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The Czech Republic Significant Market Power Act Fundamentally Redesigned

The Czech Republic Significant Market Power Act Fundamentally Redesigned

Czech Republic
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As of 1 January 2023, a significant amendment to the Act on Significant Market Power takes effect.

An entity with significant market power will now be defined as a buyer of agricultural or food products whose annual turnover:

a) exceeds € 2 million and who falls within the defined turnover bands into a higher band than its supplier (e.g. a buyer with an annual turnover exceeding € 2 million vis-à-vis a supplier with an annual turnover under € 2 million, or a buyer with an annual turnover exceeding € 10 million vis-à-vis a supplier with an annual turnover under € 10 million), or

b) generated on the territory of the Czech Republic exceeds CZK 5 billion, provided that the market power of its business partner is not relevant in this case.

If one of these criteria is met by your group (regardless of whether food or agricultural products make up only a small part of your product range), please pay close attention to the following message.

Even in the face of opposition from the professional public, the amendment passed through the legislative process in a much stricter form than required by the European directive it was supposed to implement.

Obligations that previously applied to about eight food retail chains will now apply to a multiply wider range of persons, primarily for the following reasons:

I. the newly introduced threshold of € 2 million is substantially lower than the original threshold of CZK 5 billion,

II. the turnover threshold is now calculated on any turnover (and not on turnover specifically related to food purchases, as was previously the case),

III. the new regulation affects not only food buyers but also buyers of agricultural products (e.g. semi-finished food or ingredients),

IV. the new regulation affects not only the end buyers (level above consumers), as it was in the application practice to date, but also all buyers upstream in the supply and offtake chain.

The turnover of the whole group is relevant for these purposes.

Entities with significant market power are not only restricted under severe penalties, what contractual terms they can agree with a supplier, buyer, processor or distributor, but also in the way they deal with these business partners.

Our law firm has extensive experience with the application of the Significant Market Power Act and the necessary adjustments to supplier-buyer contractual documentation.

By Michal Hrabovsky, Head of Competition, Eversheds Sutherland

Czech Republic Knowledge Partner

PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

PRK Partners has one of the most experienced legal teams on the market. We are consistently rated as one of the leading law firms in the region. We have received many significant honours and awards for our work. We represent the interests of international clients operating in the Czech Republic in an efficient way, combining local knowledge with an understanding of their global requirements in a business-friendly approach. We are one of the largest law firms in the Czech Republic and Slovakia. Our specialised teams of lawyers and tax advisors advise major global corporations as well as local companies. We provide comprehensive legal advice drawing on our profound knowledge of local law and markets.

Our legal advice delivers tangible results – as proven by our strong track record. We are the only Czech member firm of Lex Mundi, the world's leading network of independent law firms. As one of the leading law firms in the region, we have received many national and international awards, in some cases several years in a row. Honours include the Chambers Europe Award for Excellence, The Lawyer and Czech and Slovak Law Firm of the Year. Thanks to our close cooperation with leading international law firms and strong local players, we can serve clients in multiple jurisdictions around the globe. Our strong network means that we can meet your needs, wherever you do business.

PRK Partners has been repeatedly voted among the most socially responsible firms in the category of small and mid-sized firms and was awarded the bronze certificate at the annual TOP Responsible Firm of the Year Awards.

Our work is not only “business”: we have participated on a longstanding basis in a wide variety of pro bono projects and supported our partners from the non-profit sector (Kaplicky Centre Endowment Fund, Tereza Maxová Foundation, Czech Donors Forum, etc.).

Firm's website: www.prkpartners.com

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