the right to engage in enterprise and pursue other economic activity.
The Constitutional Court also ruled on a petition by the Ministry of the Interior to repeal the regulation of the city of Bilina due to its unconstitutional nature. The Ministry argued that the Competition Authority had addressed this regulation and concluded that its issuance constituted a breach of competition under Article 19a of the Act on the Protection of Competition. However, the Constitutional Court did not consider the regulation to be unconstitutional and, therefore, the petition was rejected.
Market definition and market power
i Market definition
The definition of relevant market under the Act on the Protection of Competition is identical to that of EU law. In practice, the Competition Authority and courts follow the soft law of the EU Commission and EU case law.17 To determine the relevant market, the Competition Authority uses similar econometric and other markers as are used by the European Commission (e.g., small but significant and non-transitory increase in price, price elasticity and correlation tests); however, it tends to do so on a smaller scale and with a lower degree of expertise.
ii Market power
Market power is defined in Article 10 of the Act on the Protection of Competition, wherein dominant market position occurs where the market power of one or more competitors acting in concert enables them to behave to an appreciable extent independently of its customers and consumers.
This market power is assessed based on the value of the volume supplied or purchased in the (relevant) goods market (market share) during the period under examination, as well as in other markets, including competitors' economic and financial power, legal and other barriers to market entry, vertical integration, market structure and respective market shares.
Market share in the relevant market is the starting point for assessing market power. Once the market has been defined, the Competition Authority compares statistical data on the relevant competitors and may request internal data from them to assess the market structure and market share of the competitor or competitors in question. However, even where the market share of a competitor is above 75 per cent, the Competition Authority also usually analyses and evaluates other markers to provide the grounds for its final decision.18
Relative dominance in the food industry
The Act on Significant Market Power was enacted in 2009 and amended in 2017. Any entity that is engaged in purchasing food products for their subsequent resale and that has significant market power is prohibited from abusing this power.
Unlike the Act on the Protection of Competition, the Act on Significant Market Power does not address the concept of relevant market at all and does, therefore, not require the Competition Authority to define the relevant market to assess a breach of competition in its decisions under this Act.19
Significant market power is defined by law as a position from which the purchaser20 can unjustifiably extract advantages from suppliers in relation to the purchase of food or in relation to the provision or receipt of services related to the sale and purchase of food. The main criteria for assessing this power are market structure, market-entry barriers and the financial power of the purchaser. Any purchaser acting on behalf of another purchaser is regarded as though they were a single purchaser.
Significant market power can be assumed to exist when the criteria set forth in the Act are met. Any purchaser or purchasing alliance whose annual turnover from the resale of food and the provision of related services in the Czech Republic is higher than approximately US$230 million is regarded as being a purchaser with significant market power. As the Constitutional Court stressed in the decision21 outlined in Section II, this turnover condition is material to defining whether an entity has significant market power. All conduct that constitutes an abuse of significant market power, as listed in Article 4 of the Act on Significant Market Power, is forbidden only when it comes to purchasers with the significant market power.
The initial consequences of this were originally significant, as a purchaser could be considered to be in abuse of significant market power even where the suppliers in question had significantly higher market power (absolute conception).22 However, the Act was later amended in light of criticism, with significant market power and the abuse of that power now being assessed by the Competition Authority on the basis of the absolute conception of market power, with a corrective mechanism in place to ensure that a purchaser is not considered as having significant market power where the supplier has greater market power.23
Abuse of a dominant position is defined in Article 1, Paragraph 1(b) and Articles 10 and 11 of the Act on the Protection of Competition.
Abuse of a dominant position can be committed by one competitor or by several competitors acting in concert. Dominant position is defined as a market power that enables any competitor to behave to an appreciable extent independently of its customers and consumers. Dominant position must be proved and is presumed that, until proven otherwise, market share below 40 per cent rules out dominant position.
Abuse of dominant position falls under two distinct legislative instruments.
