Antitrust law and legislation in the Czech Republic during Covid-19

The ongoing Corona crisis poses a number of problems – including legal ones – for busi-nesses in all countries. The new market challenges may require cooperation between compa-nies or taking unilateral actions that are particularly sensitive from the antitrust perspective. The antitrust rules do not simply cease to apply during the crises, but the authorities can be more flexible. Thus, companies must ask themselves what freedoms the current rules give them to take actions that would improve their situation.

The competition authorities have already confirmed in public statements that they are will-ing to accept certain justifications to overcome or reduce the negative impact of the crisis. In a joint statement dated 23 March 2020, the European Competition Network (“ECN”) - which encompasses the national competition authorities in the EU member states and the European Commission - acknowledged “that this extraordinary situation may trigger the need for companies to cooperate in order to ensure the supply and fair distribution of scarce prod-ucts to all consumers.” Some countries (e.g. Norway, in the case of the entire transport sec-tor) have also applied a temporary exemption from the ban on cartels.

The current crisis leaves room for specific actions by the competition authorities at national level. Thus, it is important to look at the current state of play on antitrust rules in various jurisdictions. Here below we have summarised the opportunities and risks under competition law arising from the crisis in Czech Republic

The Czech Office for the Protection of Competition (the “Office”) has joined other member states from the European Competition Network (ECN) in their Joint statement on application of competition law during the Corona crisis.

According to this statement, the Office will not actively intervene in cases which would under normal circumstance potentially raise antitrust concerns, e.g. cooperation of competitors to compensate for shortage of supply of goods or other scarce commodities to end-customers. The Office issued a press release in which it explicitly declares that during the state of emergency, it is possible to purchase facemasks, respirators, and disinfectants without the statutory procurement process if such purchases are required to aid the current situation.  

The statement grants the Office wide discretion in terms of flexibility to use or modify existing mechanisms to address the national state of coronavirus epidemic. The Office will continue to intervene in cases where companies would deliberately try to take advantage of the situation by skyrocketing the prices for critical protective equipment or sanitisers or for other reprehensible market behaviour. Similarly, application of competition laws will remain on the same level of enforcement for areas not affected by the coronavirus epidemic.

The Office did not issue any communication on temporary measures in light of the coronavirus epidemic which would be specific to the control of abuse of dominant position, however it is implied that the Office will not intervene if entities in a dominant position were to make use of their position in order to aid the current situation unless those actions give rise to concerns or would constitute a potential abuse of their position (e.g. in regards to pricing, product tying, etc.).

On 23 March 2020, three Czech law firms sent an open letter to the Office in which they proposed that the Office apply a softer policy in relation to the standstill obligation. The Office is asked to take into account the unprecedented blows the entities will suffer as a result of the coronavirus epidemic and emphasis is put on the time pressure when it comes to successful restructuring or dealing with distressed assets. The softer application should involve (i) quick responses to requests for an exemption from the standstill (2-3 days), (ii) lowering of administrative burden of the companies, (iii) widening the scope of approved transactions, and (iv) exemptions will be granted in full scope. The Office has not yet responded to this letter. 

The Office did not issue any communication on temporary measures in light of the coronavirus epidemic which would be specific to the merger of undertakings. Please note that as the Government of the Czech Republic declared a state of emergency in the whole territory of the Czech Republic on 12 March 2020, which is to last at least until 1 April 2020, and with account taken of other preventive measures in place, the Office is working with limited staff and in temporary makeshift mode. Despite the makeshift mode, the notification regime remains unchanged and the Office confirmed that they do not expect any delays in notification reviews as there have not been any new notifications incoming, so they have capacity to cover the notifications received prior to the declaration of a state of emergency.