CZECH REPUBLIC Trends and Developments Contributed by: Robert Neruda, Roman Světnický, Martin Rott and Robert Nersesjan, HAVEL & PARTNERS
Feedback from the consultation revealed sig - nificant concerns among businesses and legal professionals regarding legal certainty, predict - ability, and the balance between effective com - petition enforcement and rule of law principles. Many participants stressed the importance of clear rules, transparent criteria, and safe - guards against potential misuse of the proposed expanded powers. A key reform element in the merger department is the introduction of a call-in mechanism, allow - ing the Czech competition authority to review mergers below current notification thresholds if there is a justified concern regarding their impact on competition. This departs from the purely turnover-based system, enabling scrutiny of transactions with little or no Czech turnover due to strategic or market-based concerns. Inspired by similar mechanisms in Germany and Austria, primarily used to address “killer acquisi - tions” in digital and pharma sectors, the Czech proposal extends this discretionary power broadly, raising concerns over legal certainty for businesses. While offering enforcement flexibil - ity, the call-in model also introduces uncertainty for businesses, which may be unsure if trans - actions will be reviewed later, thereby risking deal delays and deterrence of investment. The current vague definition of call-in criteria leaves room for interpretation, highlighting the need for The Czech merger control regime has long relied on a simple turnover-based system to determine whether a transaction is notifiable. This model, based on the domestic revenue of the merging parties, has provided a high degree of legal cer - tainty and administrative efficiency. clearer guidance and safeguards. Rethinking Notification Thresholds
The proposed reforms challenge this foundation. By introducing a parallel discretionary regime, the CCA will be able to intervene in transactions that fall below the existing financial thresholds. While the turnover-based rules would formally remain in place, their exclusivity would be effec - tively diluted. This dual structure raises immediate con - cerns. Companies may find it difficult to assess in advance whether their transaction will be sub - ject to merger control and whether they may be exposed to post-closing enforcement. Start-ups and strategic relevance One of the stated aims of the reform is to capture transactions with strategic relevance but limited turnover. This may include acquisitions of early- stage technology companies or deals involving valuable data assets. Start-ups and innovative companies, in particu - lar, may unexpectedly fall under the scope of the new rules. Although the goal is to prevent dam - aging market concentrations, there is a risk that the reform could discourage investment in small, high-potential firms, especially when the extent of regulatory scrutiny remains uncertain. Private equity funds and venture capital inves - tors may also be affected, as they increasingly engage in transactions that carry structural sig - nificance but generate little revenue in the Czech market. In their responses to the public consultation, legal professionals and business representatives strongly emphasised the importance of predict - ability and legal certainty. While few questioned the goal of strengthening merger oversight, many warned against creating a regime where the boundaries of enforcement are undefined.
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