At the end of last week, a draft amendment to the Act on the Protection of Competition, prepared by the Czech Competition Authority, was submitted for inter-ministerial consultation. The draft reflects, in legislative form, the changes discussed by the Czech Competition Authority at its September meeting with the ICC, which we discussed in detail in our autumn blog series (e.g. here).
The changes announced at that time are now reflected in the draft legislation. The amendment is expected to enter into force as early as 1 January 2027.
What the draft brings
In its main areas, the draft largely corresponds to what the Czech Competition Authority had previously communicated at its meeting with the ICC:
- New Competition Tool (NCT): The Czech Competition Authority is to be given the power to intervene in markets where effective competition has not been functioning over the long term, even without establishing a specific infringement of the law. This may result in the imposition of measures of a general nature and, in extreme cases, even structural remedies (including the divestiture of a business).
- Mergers: The amendment proposes to introduce a call-in model allowing for the review of below-threshold transactions. At the same time, the turnover thresholds are to be increased (to CZK 2.5 billion / CZK 350 million), which is intended to reduce the number of routine notifications and enable the Czech Competition Authority to focus on cases with a genuine impact on competition. (This is also reflected in the increase in market share thresholds for simplified proceedings.) The parameters of the call-in model (in particular the aggregate turnover threshold of CZK 2.5 billion and the six-month deadline for intervention) correspond to what the Czech Competition Authority had previously announced.
- Individual liability of managers: The Czech Competition Authority is to be granted the power to sanction natural persons (managers) for participation in cartels with a fine of up to CZK 10 million and a ban on business activities for up to five years. The leniency programme will also apply in these cases. As the Czech Competition Authority has repeatedly stated, one of the reasons for introducing individual liability is to encourage managers to apply for leniency and thereby provide an additional source of information on hidden cartel agreements. Natural persons may also be sanctioned for obstructing an on-site inspection or failing to provide requested information, with fines of up to CZK 300,000.
Overall, the draft does not introduce any major surprises but rather confirms the direction previously announced.
What the draft further expands and clarifies
In addition to the key changes, the amendment also introduces a number of procedural adjustments with practical implications:
- Access to data: The Czech Competition Authority will be able (subject to court approval) to obtain traffic and location data from providers of electronic communications services.
- On-site inspections:
- Access to data stored remotely (e.g. in the cloud) is expressly provided for, regardless of its physical location,
- The Czech Competition Authority will also be able to review electronic data after it has been secured, at its own premises (in the presence of the undertaking’s representatives),
- Legal professional privilege (LPP): The Czech Competition Authority may secure disputed documents during an inspection; if the undertaking does not subsequently challenge the inspection by filing an action against unlawful interference, the documents will become part of the administrative file.
- Procedural sanctions: The maximum fine for failure to cooperate or for obstructing an on-site inspection shall be increased from 1% to 5% of the undertaking’s total annual turnover.
- Settlements: It will no longer be possible to appeal against a settlement decision, except in cases of inconsistency between the statement of objections and the description of the facts or the fine imposed in the decision.
What this means in practice
The proposed amendment represents a significant shift in the approach of the Czech Competition Authority – not only does it expand its toolkit, but, in the case of the new competition tool, it also enables the Czech Competition Authority to intervene even without establishing an infringement of the law. Alongside traditional competition risks, this creates broader regulatory uncertainty, placing greater demands on robust compliance programmes.
For businesses, this means in particular:
- The need to take into account the possibility of scrutiny of below-threshold transactions,
- Increased demands during on-site inspections, particularly in relation to electronic data and the protection of legal professional privilege (LPP), and
- Stricter consequences of procedural missteps, as well as personal liability of management.
The amendment is proposed to enter into force on 1 January 2027. The draft is currently undergoing inter-ministerial consultation, and its final form may still change. We will keep you informed of further developments.
