The Office for the Protection of Competition (Office) recently applied an alternative solution to a potential competition issue related to vertical resale price agreements and customer restriction agreements. Although the Office discovered the existence of the agreements, it did not initiate administrative proceedings.
If, on the basis of a preliminary investigation, the Office concludes that a competition issue lends itself to being resolved without administrative proceedings, it contacts the company it suspects may have violated competition law. The company then has 10 days to notify the Office in writing that it intends to eliminate the alleged competition issue, after which it must submit a proposal of measures for doing so. The proposal must include a deadline by which the company will resolve the issue. If the Office judges that the proposed measures are adequate, it refrains from initiating administrative proceedings provided that the company carries out what it proposed.
In this particular case, in its preliminary investigation the Office found that the vertical agreements had not been performed. Moreover, the company itself took the initiative to amend the conditions for the distribution and resale of its goods and to remove all potentially anti-competitive provisions, even before the Office began its investigation. The company also explicitly informed its customers about the invalidity of the questionable provisions and of the fact that it did not intend to enforce them.
In these circumstances, the Office found this case suitable for the application of alternative solutions because the company had fulfilled all the necessary conditions, i.e.:
- it had an insignificant market share,
- the agreements had not been performed or enforced, and
- the potential problem was eliminated before the Office intervened.
The approach taken by the Office in this case is used before an actual investigation. This is in contrast to the settlement procedure, which is usually resorted to when a competition law breach has been found. The Office has published guidance with more information available in Czech here.
In the case at hand, the Office refrained from initiating administrative sanction proceedings, primarily in acknowledgment of the company's cooperative attitude, its acknowledgment of the previous distortion, and its willingness to actively correct it.
Depending on the circumstances of an individual case, cooperation with the Office may therefore be beneficial, with a decision being taken not to impose a fine even before an administrative proceeding is initiated. Of course, all the statutory requirements must be met, and such procedure is at the discretion of the Office.
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