The Office imposed a fine for implementation of merger that was not approved

The Office for the Protection of Competition („the Office“) imposed by its first-instance decision a fine amounting to CZK 530,000 on the company KAREL HOLOUBEK – Trade Group a.s. for implementation of concentration with the company Karlovarská teplárenská a.s. prior to submission of concentration notification and issue of Office’s decision in force approving the merger.

In the case the Office used the settlement procedure, in which the party to the proceeding acknowledge their illegal conduct in exchange for a fine reduction. The decision has come into force.

In 2010, the Office made decision about the concentration of undertakings KAREL HOLOUBEK – Trade Group a.s. (“KHTG”) and Karlovarská teplárenská a.s. The concentration was approved on 29 December 2010 and on that date the decision came into force. However, in course of administrative proceeding the Office found out that KHTG had controlled, on the basis of Securities Lending Agreement, 51 % of voting rights of the Karlovarská teplárenská since 1 July 2002. The party to the proceeding performed its voting rights demonstrably during the general meetings of shareholders in 2002 - 2010. The representatives of the KHTG attended and influenced the meetings of board of directors of Karlovarská teplárenská.

Pursuant to the Act on Protection of Competition, in cases where the implementation of concentration is subject to the Office’s approval, the concentration should not be implemented before the Office issues its decision approving the concentration. In this particular case, KHTG acquired under the Securities Lending Agreement a possibility to exclusively control Karlovarská teplárenská. This illegal state then lasted over a long period, more than 8.5 years.

Implementation of concentration prior to submission of notification and the Office’s decision in force approving the concentration infringes the most basic principles of supervision of concentration between undertakings. Uncontrolled concentrations between undertakings may cause the distortion of competition and harm consumers. In the investigated case, a significant negative impact on competition or consumers was not identified.

The Office took this fact into account when calculating the amount of fine, on the other hand it considered the long duration of the offence. The undertaking used the settlement procedure by recognizing their responsibility for illegal conduct, legal qualification and the duration of the conduct. The fine was reduced by 20 % in exchange.

International and External Relations Department