The largest law firm in the Czech Republic Ranked by clients as the best law firm in the Czech Republic Czech law firm of the year (2012) No. 1 legal advisor according to the number of M&A deals in the Czech Republic and Eastern Europe (2012) No. 1 among Czech law firms (2012) Fifth Annual Conference on Competition Enforcement in the CEE Member States, Bratislava, 21 February 2014 Recent developments in CEE Member States The Czech Republic Robert Neruda

1.Private enforcement 2.Criminal enforcement 3.Administrative enforcement 1.Activities of NCA 1.Cartels 2.Other agreements 3.Dominance 4.Mergers 2.Legislation 3.Courts(Due Process) 4.General / policy observations AGENDA 2

No specific provisions in the Czech law … but The possibility to seek damages has always been recognized No/scarce case law Reasons (similar to other jurisdictions): Uncertainty Lack of incentives Access to evidence The role of public enforcement (protection of leniency, settlements, access to file) PRIVATE ENFORCEMENT 3

Individual criminal liability 2010 – new Criminal Code Criminal liability for cartel behavior (no other anticompetitive practices) Very strict – up to 8 years of imprisonment No decisions, but seemingly some investigations pending, incl. stand alone Criminal liability of companies 2012 – new Act on Criminal Liability of Companies Not applicable to cartels, except for bid rigging despite the wide reach of the new legislation Parallel investigations by the Czech NCA and the police avoided CRIMINAL ENFORCEMENT 4

No changes in powers/competences of the Czech NCA in the field of antitrust Anticompetitive behavior of public authorities (not desired by the Czech NCA) But other areas Significant Market Power Act (supermarkets) Public procurement Relative decrease of importance? Significant divergence in the level of activity among sections (cartels v. dominance and verticals) Cartels – lot in pipeline, but lack of decisions Stable merger control ADMINISTRATIVE ENFORCEMENT IN GENERAL 5

1.Cartel Department of the Czech NCA i.Well resourced and stable, most active ii.Disproportion between the number of opened cases and decision – ever increasing workload? iii.Difficult procedural aspects – rules of third parties, access to file 6 ADMINISTRATIVE ENFORCEMENT CARTELS

Series of fining decisions in , then silence The declarations of economists („no hard core restrictions“) vs Recent decisions of the Office („RPM hard core infringement and not likely to be exempt“ – Candy) vs Case law (strict approach, RPM almost per se prohibited) = uncertainty No decisions (guidance) as to non pricing vertical agreements = uncertainty Despite distribution is of a key importance for majority of businesses ADMINISTRATIVE ENFORCEMENT VERTICALS 7

The least activity Last (real, new) decision in 2010 predatory pricing, bus transport, 5 mio CZK (EUR ) Investigation of margin squeeze in telco lasts almost five years Pending investigations of (alleged) non pricing abuses (probably less demanding) without decisions Tricky signal for the business ADMINISTRATIVE ENFORCEMENT ABUSE OF DOMINANCE 8

Flexible, predictable, well functioning system No intervention (prohibition, commitments) in 2013 Last prohibition in 2004 NEW: third parties' right to appeal may delay the closing ADMINISTRATIVE ENFORCEMENT MERGERS 9

Substantive changes Full leniency available for initiator and leader of the cartel Immunity from criminal prosecution and from ban on public contracts and concession agreements Procedural changes Leniency application outside the administrative file Duty to continue in cartel activity (to avoid jeopardizing a dawn raid) ADMINISTRATIVE ENFORCEMENT SOFT LAW – 2013 LENIENCY PROGRAMME 10

Confirmation of the practice so far Available also outside cartel area Fixed discount 20 % Short decisions, no details (affected customers) Immunity from ban on public contracts and concession agreements (but not from criminal prosecution) No hybrid settlements Practical observations Is 20 % enough? Is it really only 20 %? A deathblow for private enforcement? Effects on the competition doctrine? ADMINISTRATIVE ENFORCEMENT SOFT LAW – 2013 SETTLEMENT NOTICE 11

Prioritisation, commitments outside and within the administrative proceedings No declaration of illegality Prioritisation If no public interest in conducting the proceedings due to the low harmful effect No review available for complainants Commitments (both types) Relaxation of former strict (prohibitive) rules ADMINISTRATIVE ENFORCEMENT SOFT LAW – 2013 NOTICE ON ALTERNATIVE SOLUTIONS 12

The complainant has no standing to appeal/challenge the fact the Czech NCA does not open the investigation (SAC Mediaservis, Regio Jet) The Czech NCA may use the evidence collected and provided by the Police (Regional Court in Brno in Litoměřice) Bid rigging per se prohibited, even in case the agreed price is the same/lower than the competitive price (Regional Court in Brno in Litoměřice) The Czech NCA is not obliged to define the relevant market with the use of economic and empiric analyses (Regional Court in Brno in Litoměřice) COURTS 13

The Czech NCA Lack of decisions in cartels, dominance, verticals The Czech NCA probably needs more resources (financial, human) The relative importance of the antitrust agenda within the Czech NCA Judicial review Is the recent decentralization and de-specialization the right step for competition cases? POLICY ISSUES 14

The judicial review probably Art. 6/1 ECHR compliant The courts de facto review the assessment of the complex economic evidence made by the Office (See Student Agency case but Litoměřice) But there is still a need to: Balance the protection of leniency applicant and other parties to the proceedings injured parties Find the right balance with the rights of third parties prioritisation, mergers, possibility to appeal Find the room and incentives for private enforcement settlements (and other alternative solutions) problematic in this regard DUE PROCESS STATUS AND ISSUES TO SOLVE 15

The Czech administrative system based on the on the permanent access to file Not suitable for leniency Review court surprisingly approved the Office's approach of denying access of other parties to the application the Supreme Administrative Court? 2012 Amendment The limited access part of the hard law Practical observations LA accessible (for reading only) for 1/10 of the investigation. Is it Art. 6/1 ECHR compliant? Third parties‘ access to the file granted by the courts DUE PROCESS ACCESS TO FILE 16

The hard law - right to be heard only 7/2012 Regional Court in Brno Litvínovská uhelná Any third party that duly exercised its rights (complained) during the proceedings has a right to appeal the clearance decision But no procedural details (eg. only participant receives the decision) The right to appeal within 1 month/1 year – the decision does not become final Risk of abuse - risk for closing Possible solution Short term – Supreme Administrative Court Long Term – an amendment tothe Competition Act enabling to challenge the final decision DUE PROCESS CASE STUDY – RIGHTS OF THIRD PARTIES IN MERGERS 17

18 © 2012 All rights reserved Comments / Questions? Thank you for your attention !