The Czech Competition Authority plans to introduce personal administrative liability of managers for cartels. They would also be able to apply for leniency on their own. I think the latter is not a good idea and I will try to explain why.
Why punish managers?
"Fines for companies are not enough. The real scare tactic is when a manager ends up in prison."
That's how I remember a statement made by a representative of the US Department of Justice. It was 2006, and it came up in conversation at a conference marking the 15th anniversary of the Czech Competition Authority (NCA). I remember it every time there is talk of the need for personal responsibility for cartel agreements.
Do we need it?
Czech, Slovak and EU law has traditionally been based on corporate liability – it is companies that pay fines for cartels or abuse of dominance and face claims for damages. But these fines are clearly not enough. Some companies commit offences repeatedly.
Perhaps this is because the fines are not ultimately paid by those who caused the misconduct, i.e. the managers, but by the company's shareholders – who often have no idea what was going on inside the company.
This is called moral hazard – the manager takes the risk, but the company pays. That is why pressure is mounting in many European countries for individuals to be held personally liable. In Czechia, criminal liability of natural persons for cartels has existed for over 15 years, but there have been few convictions. The Czech NCA has therefore come up with a new proposal – it wants to add personal (administrative) liability of managers to the Competition Act.
At a meeting with the Czech ICC Competition Commission in September, the NCA stated that the planned amendment to the Competition Act is intended to introduce personal (administrative) liability for managers and other individuals for participation in horizontal cartel agreements. The sanctions will be fines of up to CZK 10 million and a ban on activities for up to five years.
Natural persons will be able to independently take advantage of the leniency programme, i.e. confess in exchange for immunity from punishment.
There's a catch
And this is a good place to pause.
The NCA openly states that the primary goal of introducing liability for natural persons is not to punish individuals, but to obtain information for uncovering cartels. The ÚOHS therefore wants to motivate insiders to file complaints against their own companies.
I consider this motivation to be extremely problematic for several reasons.
Firstly, it contradicts the primary reason for the existence of personal liability. The aim should not be to uncover (and punish as severely as possible) companies, but above all to prevent anticompetitive behaviour and to punish the actual perpetrators fairly. It should not be just a lever to "catch" companies.
Secondly, in a society that is already divided (regionally, socially, politically), we really do not need to add further conflict between employees and employers.
Thirdly, what about employers who invest hundreds of thousands or millions in compliance training and audits to prevent precisely such situations? If their manager nevertheless breaks the rules and subsequently applies for leniency, the manager gets off scot-free, while the company – despite all its efforts – is fined.
In the best case scenario, they will receive a 10% discount for their compliance programme – but only if they waive their right to defence and agree to a settlement. That is truly absurd.
Furthermore, the availability of a leniency programme for individuals may lead to its purpose being completely reversed. Instead of motivating the disclosure of cartels, it may be abused for personal gain or settling scores. Imagine a situation where managers, in the context of internal disputes or when leaving the company, choose leniency as a means of coercion – and the competition authority easily becomes a tool in personal games.
So what to do about it?
Introducing effective personal liability for managers involved in cartel behaviour may make sense. However, allowing managers to submit leniency applications independently, i.e. independently of their employers, with the aim of turning employees against their companies, is not a good idea. Detecting and punishing companies involved in cartels at any cost – even at the cost of exonerating the actual perpetrators – cannot be the goal of a reasonable competition policy.
The Czech authority should abandon the possibility of employees submitting independent leniency applications. If the new legislation is to bring about a higher level of compliance with the rules, then we should rather increase the benefits (reductions in fines for effective compliance programmes) for companies that do everything they can to prevent cartels. It is these companies that create a genuine culture of compliance with competition law.
(The text was also published in Antitrust magazine 3/2025)