The first is the Act on Significant Market Power, which is applied in the food industry in a slightly different way. Since 2017, the legal framework and practice of the Competition Authority have provided for the absolute conception together with a corrective mechanism. Where a purchaser is assumed to have significant market power (see above) and the Competition Authority initiates proceedings against it, the purchaser can raise the objection in the proceedings that it cannot be considered to have significant market power with respect to other suppliers because, for instance, it is the weaker party in its relationship with them. The Competition Authority might then find that the purchaser holds and has abused significant market power in its relationship with some suppliers and not with others.
The types of conduct that constitute abuses of significant market power can be grouped into:
- disproportionate contractual terms and conditions between the supplier and the purchaser, primarily with regard to pricing;24
- the enforcement of pricing, provision of services or any other consideration not included in the contract between the parties;25
- discrimination between suppliers for comparable goods without fair reason;
- auditing or control of the supplier; or
- disregard of the outcomes of inspections carried out by public authorities.
Moreover, contracts between the purchaser and suppliers must meet special requirements relating to form, content and term, as stipulated in Article 3a of the Act on Significant Market Power.26 The former requirement regarding a ceiling on payments from one supplier (i.e., 3 per cent of the supplier's annual turnover) was annulled by the Constitutional Court due to its unconstitutional nature.27
The second instrument is the Act on the Protection of Competition, which targets behaviour that has disrupted or could disrupt competition, regardless of whether this is engaged in collectively or individually.
The Act on the Protection of Competition follows the EU's definition of abuse of dominant position, providing a general clause and six typical types of abuse.28
The Competition Authority relies heavily on the guidelines and case law of the European Union and cites them in most of its decisions, in which it also applies EU principles. While a per se approach may have been more common several years ago, today, the Competition Authority claims to embrace this effects-based approach.
ii Exclusionary abuses
With the exception of the České dráhy case29 and the landmark Student Agency v. Asiana case,30 few cases have been initiated in relation to predatory pricing. In short, the Competition Authority takes a more holistic and effects-based approach to this behaviour and tries to assess its impact. In this respect, where a sales price is below the cost price, this alone is not sufficient to disrupt competition, rather the impact of the entire period in which these prices are maintained would also have to be measured. Predatory pricing can, therefore, be a legitimate tool in competition.
Czech case law on margin squeezes is still immature. However, a few investigations have been conducted by the Competition Authority in the field of telecommunications31 and energy.32 In these cases, the Competition Authority has cited the guidelines and case law of the European Union.
In line with EU law, Czech domestic law deems that exclusive dealing and rebates may be anticompetitive where enforced by a dominant competitor. Anticompetitive exclusive dealing is rare. The most thorough decision can be found in relation to Telefonica Czech Republic.33 In this decision from 2004, which was confirmed by the Supreme Administrative Court in 2012, the Competition Authority provides clarification on the subject of rebates, and attempts to draw a distinction between permitted forms of quantity discounts as compared with unlawful rebates, in which it cites EU case law. The biggest issue encountered by the Competition Authority in relation to this case was that exclusive discounts were tied to the length of the contract and the length of the consumers' future undertaking, whereas the actual volume of the services used by the consumer was disregarded. In this case, termination of the contract before a certain date was made particularly difficult.
Refusal to deal
The Competition Authority has ruled on several cases where a dominant competitor has refused to deal with a consumer or suddenly terminated a contract to gain an advantage in a limited market. No rules have been established to regulate this issue, and these cases are decided on a case-by-case basis. However, certain conclusions can be drawn. First, as has been confirmed by the courts,34 the Competition Authority must take into account both sides of the contract, primarily to assess their dependence on one another more thoroughly. Market power is used as a marker in these cases only sparingly. Similarly, when a transportation company that provides 100 per cent of the public transport in a city decides to terminate a contract owing to the city council having grossly breached its contract, it may do so, but must do so in a way that does not cause harm to the city or to consumers.35
Another, quite distinct, issue is the essential facilities doctrine. The basic requirement for these cases was set in a 2001 decision of the High Court.36 Where this doctrine is invoked, the Competition Authority must prove that an essential facility exists. If it is proven to exist, then abuse of dominant position may occur both by refusing access to the facility or by setting burdensome barriers to its access. Moreover, the essential facilities doctrine may be invoked even if the facility is not a prerequisite for the existence and activity of the competitor, but where refusal of access to the facility makes it difficult for it to compete with a vertically integrated competitor.37
Discrimination is a broad area characterised by different forms of behaviour that often overlap with the abuses described above. Unlike the practice of the EU, where discrimination in competition alone is not deemed to constitute an abuse of dominant position, the Competition Authority has tended to adopt a per se approach in its early cases,38 stating that, if a dominant competitor enforces discriminatory conditions that would be lawful if they were applied by a non-dominant competitor, but if this conduct causes harm to another competitor, then the conduct constitutes an abuse of dominant position.
