CMS Expert Guide Competition Compliance Programmes in Czech Republic

Yes, the Czech Office for the Protection of Competition (the National Competition Authority, the “Czech NCA”) published guidelines on CCPs, effective from 1 January 2024.

The Czech NCA is prepared to take into account both existing programmes as well as new introductions.

The conditions for the possible consideration of a compliance programme as a mitigating circumstance are:

• The sufficiency of the compliance programme itself in relation to the size and market power of the competitor and the type of market on which it operates.
• The successful use of the Czech NCA’s Settlement and/or Leniency Programme in the proceedings before the Czech NCA.
• That, in the case of an already established compliance programme, anticompetitive conduct has occurred without the knowledge of the statutory bodies or management of the competitor concerned.

In considering compliance programmes as a mitigating factor, the Czech NCA intends to give more weight to already established compliance programmes of sufficient quality before they are introduced only in response to the Czech NCA’s investigation. In doing so, it will further take into account the degree and timeliness of the competitor’s cooperation with the Czech NCA and the quality of the individual measures proposed.

In this context, the Czech NCA notes that it will in no case take into account only formal compliance programmes without effective implementation and monitoring of the specific measures proposed.

In the guidelines, the Czech NCA defines a compliance programme as a system of internal measures and procedures for the prevention, detection and response (including internal sanctions) to potential anti-competitive conduct. It emphasises that any compliance programme must be tailored to the specific competitor, as this is the only way it can be truly effective and fulfil its function.

Therefore, in practice it is necessary to carefully document all compliance measures taken by a company, e.g. to record the training of staff and the activities of the compliance officer and compliance department. At the same time, the Czech NCA encourages a “tone from the top” approach, involving the company’s top and senior management in the enforcement of compliance. This is the only way to create a corporate culture at a given company that will be respected by all its employees and staff. The Czech NCA recommends declaring the existence of a CCP on the company’s website.

The guidelines also contain a list of typical measures that the Czech NCA recognises as appropriate to comply with the competition rules. These measures include the introduction of a risk identification system (using a risk map and control matrix), regular training sessions (at least once a year), the creation of internal information (whistleblowing) channels, the establishment of a compliance officer or an entire compliance department (depending on the size of the company) or the adoption of disciplinary measures.

It focuses on:

1. The form of the compliance programme, its content and scope

• The actual implementation and compliance.
• The pro-competitive setting of the corporate culture.
• The explanation of competition law concepts, possible penalties for anti-competitive conduct, and how to proceed in the event of a dawn raid.
• The involvement of all the competitor’s employees, from top management to the rank and file.
• Statements internally and externally about the need to comply with competition law.
• Regular monitoring and auditing of the operation of the compliance programme.

2. Compliance measures

• Risk assessment for competition law infringements, ad hoc.
• Regular and effective training of all employees once a year, e.g. employees can be instructed on topics that can be discussed with other competitors and, conversely, on topics that must not be discussed.
• Monitoring compliance with the compliance programme (compliance officer) and disciplinary system, e.g. an internal reporting system can be set up

In September 2022, the Czech NCA changed its previously cautious stance on competition compliance with a landmark decision in the Z-TRADE s.r.o. case, despite the absence of explicit legal regulation. For the first time in its history, the Czech NCA considered the implementation of a compliance programme by the competitor when determining the fine. As a result, and following a settlement, the authority further reduced the basic amount of the fine.

This case involved a distributor of luxury candles, which set resale prices for its customers and controlled and enforced non-market prices set in this way, which is prohibited under competition law. In the administrative proceedings before the NCA, the distributor made use of the settlement process and at the same time demonstrated that it was implementing an individualised compliance programme for itself. In doing so, it achieved a relatively significant reduction in the fine.

In January 2024, the Czech NCA issued its guidelines on CCPs, published alongside a revised version of its methodology for calculating fines.

