CZECH REPUBLIC Law and Practice Contributed by: Petr Mlejnek, Robert Klenka, Matěj Manderla, Jan Wagner, Ivo Hartmann and Arbër Balliu, Tenacta, advokátní kancelář, s.r.o.
6.3 Cartels Czech competition law prohibits agreements and co-ordinated conduct that prevent, restrict or distort competition. The prohibition applies to both formal agreements and informal arrangements where undertakings co- ordinate market behaviour. Prohibited conduct com - monly includes:
• invalidity of agreements; and • reputational consequences.
Leniency mechanisms may also be available to par - ticipants in cartel arrangements who voluntarily co- operate with authorities. 6.4 Abuse of Dominant Position Competition law additionally prohibits abuse of a dominant position by undertakings possessing sub - stantial market power. Dominance itself is not prohibited. Competition con - cerns arise only where market power is exercised in a manner that restricts competition or harms consum - ers. The assessment of dominance typically considers factors, including: • market share; • barriers to market entry; • economic strength; • customer dependence; and • competitive conditions. Examples of potentially abusive conduct may include: • predatory pricing; • discriminatory treatment of business partners; • refusal to supply; • tying arrangements; As with cartel regulation, the assessment focuses primarily on the effects of conduct within the Czech market rather than solely on the location where the conduct occurred. Although Czech law does not rec - ognise economic dependency as an entirely separate concept to the same extent as some other jurisdic - tions, conduct involving imbalances in bargaining power may nevertheless raise competition concerns where market power exists. In practice, abuse investigations frequently involve complex economic analysis and detailed examina - tion of market conditions. Businesses with substantial market positions therefore commonly implement inter - nal competition compliance programmes and review • exclusivity requirements; and • unfair contractual conditions.
• price-fixing arrangements; • market-sharing agreements; • restrictions of production or output; • bid-rigging practices; and
• exchanges of commercially sensitive information. Competition law may apply regardless of where the relevant conduct occurred if the conduct produces effects within the Czech market. Consequently, for - eign businesses with no physical presence in the Czech Republic may nevertheless become subject to Czech competition rules where their activities affect competition within the jurisdiction. The assessment generally focuses on: • the purpose of the conduct; • market conditions; • economic effects; and • the impact on competition and consumers. Certain forms of conduct are considered particularly serious because they are generally regarded as harm - ful by their nature. Businesses frequently face compe -
tition risks in connection with: • trade association activities; • information exchanges; • distribution arrangements; • co-operation agreements; and • procurement procedures.
The Office for the Protection of Competition pos - sesses broad investigatory powers and may conduct inspections and request documentation. Violations may result in: • significant financial penalties; • behavioural remedies;
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