St. Martin's 2023 conference brought lively discussions on merger changes and increased fines for cartel agreements.

On 8 and 9 November 2023, the Office for the Protection of Competition (hereinafter referred to as "the Office") held another annual St. Martin Conference on news and current trends in competition law and significant market power. The 16th edition of the conference was opened by Petr Mlsna, Chairman of the Office, in front of more than a hundred competition law experts, this time via online broadcast.

At the beginning of this year’s edition, the Office also completed a two-year sector inquiry into the distribution of pharmaceuticals, which resulted in a number of recommendations aimed at developing the competitive environment in this area. The Chairman Petr Mlsna also announced the forthcoming launch of another sector inquiry, which will cover the waste management sector. 

The legislative process for the amendment to the Competition Act, which notably transposed the ECN+ Directive, was also successfully completed. Following the amendment, the Office issued new revisions of its soft law documents on leniency, settlement, de minimis and alternative solutions to competition issues. A revision of the Imposition of Fines and a completely new methodology on the assessment of compliance programmes as a mitigating factor are also in preparation. The first mentioned notice has already been subject to public consultation and, among other things, brings a substantial increase in fines for the most serious horizontal cartels. "Cartels simply must not be allowed to pay off and the punishment for them must be a deterrent," said the Chairman of the Office.

Petr Mlsna also mentioned some of the recent cases on which the Office issued decisions, such as the first of a series of bid rigging cases in the area of reconstruction and security of railway crossings or several vertical RPM agreements, which, according to the Office's findings, in many cases cover entire sectors. From a procedural point of view, the cases of the City of Prague's anti-competitive gambling ordinances were also interesting, in the decision of which the Chairman of the Office took a new approach to the issue of the application of absorption in the context of interruption of the duration of the act. The topics outlined by the Chairman of the Office were followed by the Vice-Chair Kamil Nejezchleb in the opening panel What's New in Competition. According to him, the Office intends to focus on large competitors whose conduct affects larger groups of consumers, and will be stricter. At the same time, on the other hand, it will continue to reward and encourage effective cooperation with the parties. Less important cases will be more likely to be ended through competition advocacy or commitments, even in cases that have regularly resulted in fines in the past. The Vice-Chair of the Office also mentioned the number of proceedings initiated and decisions issued to date and announced the launch of a public consultation on the consideration of compliance programmes.

 

The opening panel also introduced the chairman of the Slovak Antimonopoly Office, Juraj Beňa, who presented some of his intentions, such as increasing the office's ex-officio activity, not focusing only on bid rigging cartels and creating a strong analytical and economic unit. Johannes Persch from the European Commission's Directorate General for Competition spoke about the revised guidelines on horizontal agreements, which now include the possibility to consider the sustainability criterion. He also presented the process of the ongoing evaluation of Regulation 1/2003, the development of the methodology for Article 102 TFEU and the Google AdTech case. Andris Eglons from the Latvian Competition Authority focused on the issue of the use of wiretapping by competition authorities, presenting the Latvian legislation on the matter and specific cases of its use.

The keynote speech of the conference was delivered by the Chairman of the Supreme Administrative Court, Karel Šimka, who spoke in detail about the assessment of competition cases by administrative courts. He explained that the courts' requirements for defining the subject matter of an act are becoming stricter in connection with the stage of the proceedings. At the initial stage, a reasonable suspicion is sufficient to make it lawful to conduct an on-site investigation into the matter, but in the decision the Office shall be very precise in order to withstand judicial review. At the same time, the Chairman of the Supreme Administrative Court stated that the courts are trying to find a reasonable degree to ensure that their claims do not completely prevent the Office from carrying out its activities.

The next conference panel focused on competition and sport. Michal Petr from the Faculty of Law of Palacký University in Olomouc and attorney Jan Kupčík from AK Schönherr discussed whether the field of sport is so specific that competition rules are applied only to a limited extent. In this context, they recalled, for example, recent and ongoing cases before the Court of Justice of the European Union. Petra Košt'álová, Head of the Cartels Unit I of the Office, presented the current cases of assessing competitive effects of the sale of broadcasting rights of the Czech football and hockey leagues and described the existing models of sale of broadcasting rights in sport. The anti-competitive agreements fined in the field of sport by the Polish Competition Authority were then presented by Anna Glogowska.

The final panel of the first day of the St. Martin's Conference focused on concentrations between undertakings. Martin Vitula, Head of the Mergers Unit, revealed that next year the Office will hold a public consultation to gather the views of the professional public on possible changes to the legal regulation of mergers and acquisitions. According to him, the changes could consist in changing the notification criteria or in greater use of the simplified procedure. Petr Zákoucký (Dentons) and Robert Neruda (Havel&Partners) commented on the issue, pointing out, for example, the significant increase in the administrative burden and costs of mergers, the problematic nature of permitting joint ventures that do not even operate on the Czech market, or the recent controversial cases of Illumina/Grail and Towercast. Judit Buránszki from the Hungarian Competition Authority introduced the Czech audience to the voluntary notification system that has been in place in Hungary since 2017.