Further, the Czech NCA recently dealt with several cases, e.g. in the pet food sector, where companies were fined for anti-competitive practices, specifically for setting minimum resale prices and enforcing compliance with these prices among distributors. In each case, the Czech NCA acknowledged the companies’ voluntary cooperation, such as early termination of the illegal conduct, informing customers about pricing freedom, and implementing or enhancing competition compliance programmes. These factors led to significant reductions in the fines. The Czech NCA emphasised that, while such vertical price-fixing agreements are serious infringements, the adoption of compliance programmes and active cooperation can mitigate the penalties.

The fact that a company has a CCP is assessed in terms of the effort made by the Czech NCA; however, a company must have a properly set up and functioning compliance programme or commit to its implementation.

Compliance programmes adopted and implemented before the Czech NCA opens an investigation, which have not proved to be fully effective (not allowing for the prompt detection and discontinuation of the infringement), but which can be considered sufficiently effective, may be eligible for a reduction in the basic amount of the fine by up to 10%, provided that the company modifies the compliance programme accordingly and starts implementing it after the opening of the administrative procedure. 

In its assessment, the Czech NCA will consider how the competitor’s existing compliance programme has been established, applied, why and at what level the programme has been breached and the measures taken to strengthen it.  

Yes. The Czech NCA outlined as a condition under which the compliance programme could be taken into account as a mitigating circumstance, the fact that, in the case of an already established compliance programme, the anticompetitive conduct took place without the knowledge of the statutory bodies or management of the competitor concerned.

Yes, since September 2022.

A new guideline from the Czech NCA specifies that it can reduce the final amount of the fine because of the introduction of a compliance programme by up to 5%, and up to 10% in the case of an existing compliance programme, which is deemed sufficiently effective. This is contingent on the competitor modifying the CCP accordingly and beginning its implementation after the Czech NCA’s procedure commences.

In the Czech Republic, the adoption or updating of CCPs could be used as evidence of “self-cleaning” measures when an economic operator faces the risk of exclusion from a public procurement procedure. The contracting authority may take the implementation of effective CCPs into account as part of an economic operator’s efforts to demonstrate corrective actions. However, the operator must also provide proof of other remedial measures, such as cooperation with authorities, restitution, or taking steps to prevent future infringements. 

Growing importance of CCPs: The Czech NCA has increasingly recognised the relevance of CCPs in recent decisions. While Czech law does not mandate CCPs, the Czech NCA has started considering their implementation and effectiveness as a mitigating factor when determining fines for anti-competitive behaviour. Companies that have robust CCPs in place and demonstrate genuine efforts to prevent competition law violations may benefit from reduced sanctions.

Recent case law developments: In several recent cases, the Czech NCA has acknowledged compliance programmes as part of settlements and reductions in fines. For example, companies that cooperated with the Czech NCA, promptly corrected their anti-competitive conduct, and implemented CCPs, were able to achieve significant reductions in fines. This trend highlights the practical value of adopting CCPs beyond mere regulatory compliance.

Regulatory guidance: The Czech NCA’s recent guidelines on fining and compliance programmes, published in January 2024, provide further clarity on what the Czech NCA considers to be an effective CCP. These guidelines encourage companies to actively implement and continuously improve their CCPs, with a focus on prevention, internal controls, training, and reporting mechanisms to avoid violations.

Ongoing adaptation: Czech companies, particularly those operating in sectors prone to regulatory scrutiny, have begun to adopt CCPs as part of their standard business practices. This trend is likely to continue as enforcement becomes stricter and companies strive to maintain market integrity and avoid legal risks.

In summary, the Czech NCA’s evolving stance on CCPs, together with recent case law and the publication of CCP guidelines, indicate that adopting and maintaining a robust compliance programme is increasingly seen as both a preventive measure and a mitigating factor in the event of competition law infringements, including a fine reduction.

Recently, the Czech NCA published a guideline on competition compliance programmes, and while they are currently implementing and evaluating its impact, further developments may emerge based on its effectiveness.