Czech Republic: New Developments In The Czech Competition Authority's Decision-Making Practice: Whistleblowers And Appointed Guardians

The Czech Office for the Protection of Competition recently found two companies guilty of bid rigging in a public tender. While similar bid-rigging cases occur quite frequently and generally fall within the Office's purview, this case is unique because, for the first time, the office:

  • was informed about the anti-competitive behaviour by a whistleblower; and
     
  • appointed a guardian for one of the parties involved.

Decision

The Office found two companies guilty of rigging bids1 concerning the supply of emergency protection kits to the Pardubice Region medical rescue service.2

The anti-competitive behaviour involved one of the parties preparing and completing the other party's tender documentation, which was pre-filled with all of the necessary specifications and the price. It also came with instructions on how to finalise the documentation (e.g., where it should be signed and stamped).

The Office fined one of the parties CZK 173,000 (approximately EUR 6,900), but refrained from fining the other party due to extraordinary circumstances – namely:

  • the death of the party's statutory body;
     
  • all of the party's business activities were terminated; and
     
  • the party became subject to inheritance proceedings (during which it was discovered that the succession was over-indebted).

Whistleblowing

This case is particularly interesting given how the Office learned about the anti-competitive behaviour. For the first time, a former employee provided the Office with relevant emails concerning the manipulated bids. The Office deemed such information as sufficient to prove a breach of the Act on the Protection of Competition3 and concluded that it was unnecessary to raid the parties' premises to gather additional incriminating evidence.

Notably, whistleblowing and whistleblower protection remain unregulated in the Czech Republic.4

Appointing guardians

This case also involved a procedural tool which the Office had not used before – namely, appointing a guardian. The reason behind this step was the death of one of the party's director, which had left the company without a representative in the proceedings before the Office. Under the applicable statutory provisions, the Office may appoint someone as a guardian. In the present case, the Office chose to appoint the managing director's husband, who could decline the appointment only if serious reasons would hinder him from accepting it (which was not the case).

Comment

Bid rigging remains within the purview of the Office, as highlighted by (among other things) a separate office press release stating that it is the second most successful competition authority in the European Union in detecting bid-rigging cases.5

Since the start of 2019, the office has been informed about six bid-rigging cases, which resulted in fines. The Office's press release covering the case at hand highlighted how welcoming the Office is with regard to receiving information on anti-competitive behaviour from company employees. This case also demonstrates that the Office is willing to handle seemingly small cases.

Considering these latest developments, companies that have not already done so should put greater emphasis on and effort into compliance programmes to prevent anti-competitive behaviour and introduce measures to detect such behaviour swiftly and effectively.6

Footnotes

1.Bid rigging occurs when businesses that would otherwise be expected to compete with one another secretly conspire to raise prices or lower the quality of goods or services for purchasers that wish to acquire products or services through a bidding process.

2.Case ÚOHS-S0123/2018/KD-11839/2019/852/RSk, available in Czech here.

3.Section 3(1) of Act 143/2001 Coll on the Protection of Competition and Amending Certain Acts.

4.There have been several unsuccessful attempts to pass a whistleblowing act in Parliament.

5.Press release available in Czech here.

6.If a company detects anti-competitive behaviour in a timely manner, it may make use of the so-called 'Leniency Programme' to grant cartel participants – who by their cooperation contribute to uncovering the cartel – immunity from or reduced fines.

This article first appeared on International Law Office.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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