In our previous post, we summarized the breadth of changes announced by the Czech Competition Authority at its September meeting with the ICC Commission on Competition. The scope of the plans was striking – ranging from higher notification thresholds and a new call-in model in merger control, to individual liability, labour market agreements, and dawn raids. This post is the first in a series where we will focus on individual topics. We begin with the planned amendment to the Czech Competition Act, described by the Czech Competition Authority as central to its future enforcement agenda, which would introduce a New Competition Tool (NCT).
What is the NCT?
The NCT is intended to give the Czech Competition Authority powers to intervene even in markets where no infringement of competition law has been established. The underlying rationale is that certain markets may fail due to their structure or dynamics, even in the absence of unlawful conduct (such as cartels or abuse of dominance).
The new draft differs from last year’s proposal in several respects:
- Introduction of the notion of “market failure”: A new legal concept to capture situations such as tacit collusion, market tipping, or structural dominance, even without evidence of a specific infringement.
- Speed: Proceedings would have to be completed within one year (rather than up to four). The outcome would be a measure of a general nature imposing remedies to address the identified market failure.
- Range of remedies: The Czech Competition Authority could impose not only behavioural remedies but also structural ones (notably mandatory divestitures). Structural measures should, however, only be used where behavioural remedies prove ineffective.
- Broader scope: Regulated sectors such as telecommunications, energy and banking would also be covered.
The legislative process is expected to start in early 2026 as part of a broader package amending all statutes under the Czech Competition Authority’s remit.
Potential Implications for Businesses
While the NCT aims to enhance the flexibility and efficiency of markets, it would introduce several new risks for businesses:
- Legal uncertainty: The concept of “market failure” is inherently vague. Businesses will find it difficult to predict when and why their market could attract scrutiny by the Czech Competition Authority, complicating strategic planning and compliance.
- Risk of far-reaching interventions: Structural remedies (such as mandatory divestitures) go well beyond traditional competition enforcement. Even if framed as a last resort, their availability creates a new level of regulatory risk.
- Regulatory overlap: Operators in sectors like telecoms, energy or banking may face dual regulation – from both their sectoral regulator and the Czech Competition Authority. Diverging approaches or uncoordinated remedies are a genuine concern.
- Extended investigative powers: Beyond sector inquiries, the Czech Competition Authority would gain powers for market monitoring and market investigations. These would allow the use of invasive tools, including requests for information and – in the case of market investigations – even dawn raids, without the need for suspicion of an infringement. In practice, this could mean more information requests and dawn raids, even in the absence of any suspected unlawful conduct, leading to higher costs and operational disruption.
- Shift of responsibility: The NCT would allow undertakings to offer voluntary commitments to avoid the adoption of a measure of a general nature. In practice, this shifts the burden of solving perceived market issues onto companies themselves, with the risk of complex negotiations and additional costs.
Commentary
The NCT represents a fundamental shift in competition policy, as we know it: competition law would no longer be limited to addressing infringements but could also serve as a policy instrument to “reshape” markets.
For businesses, this means that compliance with the law may no longer be sufficient. Even companies that fully respect competition rules could become targets if the Czech Competition Authority concludes that their market is “failing.”
Particularly sensitive will be concentrated or fast-moving markets — whether traditional network industries or digital platforms. For these firms, the NCT adds a new dimension of regulatory risk that will need to be factored into investment decisions, mergers and acquisitions, and long-term strategy planning.
In our next posts, we will take a closer look at other measures announced by the Czech Competition Authority — individual liability, labour market agreements, and merger control reform.
