The Czech Competition Authority (ÚOHS) has recently unveiled plans for what is likely to become one of the most sensitive changes in the history of Czech competition law — the introduction of personal liability for individuals participating in cartel agreements. If adopted, this reform would expose managers to an entirely new level of risk. What does the proposal entail, and how should it be understood?
Background
Czech (like EU or Slovak) competition law has traditionally focused on the liability of companies (legal entities) for anticompetitive conduct. It is the companies that pay hefty fines for their participation in cartels or abuse of dominance, or face damages claims from affected parties. Yet, experience shows that these sanctions do not always have a sufficient deterrent effect: some companies repeatedly engage in anticompetitive conduct.
The problem may lie in a moral hazard among managers, stemming from the separation of ownership and control. It is the manager who commits the infringement, but the consequences (fines, damages, and the drop in share value) are borne almost exclusively by the shareholders (who may often be unaware of the misconduct).
For this reason, several European countries have gradually introduced individual liability for managers, aiming to deter them personally from engaging in anticompetitive conduct. Although Czech law has recognised criminal liability of individuals for cartel participation for over 15 years, the very low number of convictions has led the Czech Competition Authority to conclude that criminal sanctions are not an effective deterrent. So, what is the proposed solution?
What Is Being Proposed?
At its September meeting with the ICC Commission on Competition, the Czech Competition Authority confirmed that the planned amendment to the Competition Act will, for the first time, introduce personal (administrative) liability for managers and other individuals involved in cartel agreements. The key features include:
- Scope: Liability will apply only to horizontal cartel agreements (price fixing, bid rigging, market sharing, boycotts, etc.). Unlike last year’s draft, vertical agreements (supplier–distributor) will remain outside the scope.
- Sanctions: Individuals could face fines of up to CZK 10 million and a ban on professional activity for up to five years.
- Intent: Only intentional conduct will be punishable; negligence will not suffice.
- Sanctionable Conduct: Liability will extend not only to direct participation but also to attempts or aiding and abetting.
- Leniency: Individuals will be able to apply for leniency. The Authority stressed that its goal is not primarily to punish individuals but to use them as a source of information for uncovering cartels.
These elements show that the Czech Competition Authority aims to design a system that not only deters unlawful conduct but also motivates insiders to come forward with information that could help uncover cartels.
Risks for Managers
For the first time, not only companies but also their managers and employees will be in the direct line of sight of the competition authority:
- Financial exposure: Fines of up to CZK 10 million could be imposed personally and may not be covered by the company or insurance.
- Career impact: A professional ban could prevent individuals from holding management or executive positions for several years.
- Investigative pressure: Managers could face more frequent questioning, increased responsibility for explaining corporate decisions, and greater pressure to cooperate personally with the authority.
- Legal representation: Since their interests may diverge from those of their employer, managers facing personal liability will need their own legal counsel experienced in competition law.
What This Means for Companies
The proposal marks a fundamental shift in the enforcement landscape. Businesses should therefore treat compliance as a strategic priority:
- Enhanced training: Managers must fully understand the implications of personal liability.
- Preparation for investigations: Dawn raid protocols and procedures should reflect the possibility that individuals will be directly targeted.
- Diverging interests: Companies must anticipate situations where a manager’s defence strategy may conflict with the company’s – one may seek to cooperate, while the other contests the allegations. This tension could be unprecedented.
- Effective internal reporting: Reliable and confidential reporting channels can prevent employees from going directly to the authority.
Commentary
The planned reform demonstrates that competition compliance is no longer just a corporate matter – it is also a personal one. The new regime brings not only financial and professional risks but also heightened personal pressure during investigations. Companies should therefore strengthen training, ensure credible reporting mechanisms, and adapt dawn raid procedures to account for individual risks. The best shield against both corporate and personal liability will be proactive and thorough compliance. By introducing individual liability, the Czech Competition Authority is effectively placing managers and their employers in a potentially adversarial position – a move that may create significant tension and new kinds of risk, the full scope of which remains difficult to predict.
This post is part of our ongoing series analysing the reforms announced by the Czech Competition Authority. In the coming weeks, we will focus on other key topics, including labour market agreements and reform of merger control.
