In part two of this article we focus on further aspects of new legislation introduced by the new Act No. 262/2017 Coll., on compensation for damages connected with competition law, which became effective in the Czech Republic as of 1st September 2017.

Presumption of damage caused by a cartel

The new Act embodies a rebuttable presumption that if there is an infringement of competition law in the form of a cartel, then damage is always assumed. This presumption applies only in relation to cartels (!), not in other cases of an infringement of competition law provisions.

Due to this legislation, the burden of proof is transferred from the damaged party (petitioner) to the infringer (defendant), i.e. the infringer shall be obliged to prove that the damage has not occurred. The procedural position of the damaged party shall be thereby simplified and reinforced.

Disclosure of evidence

The new Act introduces a new type of proceedings which aims to simplify the access of damaged party to the evidence and thereby to enable the performance of right to compensation for damages.

Damaged party that is short of evidence, but has presented a reasoned justification containing reasonably available facts and evidence sufficient to support the plausibility of its claim for damages, may propose that the court orders to the defendant or a third party to disclose relevant evidence which lies in their control, or to provide information, where such evidence is. (In exceptional cases it is possible to impose this obligation also to a relevant competition authority!).

The proposal may either precede the initiation of the proceedings for compensation of damages, so that the damaged party may become acquainted with all necessary evidence before submitting the legal action, or be made later during the actual proceedings.

In order to protect the new legal institute against its abuse and to protect the relevant entities from possible damages, which may occur due to the disclosure of evidence, the applicant has a statutory obligation to pay a security deposit in the amount of CZK 100,000.

The right to claim any compensation for damages caused by the disclosure of evidence must be exercised with the court within the period of 6 months from disclosure.

When deciding about the scope of the evidence to be disclosed to the applicant, the court has to respect inter alia the fact, whether the required documents may contain any commercial, bank or equivalent secrecy protected by law. If so, the court shall impose the obligation to maintain the confidentiality with respect to the party gaining the access to it.

An entity which refuses to disclose the court ordered evidence may be fined up to CZK 10,000,000 or 1% of its net turnover for the last accounting period.
In case of breach of confidentiality with respect to any commercial, bank or other equivalent secrecy, the court is entitled to impose a fine up to the sum of CZK 1,000,000.

Proceedings for compensation of damages caused by an infringement of competition law

The regional courts will newly have their material competence to decide in the first instance.

Failure to disclose evidence ordered by the court will lead to legal fiction that the relevant fact had been proven. In case of breach of any mandatory confidentiality duty, the court may rule that such evidence relating to this breach will not be admitted.

Courts shall apply the Civil Procedural Code (unless the law determines something else).

By Jiří Spousta & Magda Stárková