If a competitor has a dominant position in a vertically integrated market, an abuse of dominant position may also exist where different conditions are placed on other competitors as compared with those placed on its own subsidiary.39 Similarly, in its decision made in the case involving RWE Supply & Trading CZ, a.s.,40 the Competition Authority ruled that different contractual terms and conditions may be applied for a dominant competitor, provided that the differences do not bar consumers from competing with the dominant competitor's concern in a downstream market.
Also of interest is the above-mentioned case involving České dráhy, a.s., which highlights the shift from a per se approach to assessing abuses of dominant position, as per the standard set in the AKZO decision,41 to a more holistic method whereby the Competition Authority employs an effects-based approach to the assessment of these cases, and explains why – in the case in question – the prices below cost were exclusionary for competitors and how they disrupted competition, which serve to exemplify this shift in approach.
iv Exploitative abuses
The most important decision in this regard is the decision reached in the case involving Intergram,42 in which the Competition Authority elaborated on the issue of excessive pricing and how it should be assessed, in which it cited EU case law. Where it is not possible to compare the price against the consideration (the monopolist performs operations that are delegated to it by the state), the Competition Authority shall compare similar pricing in other jurisdictions, assuming that the regulatory frameworks and practice of these jurisdictions are similar.
Remedies and sanctions
Breach of competition legislation may trigger both administrative and criminal liability. However, abuse of dominant position and abuse of significant market power are administrative offences only.
If a legal entity proves that it has made every effort that could be reasonably required of it to prevent any breach of the law, then it will not be held liable for such an offence.
Each offence is described in the legislation referred to above. Generally, for disruption of competition, perpetrators are subject to fines of up to US$40,000 or 10 per cent of their net annual turnover, whereas for obstructing an investigation or proceedings, fines of up to US$15,000 or 1 per cent of net annual turnover can be handed down. The Competition Authority may mitigate or aggravate the fine, or may use any of the other instruments provided for in the Act on Liability for Administrative Offences43 or in the Guidelines on Determining Fines. Usually, the Competition Authority takes into account the annual turnover of the perpetrator in the relevant market, the duration of the abuse, the seriousness of the abuse and the behaviour of the perpetrator, and also checks whether the fine will be destructive for the perpetrator.
The Competition Authority is often criticised for handing down lenient fines and for not enforcing them sufficiently. The biggest fine issued to a cartel in the construction industry was US$70 million, although this was later rescinded by the courts. The highest fines range between US$4 million and US$14 million, and the average fine is close to US$1.5 million.
ii Behavioural remedies
Both the Act on the Protection of Competition and the Act on Significant Market Power provide the option for unlawful situations to be redressed outside of proceedings.
Both acts give the Competition Authority the power to impose measures of redress with the purpose of reinstating effective competition and to set a time limit for doing so. Contrary to Article 7, Paragraph 1 of Council Regulation No. 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, the acts do not distinguish between behavioural and structural remedies. Neither act explains these measures in detail, and the slight difference between the behavioural remedies and commitments imposed in the settlement procedure (see below) is criticised.44
Behavioural remedies are rarely employed by the Competition Authority.45 Failure to comply with such a measure of redress would constitute an offence.
Generally, both the Act on the Protection of Competition and the Act on Significant Market Power contain a set of mainly specific substantive rules. Few of their provisions, however, contain specific procedural steps or instruments. Thus, they are not stand-alone legislative acts and the Code of Administrative Procedure must therefore be applied with certain modifications.
