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Criminal Sanctions for Anticompetitive Conduct in the Czech Republic European Competition Day

Criminal Sanctions for Anticompetitive Conduct in the Czech Republic European Competition Day Brno , 13 May 2009 Martin Nedelka , Schönherr Prague/Brussels. Legal Framework. Current Criminal Act Sec. 127

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Criminal Sanctions for Anticompetitive Conduct in the Czech Republic European Competition Day

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  1. 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. Brussels in the market since: 1996 B-1000 Bruxelles, Avenue de Cortenberg 52 T: +32 2 743 40 40, F: +32 2 743 40 49, E: office@schoenherr.be SRB-11000 Beograd, Francuska 27 T: +381 11 320 26 00, F: +381 11 320 26 10, E: office@schoenherr.co.yu UA-01033 Kyiv, 44 Shota Rustaveli, 3rd floor T: +38 044 220 10 46, F: +38 044 220 10 45, E: office@schoenherr.co.ua PL-00120 Warszawa, ul. Złota 59 T: +48 22 222 42 00, F: +48 22 222 42 99, E: office@schoenherr.pl Kyiv in the market since: 2006 Warszawa in the market since: 2009 Belgrade in the market since: 2002 RO-010413 Bucureşti, Blvd. Dacia Nr. 30, Etaj 4, Sector 1 T: +40 21 319 67 90, F: +40 21 319 67 91, E:office@schoenherr.ro SK-81106 Bratislava, 1. mája 18 (Park One) T: +421 252 622 950, F: +421 252 622 954, E:office@schoenherr.sk H-1024 Budapest, Buday László utca 12. T: +36 1 345 45 35, F: + 36 1 345 45 43, E:office@schoenherr.hu Bratislava in the market since: 2009 Bucharest in the market since: 1996 Budapest in the market since: 2008 Ljubljana in the market since: 2001 Prague in the market since: 1992 CZ-11000 Prague 1, nám. Republiky 1079/1aT: +420 225 996 500, F: +420 225 996 555, E: office@schoenherr.cz SI-1000 Ljubljana, Tomšičeva 3T: +386 1 200 09 80, F: +3861 426 07 11, E: office@schoenherr.si A-1010 Vienna, Tuchlauben 17 T: +43 1 534 37 0, F: +43 1 534 37 6100, E: office@schoenherr.at Vienna in the market since: 1950 Sofia in the market since:2004 BG-1000 Sofia, Alabin 56 T: +359 2 933 10 70, F: +359 2 986 11 05, E: office@schoenherr.bg Zagreb in the market since: 2001 HR-10000 Zagreb, Ul. kneza Branimira 29 (Branimir Centar) T: +385 1 481 32 44, F: +385 1 481 30 73, E: office@schoenherr.hr

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