At the request of the Czech Government, the Antimonopoly Office (the Office) has prepared a proposal for potential legislative changes. These changes are designed to enhance the Office's effectiveness in uncovering and penalising anticompetitive conduct while fostering market competition. Some of the proposed measures include accessing telephone locations, conducting fishing expeditions, and prohibiting mergers of competitors that do not to meet turnover criteria.
New tools to fight oligopoly markets
The Office can now intervene in markets where competition is distorted, e.g. by cartel agreements, abuse of dominance or mergers. However, the Office also wants to intervene in markets where competition is distorted in other ways. Typically, these may be markets where a significant competitor acts as a “price maker”, oligopolistic markets (e.g. food markets), or markets with strong network effects, typically digital markets.
Therefore, the newly proposed rules should allow the Office to carry out sectoral investigations in these markets, as well as to impose remedies, e.g. by reviewing a large number of mergers in a given market, imposing obligations to provide access to networks, infrastructure or data, modifying certain types of agreements or contractual arrangements, and disclosing certain information. As a last resort, the Office could also order the sale of part of the business.
Easing the conditions for conducting a dawn raid
An obstacle to the investigation of cartel agreements today is the Office’s limited ability to carry out inspections of competitors. The Office therefore proposes to modify the possibility of on-site investigations so that it can also carry out random local investigations as trade inspections, or at least "preventive" local investigations in highly concentrated markets. This contemplated innovation could lead to an increased number of dawn raids on individual competitors, and it would therefore be crucial to prepare for such situations. If interested, please do not hesitate to contact our CMS experts who can help you prepare a dawn raid guideline tailored to your specific needs, and can provide attorneys specialising in competition law who can be readily available in the event of a dawn raid.
Access to location and data
The Office’s practice has long indicated the increasing importance of electronic communication, especially among managers and other employees of competitors. Therefore, the Office proposes to be able to request operational and localisation data from mobile operators. This would allow the Office to gain access to the location of phones belonging to the management and employees of competitors, similar to the capabilities of the Czech Police, which would facilitate the proof of cartel agreements, e.g. in the case of secret meetings between competitors. Information about telecommunication activity among these individuals is crucial to the Office’s investigations. Given that individuals typically carry mobile phones even during face-to-face meetings, determining the location of these devices over time is of significant importance.
In addition, the Office also seeks to obtain access to data collected by various government agencies and institutions. At the same time, it requests access to all data on public contracts, especially from entities operating public contract information systems, including various certification bodies and other relevant entities.
Rewards for whistleblowers and sanctions for individuals
Another proposed measure targets individuals who may have information about anticompetitive conduct. On the one hand, this is to introduce financial rewards for whistleblowers who provide the Office with information about anticompetitive conduct, while on the other hand, it will introduce penalties for individuals who have participated in anticompetitive conduct. Both measures are complemented by a leniency programme, under which competitors can report their participation in a prohibited agreement in exchange for immunity.
More flexibility in merger control
In the area of mergers, the Authority's proposals target mergers that do not meet the current turnover criteria and therefore cannot be assessed by the Authority, even though they may have significant effects on certain markets. The Office proposes a call-in model that would allow the Office to retrospectively require certain mergers that do not meet the current turnover criteria to be notified by the merging parties if it considers that they have the potential to distort competition. The Office would thus be able to prevent a merger from going ahead even if the turnover criteria were not met.
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At present, no specific draft bill has been published that would introduce these changes. The Office has so far only announced its intention on its website. However, we are following developments closely and will notify you once a more detailed proposal is available. In the meantime, if you are interested in exploring these topics further and discussing their potential implications for your business, feel free to contact CMS Prague's competition experts Tomáš Matějovský and Lenka Krutáková.
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