The second day of the St. Martin's Conference included a significant market power issue. The panel on the first year of experience with the second major amendment to the Significant Market Power Act included Petr Solský, Vice-chair of the Office, Pavel Dejl and Jiří Brož, attorneys at law, as well as representatives of the Croatian Competition Authority Marijana Mutavdžić and Nikolina Radanović.

Vice-Chair Petr Solský summarised the changes brought to the Czech legislation by the transposition of the UTP Directive and recalled that the legislator went beyond the Directive in some respects, in particular with regard to the national turnover criterion, the obligatory written form of contracts and the elements of contracts, the list of unfair practices, the obligation to assess the relative market power and the information on the amount of turnover. It recalled that the issue of sub-purchase or below-cost prices and the regulation of pricing practices is not part of the law on significant market power, as this issue is dealt with in the Act on prices. Similarly, there is no regulation of buying/discounting promotions through the Significant Market Power Act.

In 2023, the Office focused primarily on awareness-raising activities, conducting several dozen training sessions on the amendment to the Significant Market Power Act for all trade unions and associations that may be affected by the it. The Office also analysed markets in the agri-food chain and carried out accelerated sectoral inquiries on certain food commodities. The Office also issued several methodologies and opinions on the new legislation. No specific administrative procedures have been initiated under the new legislation yet, as there is a one-year transitional period to bring contracts and procedures into line with the Czech law. Lawyers Pavel Dejl (AK Kocián Šolc Balaštík) and Jiří Brož (AK Becker and Poliakoff) focused in particular on the provisions of Article 3(2) of the Significant Market Power Act. The provision states that in addition to the turnover criteria transferred from the UTP Directive a customer whose turnover in the Czech Republic exceeds CZK 5 billion also has a Significant Market Power. Therefore, it is highly problematic provision as it allows for a number of different interpretations. According to the interpretation of the Office, paragraphs 1 and 2 should be understood in line with each other and the mutual strength of the buyer and the supplier should always be assessed, and the interpretation under the Directive therefore takes precedence. According to Pavel Dejl, on the other hand, the Directive emphasises bargaining power, whereas the Czech criterion speaks of market power and he can therefore imagine the application of both criteria side by side. Jiří Brož was of the opposite opinion and added that at present it is not precisely defined which products are covered by the Significant Market Power Act. He identified the significantly increased number of prohibited practices compared to the Directive, which are often very vaguely defined, as a significant problem. Specific experiences and cases of sanctions for unfair trading practices were then presented by two representatives of the Croatian Competition Authority, Marijana Mutavdžić and Nikolina Radanović.

The panel was directly followed by a workshop on practical issues of services in the food chain. Jana Šlapáková from the Office focused her presentation in particular on the legal framework for the provision of services in the food chain, which is based on the European Directive No. 633/2019 on unfair commercial practices between undertakings in the agricultural and food chain and the Act on significant market power. The list of individual services is contained in the Directive. The Act No. 395/2009 Coll. uses the legal term "services related to the purchase and sale of food" (related services). According to the Office, the common feature of related services is their necessity or need. The Office's detailed requirements for an estimate of the cost of the related service as a necessary part of the contract have sparked a lively debate. The Office's representatives listened to comments from the audience and promised to address them, reiterating that the Office's views were not dogma but reflected practice. If there is a professional consensus in this respect, the Office is prepared to modify its opinions. The Office's methodological support to the professional public will be extended in the coming year by organising methodological days also for the area of significant market power. Jana Buršíková (Rohlík.cz) presented a case study focused on innovative services related to the sale of food in the digital environment.

At the second workshop on the amendment to the Competition Act, Igor Pospíšil and Jana Konopiská from the Office discussed some of the institutes affected by the amendment. The Office's administrative discretion was strengthened in the settlement and compliance considerations, based on the experience with its use so far. In some cases, the desired procedural savings were not achieved and undertakings took these institutes as an automatic entitlement to a reduction of the fine. Jana Konopiská presented an amended concept in the use of competition advocacy, commitments and prioritization.

The most controversial part of the amendment is perceived to be the changes to fines, especially in connection with the revision of the penalty methodology introduced by the Office. Ivana Dobíšková Halamová, an attorney-at-law, gave a detailed analysis of the Office's new methodology, which she criticized, for example, for the lack of regulation of fines for offences of natural persons, for some offences of legal persons (e.g. in the case of non-collaboration of legal persons with the Office) or more detailed rules for orderly fines. However, the most attention was paid to the increase in fines for the most serious offences, where, according to its calculations, the fines should almost double. This interpretation was opposed in the discussion by Kamil Nejezchleb, Deputy Chairman of the Office, according to whom the methodology merely responds to the Office's practical experience to date and at the same time quite legitimately reflects a change in the Office's approach to less serious types of anti-competitive conduct as well as an effort to make the leniency programme more attractive and motivate undertakings to use it. At the end of the workshop,

Professor Josef Bejček from the Department of Commercial Law at the Masaryk University Faculty of Law spoke out strongly against new trends that seek to include new exogenous "non-competitive" objectives into competition policy. In his view, antitrust is not suitable for the enforcement of completely “alien” interests such as sustainability (especially when this concept is very vague) or for the enforcement of privacy protection.

 

Press Unit of the Office for the Protection of Competition
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