Binding Approach of the Office for the Protection of Competition to Assessment of the Impact of the COVID-19 Pandemic on Competition within the Czech Republic

Considering the ongoing coronavirus outbreak, repeated declaration of the emergency state and number of emergency measures, having significant impact on the business sector, the Office for the Protection of Competition takes again into account current situation in its activity. The present difficult situation may require and justify certain types of cooperation and contacts between undertakings, which could, under different circumstances, indicate possible prohibited agreements distorting competition.

The Office consequently announces how it shall proceed when dealing with requests for assessment of indicated cooperation between undertakings as parties to agreements within the meaning of Article 3 of the Act No. 143/2001 Coll., on the Protection of Competition (hereinafter referred to as “Competition Act“) and Article 101 of TFEU. As regards unilateral practices of undertakings, the Office shall not change its current approach. At the same time the Office declares that abusing of dominant position in connection with impact of the COVID-19 pandemic may be considered as an aggravating circumstance when calculating the amount of the fine. Similarly, in the field of merger control, the Office considers current provisions of competition law as flexible enough both for parties to proceedings and for the Office, therefore its current procedures don’t require any changes.  

Cooperation between undertakings within the territory of the Czech Republic during the period of solving economy issues caused by the COVID-19 pandemic

1. The Office is aware of possible need for cooperation between undertakings necessary to ensure availability of certain goods and services in unprecedented situation caused by the COVID-19 pandemic. It is therefore understandable that public interest in such cooperation, which could be considered as anticompetitive under common circumstances, might temporally prevail over interest in protection of free market environment. Such agreement is not therefore considered as prohibited within the meaning of Article 3 of the Competition Act (and Article 101 of TFEU), under the condition that it restricts competition in the narrowest possible way, which will lead to its intended objective.

2. The Office hereby provides undertakings an option to ask for preliminary assessment of their intended cooperation. Undertakings may address the Office via e-mail posta@uohs.cz or via its data box available at www.uohs.cz

3. The Office is ready to assess individual cases and decide whether the intended cooperation fulfils the abovementioned conditions, mainly whether it is necessary for provision of goods and services affected by the crisis, and thus it cannot be considered as anticompetitive during current emergency period.

4. The Office hereby neither provides general consent to any cooperation between undertakings, nor issues a block exemption pursuant Article 4 par. 2 of the Competition Act. On the contrary, the Office strongly discourages from entering into cartel agreements and other horizontal or vertical anticompetitive conduct.  

5. The Office points out, that if the cooperation of undertakings is anticompetitive by its object or effect, the prohibition of agreements under Article 3 of the Competition Act shall not apply only in case when such agreements:

• shall contribute to improving the production or distribution of goods or to promoting technical or economic progress  and at the same time allowing consumers a fair share of the resulting benefit,
• shall not impose restrictions on the undertakings, which are not indispensable to the attainment of these objectives,
• shall not allow the undertakings to eliminate competition in respect to a substantial part of the market of goods, the supply/purchase of which constitutes the objective of the agreement.

These conditions shall be met cumulatively in order to consider the cooperation as compliant with competition law.

6. To assess whether particular cooperation (an agreement) is necessary and therefore permitted during current crisis, the Office requires undertakings to indicate in their request:

• undertakings involved in the cooperation,
• nature and purpose of the cooperation,
• goods and services concerned,
• intended time and geographic scope,
• information intended to share within the cooperation,
• at least estimation of their market shares on relevant markets affected by the cooperation.

7. Without this specific information, the Office is not able to assess whether it will consider the intended cooperation as compliant with the Competition Act during current crisis.

8. The European Commission (DG Competition) is also prepared to support undertakings intending to cooperate and to share information with the purpose of provision of necessary goods and services during the current crisis, as well as to assess this conduct ex ante in perspective of possible infringement of Article 101 of TFEU.[1]

9. The Office underlines that it is not willing to assess only hypothetical and general intentions of cooperation between undertakings, neither intentions which are not demonstrably linked to goods and services affected by the crisis.

10. For now the Office intends to assess the requests in the abovementioned manner for the temporary period of six months from issuance of this notice, but it does not exclude its possible prolongation or shortening based on new developments. The Office shall make every effort to answer the request in the form of opinion as promptly as possible, ideally within few days.

11. The purpose of these informal opinions is to contribute to prompt and effective solution of crisis caused by pandemic and to provide cooperating undertakings with guidance and higher legal certainty with regard to legality of their competitive conduct in the market.

12. Opinions issued by the Office will be based on the information provided by the undertakings in the abovementioned manner only. Even though such opinions, without any doubt, will give undertakings guidance, it cannot be legally binding and have not effects of a decision in force issued by the Office after conducted administrative proceedings. The Office emphasizes that in case it finds out that the information received and thus serving as a basis of Office’s opinion is not genuine and correct, the Office will investigate circumstances of cooperation in question from the perspective of possible infringement of the Competition Act with increased attention.