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Changes in Competition Law from 1/9/2009

The amendment to the Act on the Protection of Economic Competition (published under Act No. 155/2009, Coll.) brings existing Czech regulations in line with EC competition law. The amendment applies to a number of provisions and specifies or replaces their wording with the aim of removing existing differences of application and interpretation. In addition the amendment implements certain new “European” institutes, in particular the simplified proceedings on obtaining approval for concentration of undertakings and sector-related surveys. The proceedings before the Antimonopoly Office shall be regulated in greater detail while the provisions on sanctions have been completely revised.

New Definition of Agreements Infringing Economic Competition

The existing wording of the provisions of Section 3, subsection 1 of the Act designates agreements that lead or may lead to infringement of economic competition to be prohibited. The literal interpretation of these provisions, however, represents a wider restriction in comparison with EC regulations, which does not take into consideration the possibility of infringement of economic competition but only mentions infringement. The new formulation has therefore been changed to read “agreements the objective or result of which is infringement of economic competition.”

De Minimis Agreements

The amendment deletes the existing provisions of Section 6 of the Act that exempt from prohibition all cases where the relevant market share of the parties to the agreement does not exceed the defined threshold. The cancellation of these provisions does not mean de minimis agreements shall be newly subject to prohibition. The legislative change, in fact, reflects the above-mentioned different EC conception where agreements not infringing on economic competition, i.e. mainly de minimis agreements are a priori not prohibited agreements and consequently it is not logical to exempt them from prohibition. To strengthen the legal certainty of undertakings, the amended provisions of Section 3, subsection 1 of the Act have expressly added that agreements with negligible impact on economic competition shall not be prohibited. To achieve unified application practice on quantification of such impact, the Antimonopoly Office intends to issue a Notification of Agreements with Negligible Impact on Economic Competition based on the model of the European Commission.

Joint Control over the Undertaking

The regulation of competition has been softened by amendments to the provisions of Section 12, subsections 5 and 6 of the Act. Pursuant to the corresponding provisions of Council Regulation No. 139/2004 on Control over Merging Enterprises, the cited provisions shall only have impact on obtaining joint control over a newly established competitor (joint venture).

Added Turnover from Partial Transactions

From the viewpoint of net turnover generated by concentrating undertakings, the provisions of Section 14, subsection 5 of the Act only applied to several partial concentrations performed in two years between the same undertakings in the form of transfer of a part of the enterprise. These partial transactions shall be newly assessed as a single transaction in all types of concentrations, without regard to the form thereof.

Simplified Proceedings on Approval of a Concentration

The simplified procedure may be applied if the notified merger does not cause serious concerns of infringement of economic competition. The amendment regulates two types of these concentrations in Section 16a of the Act: (i) a situation where the undertakings involved do not operate on the same relevant market or do not operate on a market vertically connected with the relevant market of one of the undertakings or, as the case may be, their market shares do not exceed the determined thresholds; and (ii) transformation of the undertakings’ share of the joint control into exclusive control of the former joint venture.

The simplified proceedings consist in shortening the deadline for assessment of the concentration and issuing the decision in a simplified form. The Antimonopoly Office shall announce the commencement of simplified proceedings and the deadline for submitting objections only electronically through a public data network. The proposed concentrations shall be published on its website. Objections against the concentration may be raised in writing as well.

The simplified questionnaire constitutes an annex to new Decree No. 252/2009, Coll., which sets forth the particulars of an application for approval of a concentration of undertakings, and shall be used for filing an application for approval of a concentration of undertakings in simplified proceedings.

Other Changes

Concerning the supplemented regulation of procedural issues, we wish to mention in particular the new provisions of Section 21a, subsection 4 that in compliance with EC regulations introduces the possibility of sanctioning legal successors should the person who actually infringed the competition rules cease to exist. These provisions apply to legal entities suspected of concluding a prohibited agreement, abusing a dominant position or implementing an unapproved concentration of undertakings.

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