The Competition Authority actively oversees competition and initiates investigations where necessary. Investigations and other proceedings can only be initiated at its sole discretion. As a government office, it is also required to receive, analyse and report the findings of third-party concerns; however, proceedings concerning abuses of dominant position and significant market power can only be brought ex officio.46 Nevertheless, the Competition Authority is empowered to prioritise cases, which means it cannot initiate proceedings in cases where no public interest is involved or where the perpetrator commits to restoring competition and such commitment is deemed sufficient.
The Competition Authority has the authority to conduct investigations (including both dawn raids and requests for documents)47 before or after initiating proceedings. The only limitation placed on the Competition Authority in this respect is that any investigation conducted prior to initiating proceedings must be proportionate to the purpose of that investigation.48 The person under investigation can refuse to cooperate if the investigation extends beyond its stated scope and purpose,49 whereas after initiating proceedings, the Competition Authority can expand the investigation as regards the evidence gathered.50 Investigations may also be conducted on premises other than business premises after consent has been granted by the relevant court. A detailed record must be taken of all investigations conducted on premises.
A defence may be filed against investigations on business premises in the form of a suit against public authority interference.51 Following criteria set out by case law, the Competition Authority issued its Information Paper summarising the procedure for dawn raids.52
There are no strict time limits applicable to the Competition Authority, and the general time limits set forth in the Code of Administrative Procedure apply. However, these can be extended subject to the complexity of the case in question and are not binding on the Competition Authority. Nevertheless, any unnecessary prolongation of these time limits is unlawful and can lead to compensation claims for damage arising from such extensions. On average, cases are decided in one to two years, while the longest cases can take up to 12 years when all legal remedies are employed.53
A settlement procedure is in place for both reducing fines and dropping proceedings. The Competition Authority will issue a statement of objection informing the perpetrator of the offence committed, the possible consequences of the offence, the probable amount of the fine and the main evidence. The perpetrator can then assume commitments to restoring competition. If the Competition Authority finds the proposed commitments sufficient to restore competition, it may drop the proceedings while also imposing these commitments on the perpetrator in its decision. The perpetrator can also reach settlement with the Competition Authority following a ruling on the offence. The fine can be reduced if the Competition Authority decides, upon the request of the perpetrator, that a lower fine would be sufficient for the offence committed. In all cases, the perpetrator must admit to having committed the offence.
Procedures are most often conducted in writing. Oral hearings can be arranged if they are necessary for the perpetrator to properly exercise its rights.
The decisions of the Competition Authority are subject to appeal. However, the second instance for these decisions is the Head of the Competition Authority. The decisions of the Head of Competition Authority can be challenged before the administrative courts, with the decisions of the administrative court subsequently subject to special appeal with the Supreme Administrative Court, which is the court of final instance. Where a decision may have infringed constitutional rights (in particular, when an in situ investigation has been conducted unlawfully), a constitutional appeal can be filed with the constitutional court. Finally, where basic rights may have been breached unlawfully, the European Court of Human Rights may decide that the breach should be redressed.54 Generally, the prospect of successful appeal against a decision of the Competition Authority is relatively high.
In 2017, the Act on Compensation of Damage in the Area of Economic Competition integrated EU Directive 2014/104 on antitrust damages actions into domestic law.
The goal of the Act is to facilitate both follow-on and stand-alone actions for private enforcement of competition law, in the event of both a breach of EU law and the antitrust laws of Member States.
Decisions of the Competition Authority handing down convictions serve as evidence in civil proceedings, with the conclusion of guilt held as indisputable. Damage must be proven by evidence. The Act entitles the plaintiff to demand access to the documentation of both the defendant and the Competition Authority. Both of these possibilities are limited, however, as the Competition Authority may refuse to provide documents if it deems that doing so would jeopardise the effective enforcement of competition law where these documents contain sensitive information or business secrets or where access would not be proportionate to the scope of the plaintiff's application.55
The biggest novelty of the Act is the introduction of a type of discovery in Czech procedural law. To acquire documents from the defendant, the plaintiff must file an application demanding access to documentation. This application must provide sufficient facts and evidence from which to attest to the credibility of the plaintiff's claim and right to damages. The court may then order the defendant to provide these documents or classes of documents that are necessary and proportionate to the claim. Compliance with this injunction is secured by high fines that can go up to 1 per cent of the turnover or approximately US$500,000. However, the plaintiff remains liable for any damage that may be incurred by these documents being handed over. The effectiveness and usability of these instruments is yet to be tested in the Czech Republic.
