Czech Republic: New guideline on fines – Tougher times ahead
In April 2018, the Czech competition authority (‘CCA’) adopted new guidelines on calculating fines for antitrust law infringements. These guidelines replace the previous guidelines on the topic dating back to 2006.
The reason for this change is that the CCA has been criticised for years for being too soft on culprits and imposing inadequate fines even in cases of serious breaches of antitrust law.
This may well change under the new regime. The guidelines substantially increase the base amount of the fine that can be imposed (before adjustments depending on the duration of the infringement and other circumstances of the case) for each type of anti-competitive behaviour. The new guidelines (like the old ones) differentiate between three different forms of infringements:
- In the case of less serious breaches (vertical agreements without hardcore restrictions such as price fixing, ‘gun-jumping’), the base amount of the fine goes up from up to 0.5% of sales generated by affected goods or services to up to 5%.
- For serious types of antitrust breaches (vertical agreements with hardcore restrictions, less serious infringements in relation to horizontal agreements, ‘gun-jumping’ contrary to an existing decision of the CCA), the base amount of the fine increases from the previous up to 1% of sales to 3% to 10%.
- Finally, in the case of very serious breaches (i.e. the most serious vertical and horizontal infringements, abuse of a dominant position), the base amount of the fine increases from up to 3% of sales to 5 to 15% (but is still capped at 10% of sales after all further adjustments).
Compared to the old guidelines this can mean a possible substantial increase in fines imposed by the CCA (five times higher for very serious infringements and even ten times higher for less serious and serious types of antitrust infringements compared to the old regulation).
As mentioned above, the base fine is to be further adjusted according to other circumstances of the case. Under the previous regime, the resulting fine could increase or decrease by up to 50% of the base fine, whereas now this changes to up to 70%. As also mentioned above, the total fine for any infringement remains capped at 10% of total annual sales.
The new guidelines were adopted in April last year, but will be applicable only to proceedings commenced after their adoption. This means that 2019 will be the first year in which the new guidelines could become relevant in practice. However, it remains to be seen if and to what extent the new tougher approach of the CCA pioneered by the new guidelines materialises, although it is very likely that tough(er) times are ahead for those found guilty of antitrust infringements. Therefore, self-assessment and competition compliance remains as important as ever for market participants in order to avoid being caught unprepared under the stricter new regime.
Any questions? Please contact: JUDr. Miloš Temel
Practice Group: Antitrust & Competition