Commission Report (2002): Czech Republic

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 6: Competition policy

Progress since the last Regular Report

Since the last Regular Report, the Czech Republic has made further progress in this area.

In the anti-trust field, Czech legislation is already largely compatible with the acquis.

The Office for the Protection of Competition, which is the national competition authority in the Czech Republic, has continued to build on its enforcement record over the past year. In 2001, 132 anti-trust decisions were adopted (22 on restrictive agreements, 5 on abuse of dominance and 105 on merger cases), 12 of which were prohibitions and conditional approvals (4 with fines). In 2001, there were three court appeals against competition office decisions and all were rejected.

In October 2001, the Office issued a Decree concerning the notification of mergers, including the use of a standard form.

In an effort to concentrate its resources on the most serious anti-competitive behaviour, the Office has revised its Leniency Programme of July 2001 in line with the Commission's new programme of February 2002, in order to further encourage whistle-blowing by participants in cartels.

During 2001 the Office also intensified measures to increase public awareness of its activities, including press conferences, a regular information bulletin, and further development of its internet site, which, since February 2002, also includes a 'cartel register' listing all agreements for which an exemption or negative clearance has been granted.

In the field of state aid, the Czech Republic has already incorporated the basic principles of the acquis.

An amendment to the Investment Incentives Act came into force in January 2002, which creates a direct connection between the Act and the State Aid Act. The Czech Republic has also proposed a regional aid map, which is in line with the acquis, for joint adoption by the Association Committee. The State Aid Report for 2000 was transmitted to the Commission in December 2001 and follows the methodology and presentation of the European Commission's survey on state aid in the EU.

In 2001 the Office for the Protection of Competition, which is also the national state aid monitoring authority, issued a total of 137 state aid decisions where of 8 were non-approvals and conditional approvals. The Office currently employs 16 people in the state aid section. The necessity to assess every individual aid award under the Czech Investment Incentives Act creates a heavy workload, which could be avoided by establishing a fully compatible investment scheme.

Overall assessment

As regards anti-trust, the overall assessment is positive. Alignment of legislation is already well advanced. The enforcement record of the Office for the Protection of Competition is in general satisfactory. Not least in view of the planned modernisation and decentralisation of the application of EC anti-trust rules, efforts to further strengthen the enforcement record need to continue, giving priority to cases concerning the most serious distortions of competition and imposing more deterrent sanctions.

As regards state aid, the overall assessment is satisfactory despite remaining difficulties with regard to past enforcement in the banking sector for which there also remains a need for increased transparency. Furthermore, it is essential that state aid enforcement in the steel sector continues and in particular that a close control over the specific work being undertaken to prepare the steel industry for restructuring is maintained. In the steel industry, aid for restructuring can only be given if the national and individual restructuring programmes of the companies include necessary measures for reaching viability and necessary cuts in production capacity, in line with the requirements set out in Protocol 2 of the Europe Agreement.

As regards administrative capacity, the Office for the Protection of Competition is a fully independent authority and has sufficient resources and expertise in place. It has broad powers to enforce the competition rules. Currently, the Office employs 129 officials in total.

Conclusion

In its 1997 Opinion, the Commission concluded that the Czech Republic had already made considerable progress in terms of approximation of legislation in the field of antitrust, and that the enforcement efforts made by the Office represented an important step forward. As regards state aid, the powers of the monitoring authority to examine compatibility of aid measures needed to be clarified and improved.

Since the Opinion, the Czech Republic has made steady progress, in particular as regards legislative alignment. The administrative capacity of the Office has also been gradually strengthened, and an enforcement record has been developing in both the fields of antitrust and state aid, for the latter of which the Office took over responsibility in 2000. Overall, on legislative alignment, administrative capacities and enforcement record the Czech Republic is reasonably advanced, except enforcement in the areas of banking, where increased transparency is also needed, and steel, where enhanced monitoring will be required.

Negotiations on this chapter continue. The Czech Republic has not requested any transitional arrangements in this area.

In order to complete preparations for membership, the Czech Republic`s efforts now need to focus on strengthening its enforcement record in the field of state aid by ensuring more effective and fully transparent state aid control and monitoring, in particular in the steel and banking sectors, and on ensuring that it continues to update its alignment as the acquis in this area evolves.

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