Furthermore, limitation rules have significantly changed under the Act. In particular, the limitation period is longer and does not have an absolute limit, and the commencement date and suspension rules are also addressed differently. The changes go hand in hand with the uncertainty as to whether to apply the new limitation rules or the old ones in each case, as the answer is not sufficiently stipulated in the Act or in the available case law. There are no official statistics yet on the number of cases introduced under the new Act. Based on informal information, however, this is estimated to be about a dozen, mostly following on from EC decisions.
Collective actions cannot yet be brought in the Czech Republic.
On 1 December 2020, Petr Rafaj resigned as the Head of the Competition Authority after almost two years of an ongoing police investigation into allegations that he was exerting undue influence in the investigations and decision-making of the Competition Authority. Rafaj denied all allegations against him. At the end of March 2021, the police discontinued part of the investigation due to a lack of evidence; however, other parts of the investigation are ongoing.
A new Head of the Competition Authority, Petr Mlsna, was appointed following Rafaj's resignation. He has publicly announced that he will encourage the Competition Authority to take a more active role in tackling cartels and other types of breaches of competition law (rather than focusing merely on public tender issues), so changes can be expected to its current practice. In this respect, he has stated that the Competition Authority itself will investigate breaches of competition law continuously, and that proceedings will not be initiated merely upon reports from third persons, as has been the case until now.
He has also proclaimed that he will focus on the transparency and efficiency of the Competition Authority's decision-making process, particularly in respect of appeals rulings. To pursue this goal, he has approved a new organisational structure for the Competition Authority, which will place him in direct charge of the appeals departments. Furthermore, he has recently appointed approximately half of the appeals committee members and he has announced that further personnel changes will come during 2021.
In October 2020, the government proposed an amendment to the Act on the Protection of Competition, which would implement the ECN+ Directive.56 The amendment would also bring in changes required by current practice in the Czech Republic. The amendment bill is currently being discussed in the Chamber of Deputies and, due to the upcoming elections, will probably not pass during 2021.
The expectation that private enforcement would be combined with collective actions has not yet come to fruition. The related bill, brought before the Chamber of Deputies in March 2020, must be approved by both the Chamber of Deputies and the Senate, with the most optimistic forecasts being that it will pass into law in 2022.
1 Tereza Mrázková is a junior associate and Robert Pelikán is a partner at Wolf Theiss.
2 Constitutional Act No. 2/1993 Coll.
3 Decision of the Constitutional Court No. IV ÚS 27/09.
4 Decision of the Constitutional Court No. III ÚS 3472/15.
5 Act No. 143/2001 Coll.
6 Act No. 262/2017 Coll.
7 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union.
8 Act No. 395/2009 Coll.
9 For example, negotiation or enforcement of contractual terms that create a significant imbalance in the rights and obligations of the parties, as stipulated in Article 4, Paragraph 2(a).
10 Decision of the Head of the Competition Authority No. ÚOHS-R0001/2018/TS-31480/2018/310.
11 See Annual Reports of the Competition Authority for the Years 2015–2019, http://www.uohs.cz/cs/informacni-centrum/vyrocni-zpravy.html.
12 Approximately 12 decisions concerning cartels were issued in 2019 and 15 decisions in 2018 (see Annual Report of the Competition Authority for the Year 2018, http://www.uohs.cz/cs/informacni-centrum/vyrocni-zpravy.html).
13 In this decision (No. ÚOHS-R0002/2020/HS), the Competition Authority rejected an appeal filed by OSA against its Decision No. S0249/2018/DP-35137/2019/830/DKl and upheld the challenged decision. The upheld decision imposed a fine of 10.67 million Czech crowns on OSA for unlawful conduct. OSA was ruled to have imposed unfair business terms and conditions upon accommodation facilities providers, as its copyright licence agreements for audio and audiovisual devices located in the accommodation facilities (hotel rooms) failed to take into account the actual occupancy rates of the hotel rooms.
