Czech Republic: Office For The Protection Of Competition Gets Tougher On Fines For Competition Law Infringements

In April 2018 the Office for the Protection of Competition adopted new guidelines on the method of setting fines for competition law infringements,1 noting that the need for a revision of the previous guidelines had emerged in the wake of developing case law, as well as amendments to the Act on the Protection of Competition.

The new guidelines are intended to underline the repressive and preventive function of fines. As a result, undertakings can expect higher fines for infringements of competition rules than under the previous regime. In line with the previous guidelines, the new guidelines continue to consider the gravity and duration of the infringement as the core factors when calculating a fine.

However, they also provide undertakings with a more thorough and comprehensive list of factors which the office will consider when determining the amount of the fine. As such, although the guidelines create grounds for the office to impose stricter sanctions, the undertakings are at least provided with greater legal certainty and transparency as to the method of calculation. This update sets out the most significant changes introduced by the guidelines.

New percentage thresholds for calculating basic amount of fines

The new regime introduces a lower and upper band for calculating the value of sales of products or services affected by the anti-competitive behaviour for the purpose of calculating the basic amount of the fine. The percentage depends on the type of infringement.

For the most serious infringements, the office may calculate 5% to 15% of the value of sales (which were affected by the anti-competitive behaviour), whereas for serious and less serious infringements the percentage ranges from 3% to 10% and up to 5%, respectively. Due to these new thresholds, the basic amount of fines for competition law infringements is likely – in comparison with the old method – to double or even triple, depending on the circumstances of the case.

Special rules for gun-jumping infringements

As a matter of principle, gun-jumping infringements fall within the category of serious infringements for which the office may calculate the basis of the fine by considering 3% to 10% of the value of the sales. However, the new guidelines allow the office to derogate from this rule in instances where the infringement of the standstill obligation pertains to a transaction which was:

  • subsequently cleared without commitments; or
  • approved under a simplified procedure.

In such cases, the office will consider 2% of the value of the sales or up to 1% of the value of the sales if the transaction was cleared in a simplified procedure.

Updated list of mitigating and aggravating circumstances

The guidelines also provide an updated list of mitigating and aggravating circumstances which the office will consider when assessing the gravity of the infringement. Moreover, the office's discretion to adjust the amount of the fine with respect to the existing mitigating or aggravating circumstances has been increased from 50% to 70%. As such, the office has more freedom to consider individual circumstances, which can thereafter be reflected in the final amount of the fine.

Increased time coefficient for long-term infringements

The office decided to take a more rigorous approach towards long-lasting infringements and subsequently increased the time coefficient for infringements of more than 120 months from three to 10.

Comment

It can be expected that the office will get tougher on fines for competition law infringements. The guidelines allow the office to impose significantly more severe penalties (up to 15% of the value of sales) for serious and long-term infringements in the future. This expected tougher approach can also be inferred from the office's press release2 relating to the introduction of the guidelines.

Footnotes

(1) www.uohs.cz/cs/hospodarska-soutez/aktuality-z-hospodarske-souteze/2416-uohs-prepracoval-metodiku-pro-ukladani-pokut-za-protisoutezni-jednani-tresty-budou-spravedlivejsi.html.

(2) www.uohs.cz/cs/informacni-centrum/tiskove-zpravy/hospodarska-soutez/2416-uohs-prepracoval-metodiku-pro-ukladani-pokut-za-protisoutezni-jednani-tresty-budou-spravedlivejsi.html.

This article was first published on International Law Office.

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