The Czech Competition Authority (the “CCA”) initiated a public consultation concerning the proposed review of the Czech merger control regime. The review may result in the most extensive changes to the regime in decades. HAVEL & PARTNERS has submitted its comments to the consultation.
During the summer 2024, the CCA published a public consultation paper, inviting comments on the functioning of the Czech merger control regime and its reviews as proposed by the CCA. The CCA’s stated goal of the consultation is to assess whether there are regulatory gaps in the current merger control regime, to evaluate the existing notification criteria and to increase transparency, efficiency and legal certainty.
HAVEL & PARTNERS provided it comments to the entire scope of the CCA consultation in the 25 pages long document. We consider it an important part of our mission and responsibility to society to participate in the legislative process. Below, we summarise the key points of the consultation and how we addressed them.
The review of notification thresholds
The most consequential part of the CCA’s proposal concerns the review of notification thresholds. The current notification criteria, which date to 2004, are turnover based. Specifically, transactions must be notified to the CCA if they meet at least one of the following two alternative tests:
- First test:
- total local turnover of all undertakings involved is at least CZK 1.5 billion; and
- individual local turnover of at least two undertakings involved is at least CZK 250 million.
- Second test:
- global turnover of one undertaking involved is at least CZK 1.5 billion; and
- local turnover of the second undertaking involved is at least CZK 1.5 billion (this second undertaking may be one of the merging parties, the target, or one of the parents of a JV).
As part of the consultation, the CCA is reconsidering its entire approach to the notification criteria. The CCA is assessing both whether the thresholds (i) capture all relevant transactions (including all relevant killer acquisitions and serial acquisitions); (ii) do not overreach, and thus capture transactions that cannot have an effect on competition. Critically, the CCA is also considering whether to implement a call-in model – an ability to request notification of transactions that are below the standard turnover thresholds.
In general, we think that the notification criteria in the current form work well. The system is well established, predictable, easy to work with, and is likely able to catch – possibly with only very rare exceptions – all relevant transactions. We see no clear reasons to change the status quo. We object, particularly, to the implementation of the call-in option which would, in our view, undermine legal certainty, increase costs (both on the side of the CCA and the parties), and lead to several procedural complications. These drawbacks would not be outweighed by any clear benefit, as the current criteria already catch all transactions with plausible anticompetitive effects.
Simplification of the proceedings
The second area of proposed changes which we think may have a meaningful impact on the merger control regime, concerns the extent of information the parties must provide during the notification process. The following key changes are being considered in this respect.
First, the CCA considers revising the list of transactions qualifying for the simplified procedure. Currently, for the transaction to qualify for the simplified procedure, horizontal relationships between the parties must be below 15%, vertical relationships below 25%.
In our view, the current thresholds are unnecessarily sensitive. For example, the European Commission’s (the “EC”) equivalent thresholds for simplified procedure are 20% for horizontal, and 30% for vertical relationships. In Czechia, the current rules lead to approximately 30% of transactions notified in full procedure – compared to 13% of EC’s notifications. Thus, we think adjusting the thresholds to at least the EC level seems appropriate.
Second, the CCA is considering a simplification of the notification forms. We fully endorse this initiative. There is a large amount of information that have little plausible value for the CCA in its review of transactions – from now largely obsolete fax numbers, through comprehensive state aid information, nuance information about imports, distribution methods or price comparison with non-Czech markets as a default request for all full notifications. We proposed to the CCA to withdraw those requests from the notification form.
Third, the CCA is proposing to no longer require official translations of documents submitted as part of the notification that are in neither Czech nor Slovak. This would be a welcome change, as the requirement for official translations is both time consuming and costly, with no actual benefit to the quality of the CCA’s review.
Conclusion
Overall, we welcome the CCA’s initiative. The current Czech merger control regime has been active, with limited changes, since 2001 and it seems appropriate to look back and review its functioning. It is likewise commendable that the CCA seeks the views of all the stakeholders on the proposed changes. In terms of the changes that should be implemented, we consider the current framework of the Czech merger control regime broadly appropriate – requiring nuanced improvement of details, rather than an overhaul. We supported this outcome in our comments to the CCA consultation. It will be interesting to follow what changes the CCA will eventually propose and how its proposals will evolve in the legislative process.
The link to HAVEL & PARTNERS full submission to the CCA’s consultation (in Czech) is available HERE.