14 Decisions of the Competition Authority Nos. ÚOHS-17996/2020/830/VVo and ÚOHS-S0232/2018/VS-35131/2019/830/VVo were issued in 2020. In 2019, the Competition Authority issued Decisions Nos. ÚOHS-S0478/2018/VS-11518/2019/830/VVo and ÚOHS-S0516/2018/VS-16764/2019/830/ŠBe.
15 Decision of the Constitutional Court No. Pl. ÚS 30/16.
16 This exception concerns the requirement regarding the content of contracts entered into between the purchaser and supplier; see Section IV.i.
17 Decisions of the Competition Authority usually refer to the Commission Notice on the definition of relevant market for the purposes of Community competition law.
18 Such as legal barriers to market entry or positions of competitors. It is not unusual for the Competition Authority to ask a competitor for statements on the market structure and their positions, including when they are not party to the proceedings, or to conduct market research via questionnaires. This can also be seen in the landmark decision of the Competition Authority on the abuse of dominant position in which the Competition Authority used thorough analyses to define the market and assess the market share, No. ÚOHS-S162/2008/DP-4490/2010/820/DBr; similarly, as with Decision No. ÚOHS-S0220/2006/DP-18887/2018/830/DKl in which the Competition Authority also took note of the vertical integration of the competitor even though the market share of the competitor was above 90 per cent. However, in most cases, the Competition Authority states that when the market power is greater than 75 per cent, it is not necessary for additional criteria to be evaluated.
19 Decision of the Head of the Competition Authority No. ÚOHS-R0001/2018/TS-31480/2018/310.
20 Article 2 of the Act on Significant Market Power defines the purchaser as an 'entrepreneur or purchasing alliance if they purchase food for resale or receive or provide services relating to the purchase of food'. A person acting on behalf of another purchaser is also considered to be a purchaser.
21 Decision of the Constitutional Court No. Pl. ÚS 30/16.
22 Until 2017, this concept was disputed, with the Competition Authority upholding the absolute conception of significant market power. When the purchaser did have significant market power, it was banned from the actions stipulated in law notwithstanding its supplier's market position.
23 This view was upheld by the Head of the Competition Authority in Decision No. ÚOHS-R0001/2018/TS-31480/2018/310, in which it explained the move to the updated conception. However, the Competition Authority will only apply this corrective measure upon the objection of the purchaser and the purchaser must provide sufficient proof (base) for the objection.
24 For example, in its Decision No. ÚOHS-S0161/2017-22390/2017/461/MNo, the Competition Authority ordered the COOP group to refrain from demanding a 2 per cent price reduction from its suppliers backed by the threat of reducing the amount of its purchased products by 30 per cent (leaked internal letter requesting this action). The COOP group has close to an 11 per cent market share.
25 For example, in the proceedings with Globus ČR, v.o.s., the company demanded that its supplier purchase marketing services from Globus' subsidiary (see Decision of the Competition Authority No. ÚOHS-S0138/2017/TS-25800/2019/461/MPr).
26 For example, the Competition Authority fined MAKRO Cash & Carry ČR s.r.o. for failing to adhere to the requirements under Article 3a of the Act on Significant Market Power (see Decision of the Competition Authority No. ÚOHS-S0356/2018/TS-28761/2019/461/MNo).
27 The above-mentioned Constitutional Court Decision No. Pl. ÚS 30/16.
28 The Act specifically mentions leveraging, tying and bundling of services, discriminatory terms and conditions, refusal to deal, predatory pricing and denial of access to an essential facility.
29 Decision No. ÚOHS-S0180/2016/DP-36406/2017/830/DKl, in which the Competition Authority addressed the predatory pricing policy employed by České dráhy, a.s., whereby the undertaking prevented other competitors from accessing long-distance passenger rail transport, and imposed a fine of 367.81 million Czech crowns on České dráhy. Consequently, the fine was reduced to 274.8 million Czech crowns based upon an appeal filed by České dráhy.
