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Second Annual Conference on Competition Enforcement in the Recently Acceded Member States

Brno 23 April 2010

Development of Competition

Enforcement in the Czech RepublicImportant Decisions

Robert NerudaVice Chairman

Office for the Protection of Competition, the Czech Republic

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Overview

• Background• Cartels• Abuse of dominance• Mergers• Courts• Conclusions

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Background

• Organisational changes– structure of the Competition Section– Chief economist department– Cartel department– Devil's advocates' panel

• Policy changes– willingness to enforce signaled– more economic approach– Prioritisation

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First instance decisions

3

0

3

4

1

5

11

4

15

0

2

4

6

8

10

12

14

16

2007 2008 2009

Agreements

Abuses

Total

5

Cases Opened

54

9

5

3

89

0

9

15

1

16

2 13

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009

Agreements

Abuses

Total

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Overview

• Background• Cartels• Abuse of dominance• Mergers• Courts• Conclusions

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Cartels

Cases

• RPM campaign provisionally finished• Export bans

– Sokolovská uhelná (lignite)– KMV (soft drinks, settled)

• Pending– bid rigging (evidence submitted by the police)

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Cartels

Other important developments

• Leniency program – rules on access to leniency file– seeking a balance between LP and settlements– joint application

• Self incrimination rules

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Overview

• Background• Cartels• Abuse of dominance• Mergers• Courts• Conclusions

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Abuse of dominance

Development

• Focus on exclusionary conduct• Pricing (margin squeeze, predatory pricing)• But still some room for investigation of

exploitation!– RWE Transgas

• excessive advances for gas supply • compensation of damages in settlement procedure

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Abuse of dominance

Cases

• MUS (lignite)– complaint on refusal to supply and discriminatory (excessive)

pricing– mutual business dependence between MUS and heating plant– no dominance found despite very high market share (> 60 %)

• countervailing buyer power (dominance on purchase market)

• vertical integration of competitors

– case closed …• … with controversy

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Abuse of dominance

Commitments

• RWE Transgas– access to gas storage facilities– parallel investigations by the Office and the regulator

(ERU)– commitments outside formal proceeding

• making 20 % of storage capacity available to competitors• shortening of capacity reservation by 12 years

– lessons learned

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Overview

• Background• Cartels• Abuse of dominanceAbuse of dominance• Mergers• Courts• Conclusions

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Mergers• Crisis? What?

• Scarce interventions– but structural commitments only (Agrofert/Agropol)– painful revision of commitments

• Concept of undertaking– definition of economic activity – health insurance is not economic activity (HZP/ZP Agel)

• Are some mergers abandoned because of the threat of MEA?

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Overview

• Background• Cartels• Abuse of dominanceAbuse of dominance• Mergers• Courts• Conclusions

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Courts

• Supreme Administrative Court– Petrol stations cartel

• succession of liability - a Pyrrhic victory?• automatic legal or economic continuity not available in the

Czech law– except for cases where transformation of company was

motivated (at least partially) by the intention to evade consequences of violation of competition law

• fully applicable for 2001, but situation might have changed after 1 May 2004 (1 September 2009)

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Overview

• Background• Cartels• Abuse of dominanceAbuse of dominance• Mergers• Courts• Conclusions

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Conclusions

• Significant change of competition policy– from formal to effect based approach

• Due process in cartel investigation• Balance between leniency program and settlements• Mergers as usually

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Thank you for your attention.

For further information:Robert Nerudarobert.neruda@compet.czwww.compet.cz