The Office presented a number of possibble legislative proposals to support Efficient competition

The Office for the Protection of Competition drafted a proposal of possible legislative changes. The purpose of such amendments is to increase the effectiveness of the Office, in particular the detection and punishment of anticompetitive conduct and support the development of competition in the markets. Four main areas are covered by the proposals: 1) new procedural tools enabling the Office to punish anticompetitive conduct in concentrated markets; 2) strengthening the power to detect and punish cartel agreements; 3) the process of merger review; 4) the access to information and data.

Currently, the Office is empowered to punish undertakings for competition infringements in the form of prohibited agreements, abuse of a dominant position, or in certain cases, the Office may prevent structural changes of markets leading to significant distortions of competition through the review of concentrations among undertakings. However, these tools do not allow the Office to intervene in markets where competition is distorted or restricted, but not by the anticompetitive conduct mentioned above. Typically, these may concern markets where there is either a significant undertaking acting as a 'price setter', oligopolistic markets that are prone to 'tacit collusion', or markets with strong network effects, typically digital markets.

 

The new amendment should enable the Office, at first, to conduct a sector inquiry of the market in question. If the sector inquiry shows that competition has been distorted in the market for a long period of time and the situation is unlikely to change in the near future, the Office should be able to impose certain remedies that would open up the market and encourage the development of competition.

 

These measures could include, for example – a review of a higher number of mergers in the market concerned; implementing transparent and non-discriminatory norms and standards; an obligation to provide access to networks, infrastructure or data; the obligation to modify certain types of agreements or contractual provisions; setting out the requirements for commercial relations among undertakings; obligation to disclose information to reduce information asymmetry; obligation to separate accounting or business divisions, etc. In the extreme case of long-term negative effects in the market, divestiture of part of the undertaking could also be imposed if no other remedy proves effective.

The Office's limited power to inspect the premises of undertakings can be considered as a major obstacle to cartel investigations. Therefore, the Office proposes to modify the power to conduct dawn-raids so that it can also carry out random inspections, like, for example, Czech Trade Inspection Authority, or at least to conduct 'preventive' on-site inspections in highly concentrated markets.

 

In this area, which is crucial for the detection of prohibited agreements, the Office proposes to introduce procedural tools that are already in place in certain EU Member States. The practice of the Office has shown the increasing importance of electronic remote communication of the undertaking subject to the investigation, in particular managers and other employees of the undertaking. Information on telecommunication contacts among these persons is essential for the Office´s investigation. Given the fact that even during personal meetings the employees carry telecommunication devices (typically mobile phones) with them, it is also of a great importance for the Office to determine the location of these devices in the specific timeframe. The Office therefore proposes that it would be included among the institutions that are enabled by the Electronic Communications Act to ask entities operating a public communications network or providing a publicly available electronic communications service, to hand over to the Office operational and location data of the end telecommunication equipment of a user of a publicly available electronic communications service.

 

Another proposed measure is focused on natural persons who may possess information on the anticompetitive conduct. On the one hand, financial rewards for whistleblowers who provide the Office with information on anticompetitive conduct, should be introduced. On the other hand, penalties for natural persons who participated in the anticompetitive conduct should be enacted. Both measures should support the leniency program under which undertakings may notify their participation in a prohibited agreement in exchange for immunity.

Concerning the concentrations among undertakings, the Office´s proposals are focused on mergers that do not meet the current turnover criteria, and, therefore, cannot be reviewed by the Office, even though they may have significant effects in certain markets. The Office proposes a so-called call-in model. It would allow the Office to retroactively request the notification by the merging parties even in cases that do not meet the existing turnover criteria for notification. The Office should be empowered to do so if it presumes that such concentration could potentially distort competition.

Improve the access to data

The Office's inability to access data and information available to other state administrations presents another significant obstacle for the detection of the anti-competitive conduct. Based on the current legislative framework and on published information, a number of administrative bodies and institutions possess relevant data which they collect for the purpose of exercising their powers. Such data could be relevant also for the Office. However, the Office cannot be usually provided with such information, as this is (usually) forbidden by the legal obligation to protect the data pursuant to individual departmental legal provisions. Although the cooperation among ministries and other central state administration bodies is, in general, regulated by the Act on the Establishment of Ministries and Other Central State Administration Bodies and also by the Administrative Code, these legal provisions cannot be considered sufficient.

 

The Office could request certain specific data from undertakings, e.g. in the course of sector inquiries, but this procedure would be highly inefficient from the perspective of both the Office and the undertakings, if the data has already been collected by a certain state administration body. Therefore, the Office proposes a legal provision that would allow it to access the data collected by approximately ten state administration bodies. At the same time, the Office also requests the access to all public procurement data, in particular from institutions that operate public procurement information systems, which are various certification bodies and other relevant entities.

 

Press Unit of the Office for the Protection of Competition
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