30 Decision on the anticompetitive behaviour of a Czech train transporter consisting of predatory pricing proven to have been set to inhibit competition, No. ÚOHS-R 155/2008/01-5485/2009/310/MVr.
31 See, for example, Decision of the Supreme Administrative Court No. 2 As 357/2017-37.
32 Decision of the Head of the Competition Authority No. ÚOHS-R63/2011/HS-8361/2012/320, in which a coal company was found not guilty of having abused a dominant position, including through pricing. This decision was later upheld by the Decision of Supreme Administrative Court No. 6 As 89/2015-51.
33 Telefonica was found to be in abuse of its dominant position by imposing rebates; Decision of the Competition Authority No. 1/03-3250/03-0RP.
34 Decision of the Supreme Administrative Court No. 5 Afs 46/2012-69.
35 In particular, it must do so with sufficient advanced notice, as confirmed by a decision of the Regional Court of Brno, No. 62 Ca 42/2007-337.
36 Decision of the High Court in Olomouc No. 2 A 10/2000-58.
37 For example, when a transportation company operates both buses and bus stations, as confirmed by the Supreme Administrative Court in Decision No. 8 Afs 48/2007-235.
38 Decision of the Head of the Competition Authority No. R034/2002.
39 Decision of the Head of the Competition Authority No. R002/2004.
40 Decision of the Head of the Competition Authority No. ÚOHS-R15/2015/HS-24337/2015/310. This case is also interesting as the Regional Administrative Court and then the Supreme Administrative Court confirmed that the intra-enterprise doctrine cannot be used if a controlling competitor in the concern has contractually bound its subsidiaries to apply certain additional conditions while contracting distributors outside of the concern.
41 Decision of the European Court of Justice No. C-62/86.
42 The proceedings were discontinued after Intergram appealed and the case was rescinded by the Head of the Competition Authority in Decision No. R003/2005. Intergram is a collective administrator of rights of performers and producers of audio and visual recordings.
43 This Act is fully applicable to these proceedings with slight modifications; Act No. 183/2017 Coll.
44 The Competition Authority tried to shed some light on the matter in its Notice on alternative solution of certain competition issues, stressing the key difference, which lies in the fact that behavioural remedies are imposed when a competitor is found guilty of a breach of competition law rules, whereas a competitor is not found guilty if a decision imposing commitments is issued.
45 e.g., regarding concentration of undertakings, the Competition Authority imposed behavioural remedies in the Karlovarské minerální vody case (No. ÚOHS-S 224/03-1271/04), which consisted of the obligation to transfer shares of Poděbradka to a shareholder independent of Karlovarské minerální vody.
46 The initiation of proceedings means that the Competition Authority serves notice on a person in accordance with law, usually in writing.
47 Investigations include requesting documents, investigating the business premises of the person under investigation and investigating non-business premises.
48 Based on the decision of the European Court of Human Rights in the Delta Pekárny, a.s. v. Czech Republic case (No. 97/11), the Competition Authority was required to have reasonably specific evidence and reasons for conducting an investigation in the form of a dawn raid, as confirmed by case law; see, for instance, the decision of the Regional Administrative Court in Brno, No. 29 A 165/2016, highlighted by the Supreme Administrative Court.
49 Official request for information or notification of an in situ investigation.
50 In the Supreme Administrative Court Decision No. 5 Aps 4/2011-326, the Court stated that it is not the purpose of the preliminary investigation (before the initiation of proceedings) to gather information and evidence for a final decision on the matter.
51 Decision of the Supreme Administrative Court No. 5 Afs 7/2011. This possibility also exists following the revision of the Act on the Protection of Competition.
52 Available in Czech at http://www.uohs.cz/cs/informacni-centrum/informacni-listy.html.
53 e.g., decision of the Competition Authority No. ÚOHS-S0220/2006/DP-18887/2018/830/DKl.
54 This occurred in 2014 in the Delta Pekárny, a.s. v. Czech Republic landmark case, No. 97/11.
55 Both the Act on Compensation of Damage in the Area of Economic Competition and the Act on the Protection of Competition regulate this process and the provision of documents in detail.
56 Directive 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market.