Compensation of harm caused by anti-competitive behaviour in the Czech Republic

Competition rules are enforced by competition authorities such as the Office for the Protection of Competition in the Czech Republic (“the Office”). Although these authorities have the power to impose substantial fines on companies that breach the law, they do not have the power to award compensation to the individuals or companies affected by such anti-competitive behaviour. Therefore, victims of anti-competitive practices are increasingly interested in bringing the matter to the attention of national courts and to get damages. Nowadays, it is possible to start private enforcement proceedings in every EU Member State. However, the procedural rules vary considerably between Member States. Here, we examine the fundamental rules for recovering compensation for damage suffered in consequence of anti-competitive behaviour in the Czech Republic.
 
The legal basis of competition litigation
 
In Czech competition law, the legal basis for bringing actions for breach of Czech, EU Member States’ or EU competition law is contained in the Act No. 262/2017 Coll., on Compensation of Damage in the Area of Competition (“the Compensation Act”). The law implements Directive 2014/104/EU on antitrust damages actions and seeks to remove the obstacles that impede effective compensation for victims of the antitrust violations. To this end, the Compensation Act has introduced numerous measures which facilitate antitrust damages actions that were previously almost non-existent in the Czech Republic.
 
Standing to bring an action for breach of competition law
 
The Compensation Act provides wide active legal standing under which any natural or legal person harmed by an infringement of competition law may bring an action for damages before the competent Czech courts.
 
Moreover, in light of the principle of effectiveness, consumers – including small entrepreneurs with up to 10 employees and an annual turnover of up to CZK 50 million – may bring class actions for damages, pursuant to the Act No. 179/2024 Coll., on Civil Class Proceedings (the Class Proceedings Act). The law is based on opt-in model, which means that consumers must actively register their claim. For a class action to be admissible, there must be a group of at least 10 consumers.
 
It is important to note that only non-profit organisations registered with the Ministry of Industry and Trade acting on behalf of a group of consumers can bring a group action for damages. Under the Class Proceedings Act, the members of the group are not parties to the proceedings and have only limited procedural rights in the proceedings (e.g. to comment on the subject-matter or conduct of the proceedings). Class actions are dealt with at the first instance by the Municipal Court in Prague.
 
Scope of compensation
 
The Compensation Act further regulates the scope of compensation and sets out the right of any claimant to obtain full compensation for any damage suffered as a result of anti-competitive practices as well as interest on the damages. Accordingly, the discretionary power of a judge to reduce compensation, which is otherwise typical for civil litigation proceedings, does not apply. On the other hand, Czech courts do not award punitive damages.
 
It seems that the most important case, in which monetary damages have been awarded, though not apparently conclusively, so far, is ASIANA v STUDENT AGENCY. This was a follow-on damages case in which a bus transport company, ASIANA, sued its competitor, STUDENT AGENCY, for damages arising from abuse of a dominant position by setting unreasonably low prices and having forced ASIANA out of the bus transport market on the Prague-Brno route in 2007 and 2008.
 
Following a years-long legal battle in that case, in January 2024, the High Court confirmed[1] a judgment of the Regional Court in Brno[2] that awarded approximately CZK 11 million in damages, as well as default interest, to ASIANA on the basis of a submitted econometric study, which measured losses as the difference between the earnings ASIANA would have received if the harmful event had not occurred and the earnings ASIANA has received given the harmful event.
 
Timing
 
As a rule, antitrust damages actions must be commenced, under the Compensation Act, within five years from the time the infringement has ceased and the claimant became aware or could have reasonably been expected to know the harm, the identity of the infringer and the competition law infringement. However, this time period is suspended when, for example, the Office conducts the proceedings relating to the infringement, which is the subject of the damage action.
 
In practice, the duration of the proceedings will depend upon the facts and complexity of the case. Nevertheless, it can be generally expected that the first instance proceedings should take from one to two years, while appellate proceedings could take another one to two years. Accordingly, the final judgment could be obtained approximately within two to four years.
 
Evidence
 
Obviously, no claim can succeed without substantive evidence. Obtaining this evidence is critical issue in any action. Therefore, it is appreciated that under the Compensation Act the claimants have easier access to evidence necessary in actions for damages. In particular, if a party needs specific documents that are in hands of the infringer or third parties, it may obtain (subject to payment of a deposit of CZK 100,000) a court order for the disclosure of such documents. Non-compliance with a disclosure order will be subject to the imposition of a procedural fine by the court of up to CZK 10 million or up to one percent of annual turnover. However, amnesty/leniency statements are excluded from the disclosure.
 
It is further noteworthy that the Compensation Act establishes a rebuttable presumption that the cartels caused damage. This presumption is a clear divergence from the rules on general liability for damage where the plaintiff has to prove that damage was suffered.
 
Pursuing the same objective, the Compensation Act explicitly states that the decisions of other courts, the European Commission and the Office finding a competition law infringement constitute binding poof that the behaviour took place and was illegal. Apart from this, the decisions of the competition authorities from other EU Member States constitute prima facie evidence of an infringement.
 
Justification / defences
 
Nevertheless, the Compensation Act stipulates that the defendants can rely on the passing-on defence against the claimant. The infringer can thus reduce compensation to direct customers by the amount they passed on to indirect customers.
 
Conclusion
 
Competition law enforcement systems are based on two enforcement pillars, public enforcement and private enforcement. The Compensation Act, which removed main elements that hindered development of private enforcement of competition law in the Czech Republic, brought both these pillars on an equal footing. Although it is true that there was only a limited number of civil law litigation cases relating to competition so far, this trend may change in the near future, owing to an increased awareness among companies and lawyers of the possibilities of using the competition rules “offensively”.
 
Tomáš Fiala
Vejmelka & Wünsch
Prague, Czech Republic
 
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AUTHOR & CONTACT INFORMATION
 
AUTHOR:                                             Tomáš Fiala
 
AUTHOR EMAIL:                                prague@vejwun.cz
 
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FIRM DESCRIPTION:
 
Vejmelka & Wünsch is one of the leading law firms in the Czech Republic. The provision of comprehensive services for clients in respect of all types of commercial projects constitutes the core activity of the law firm. Vejmelka & Wünsch’s competition law practice encompasses a broad range of matters in antitrust, competition and related areas of law. Vejmelka & Wünsch has participated in all types of proceedings before the Czech Competition Office. The most important areas have been and likely continue to be cartel proceedings and competition compliance programmes. Its lawyers have successfully guided numerous proposed mergers through the merger clearance requirements. Similarly, the firm regularly advise multinational companies with respect to their distribution systems, pricing policies and related matters.
 
AUTHOR BIOGRAPHY:
 
Tomáš Fiala is an attorney at Vejmelka & Wünsch. He specialises on competition, data protection and pharmaceutical law. He has advised a number of Czech and international clients in prominent competition proceedings before the Czech Competition Office. Prior to joining Vejmelka & Wünsch, Tomáš worked at the Competition Office where he held a position of the Director of the European and International Department. He participated as a speaker at several seminars and conferences in competition law and is an author of various legal articles in this field.