New rules on leniency and settlement procedure discussed in Czech Parliament

Leniency programmes and settlement procedures are commonly used by the Czech Office for the Protection of Competition (“Office”). The leniency programme was used as a “soft law” by the Office since 2001 to promote discovery of unlawful horizontal agreements. As for the settlement procedure, it started to be applied in the Office's practice in 2008 without any legislative basis and aims at a "simplified" and therefore less costly procedure. The conditions for the application of the settlement procedure were defined only in the decisions of the Office and later in its soft-law documents. Both concepts were expressly incorporated into Czech law in 2012.

Their use in practice may be demonstrated, for example, on the recent decision where the Office sanctioned a bid rigging agreement on projecting high-speed rails concluded by SUDOP PRAHA a. s. (“Sudop”) and Výzkumný Ústav ┼Żelezni─Źní, a. s. (railway research centre – “VUZ”). VUZ informed the Office on the existence of the cartel agreement within the leniency programme and thus the fine on VUZ was not imposed. Sudop applied for the settlement procedure, within which it admitted to committing the illegal conduct and its fine was reduced by 20% to CZK 9,302,000 (approx. EUR 350,000). Since neither VUZ nor Sudop filed an appeal, the decision has come into force.

In relation to the leniency programme and settlement procedure, the Czech Parliament is currently discussing a bill implementing EU Directive 2019/1 and amending these concepts. The bill in relation to the leniency programme incorporates slight changes reflecting especially Chapter VI of the Directive. In particular, the programme shall newly apply to both horizontal and vertical agreements, not only to the horizontal ones. The bill also specifies who is eligible to file a request for a leniency programme and the possibility to apply for a marker which gives the potential applicant the opportunity to "protect" the order of his leniency application. If the application in the same matter is submitted to the EU Commission, the same shall apply on the European level.

The settlement procedure is newly comprehensively regulated reflecting the current practice of the Office. The bill would add more detailed rules for conducting the settlement procedure as a specific negotiation between the Office and the party to the proceedings. In particular, the Office may at any time terminate the settlement procedure in whole or in relation to one or more parties to the proceedings if it considers that procedural savings cannot be expected or in view of the nature and gravity of the distortion of competition. Furthermore, if all statutory requirements are met, the fine shall be reduced upon Office discretion by 10 to 20 % (instead of 20 % in all cases). This is to emphasize a "non-claim" character of the whole concept and to fully develop its main purpose, i.e. procedural savings.

The bill is still in the legislative process and its wording might be changed.


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