CZECH REPUBLIC Law and Practice Contributed by: Robert Neruda, Roman Světnický, Martin Rott and Robert Nersesjan, HAVEL & PARTNERS
nies), subsidiaries, joint ventures and subsidi - aries of the parent companies. The turnover needs to be adjusted to take sub - sequent transactions into account, such as divestments, acquisitions and other business closures, after the end of the respective finan - cial year. 2.8 Foreign-to-Foreign Transactions All transactions that meet the thresholds are subject to merger control, regardless of where the undertakings are registered. Accordingly, there is no exemption for foreign-to-foreign transactions. There is no local effects test per se, but the Czech merger control regime requires a local presence since the target must generate a cer - tain level of turnover in the Czech Republic. Nonetheless, with regard to international joint ventures, it is sufficient for the turnover to be achieved by the parent company/whole group, while the target itself does not have to be pre - sent in the Czech Republic. Therefore, a filing may be required even though a target has no local sales or assets. 2.9 Market Share Jurisdictional Threshold There are no market share thresholds for noti - fication. Under the previous merger control regime, only transactions leading to a 30% share on a relevant market(s) were notifiable, but since 2001 the current legislation has applied thresh - olds based solely on turnovers. 2.10 Joint Ventures Joint ventures are subject to merger control only if the joint venture is a “full function” joint venture – ie, it operates on a lasting basis and performs all the functions of an autonomous economic
entity. The joint venture must be economically autonomous from the operational point of view to be full function. Conditions for full function joint ventures are in line with the practice of the European Commission. Full function criteria are met when the joint venture: • has sufficient resources to operate indepen - dently in a market; • engages in activities beyond specific func - tions for the parent companies; • is not dependent on commercial relationships with the parents; and • operates on a lasting basis. The following transactions concerning full func - tion joint ventures are subject to merger scrutiny: • the establishment of a joint venture; • a change from joint to sole control; • dissolution – if (part of) the business of the joint venture is transferred to one or more undertakings controlling the joint venture or to a third party; • a change/extension of the activities of a joint venture – if further assets, contracts, know- how, rights, etc, are transferred from parent companies to the joint venture (these activi - ties must be transferred to extend the busi - ness activities of the joint venture into other product or geographic markets); and • a change in participants/owners – for instance, if one of the controlling businesses sells its share in a joint venture to another business, or if one of the controlling busi - nesses is acquired by another business. Concerning the turnover thresholds, the turno - ver a joint venture has with third parties must be divided equally between the controlling owners notwithstanding their actual shares and the dis - tribution of profit.
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