In recent years the practice of competition lawyers and the kind of work and challenges they are facing while providing legal services in the Czech Republic have significantly changed. These changes are caused by several factors.
First of all, it is obvious that the changes in the financial markets and global economic situation also affect the kind of work competition lawyers are doing at the moment in the Czech Republic. The changes in the economic environment are even more remarkable for competition lawyers in comparison with lawyers practising in other areas of law and result in an important change in the type of legal services in the area of competition required by the clients. The financial crises and economic downturn led above all to a notable decrease in M&A transactions. That resulted in fewer transactions that have to be notified to the anti-monopoly offices – either to the Czech Office for the Protection of Economic Competition (hereinafter the “Office”) or the European Commission (hereinafter the “Commission”).
However, in the mid-term perspective the acquisition of some of the failing firms could be expected. In this respect it is relevant that the Office has issued a notice on the application of the ‘failing firm defence’ in evaluating concentrations. This also clearly demonstrates the continuing harmonization of Czech competition law with European competition law even in secondary legislation and soft law in all areas. The Office recently also published notices on pre-notification contacts, calculation of turnover, de minimis agreements and the leniency program, mostly inspired by the respective Commission guidelines.
The merger clearance procedures before the Office will also be affected by the Act No. 155/2009 Coll., amending Act No. 143/2001 Coll., on the Protection of Competition and Amendments to Certain Acts, as amended, effective as of 1 September 2009. This amendment introduces into the Czech competition legal framework simplified procedures for clearing concentrations which do not raise competition concerns, i.e. concentrations of undertakings with low market share or concentrations involving a change from joint to sole control. In these cases only the simplified notification will be required and the Office will issue a decision within shorter time limits (20 days as compared to 30 days for the phase one decisions and five months for the phase two decision in the standard procedure).
On the other hand the change in economic climate results in more cases involving state aid issues. In this area the Office is only a monitoring, co-ordinating and consulting body as the decision-making powers stay in the Commission’s hands and therefore all measures of the Commission approved in connection with the economic crises in the area of the state aid are fully applicable in the Czech Republic. As of 1st September 2009 amendment to Act No. 215/2004 Coll., on Regulation of Certain Relationships within the Area of State Aid, came into force transferring the tasks of the Office in the area of state aid in the fields of agriculture and fishery to the Ministry of Agriculture and changing the fines which could be imposed by the Office or the Ministry of Agriculture.
In the area of cartels and abuse of dominant position the competition lawyers and their clients could profit from the gradual change of the Office’s approach and its efforts to prefer co-operation with the suspected companies in cases when the companies are prepared to remedy their anti-competitive actions by themselves. The legal framework enables the Office to accept commitments proposed by the suspected company/companies, provided they will be sufficient for elimination of the anticompetitive situation, instead of initiating the administrative proceedings or imposing penalties in the initiated proceedings. There are several examples of application of this alternative solution to competition cases in the recent decision-making practice of the Office. Even in cases when the commitments are not acceptable for the Office (typically in hardcore cartels and serious abuses of dominant position), the Office has already used settlements in the form of substantial lowering of the fine as a result of guilty pleas from the respective undertakings.
The situation and the approach of the competition lawyers’ clients to the alternative solutions in case of cartels and possibly also the use of the leniency programme may however be changed by the new Penal Code (Act No. 40/2009 Coll.). The new Penal Code, effective as of 1 January 2010, declares the conclusion of a cartel agreement as a criminal offence of the natural person concluding such an agreement. Only the experience of application will show what will be the real impact of this measure. Nevertheless, we have already noticed the increasing interest of clients in regard to preventative measures in their companies including the implementation of compliance programmes.