Criminal Sanctions for Anticompetitive Conduct in the Czech Republic European Competition Day Brno, 13 May 2009 Martin Nedelka, Schönherr Prague/Brussels

2 Legal Framework Current Criminal Act Sec. 127 Penalises: “serious infringement to business conduct rules set forth by legal act committed with the aim to gain a considerable unjustified advantage” New Criminal Act Sec. 248 (2) Penalises: “concluding an agreement on price-fixing, agreement on market sharing or other agreement disrupting competition with its competitor” Effective as of 1 January 2010

3 Current Criminal Act (1) Applies to: all infringements of competition rules – vertical and horizontal agreements, abuse of dominant position and the implementation of a concentration without prior approval Sanction: imprisonment of up to 5 years, disqualification or financial penalty

4 Current Criminal Act (2) General formulation Unclear responsibility of the offenders (= natural persons only) Never applied in practice No deterrent effect

5 New regulation adopted

6 Aims of New Regulation Penalise only the most serious anticompetitive conduct Emphasis on deterrent effect Clarify the criminal responsibility of the offenders Make a clear distinction between the responsibility of legal and natural persons

7 New Criminal Act (1) Applies to: horizontal agreements(?) Addressees: natural person “who enters in an agreement on price-fixing, agreement on market sharing or other agreement disrupting competition with its competitor” Sanction: imprisonment of up to 8 years, financial penalties, disqualification or expropriation

8 New Criminal Act (2) Only Horizontal Agreements? Also applicable to vertical agreements? – “other agreements disrupting competition” Addressees? Under Czech law, legal persons are not liable for criminal offences Natural persons usually are not parties to cartel agreements

9 New Criminal Act (3) Natural persons usually act only as members of an executive body of the respective legal person – they do not act for themselves Can a member of an executive body of a legal person “enter into a cartel agreement with its competitor”? Extensive interpretation of the provision so that it also covers the conduct of members of a legal person‘s executive body?

10 Further Problematic Issues of Criminal Prosecution Two proceedings/sanctions for one conduct (administrative and criminal) Low awareness of offenders about the criminal consequences of their anticompetitive conduct Insufficient practical experiences of police/state attorneys Jeopardises the leniency programme?

11 Conclusions The new Criminal Act aims at the most serious infringements only Problem of unclear responsibility not solved No substantial change in the current situation  The new Criminal Act does not provide a clear solution to “old problems”

12 Thank you.

13 Schönherr – a European firm

14 SRB Beograd, Francuska 27 T: , F: , E: Belgrade in the market since: 2002 SI-1000 Ljubljana, Tomšičeva 3 T: , F: , E: Ljubljana in the market since: 2001 RO Bucureşti, Blvd. Dacia Nr. 30, Etaj 4, Sector 1 T: , F: , Bucharest in the market since: 1996 B-1000 Bruxelles, Avenue de Cortenberg 52 T: , F: , E: Brussels in the market since: 1996 Zagreb in the market since: 2001 HR Zagreb, Ul. kneza Branimira 29 (Branimir Centar) T: , F: , E: Sofia in the market since:2004 BG-1000 Sofia, Alabin 56 T: , F: , E: Vienna in the market since: 1950 A-1010 Vienna, Tuchlauben 17 T: , F: , E: H-1024 Budapest, Buday László utca 12. T: , F: , Budapest in the market since: 2008 CZ Prague 1, nám. Republiky 1079/1a T: , F: , E: Prague in the market since: 1992 SK Bratislava, 1. mája 18 (Park One) T: , F: , Bratislava in the market since: 2009 UA Kyiv, 44 Shota Rustaveli, 3rd floor T: , F: , E: Kyiv in the market since: 2006 PL Warszawa, ul. Złota 59 T: , F: , E: Warszawa in the market since: 2009