May 2012 – On 29 March 2012, the Regional Court in Brno issued a judgement ruling that a request for information made by the Czech Competition Office could be considered as inadmissible only if the Czech Competition Office was not obviously entitled to conduct the proceedings during which the request was made (i.e. making such a request would obviously exceed its powers in an excessive way). This conclusion follows the view that procedural defects should primarily be rectified by remedial measures stipulated by law, whereas the right to seek direct judicial redress against unlawful infringement has only a subsidiary role.
Subject matter of the case
In March 2011, the Office for Protection of Competition (the “Office”) initiated administrative proceedings against Telefónica Czech Republic (“Telefónica“) for alleged abuse of dominant position by means of a margin squeeze in the market of access to Internet services through broadband ADSL technologies. So far, the Office has not taken a decision on the merits of the case.
Previous interventions by Czech courts
The current administrative proceedings were preceded by so called “preliminary investigations” conducted by the Office. These investigations lasted from November 2008 until September 2011 when, at Telefónica’s request, the Office was ordered by the Regional Court in Brno[1] to discontinue preliminary investigations. The verdict of the Regional Court in Brno was later confirmed by the Supreme Administrative Court in September 2011.[2]
In its action, Telefónica mainly claimed that (i) the preliminary investigations were lasting too long, (ii) the amount of information required by the Office was too extensive and that (iii) the scope of the preliminary investigations had been altered continuously. The courts supported Telefónica’s view and ruled that the Office may initiate preliminary investigations of market practices that potentially distort competition, but that such investigations must be reasonable in terms of duration and scope – which in the view of the court was not the case here. The Office responded to the court’s decision by opening official administrative proceedings against Telefónica regarding its dominant position on the ADSL broadband market in March 2011.[3]
The second intervention of the court, this time in favour of the Office
Arguments of the parties
During the course of the current administrative proceedings, Telefónica approached the Regional Court in Brno with a further claim. Telefónica sought protection against what it saw as the Office’s unlawful infringement in making an excessive request for information and asked the court to prevent the Office from requesting such information. Telefónica in particular claimed that (i) the Office required an excessive amount of information (thousands of pages of documents), (ii) the required information had already been provided in the course of the preliminary investigation conducted by the Office and (iii) if the Office requires information that has already been provided and assessed in preliminary investigation and if the Office concludes that such information is not relevant to the proceedings in question, then such procedure of the Office deviates from the limits of proportionality and should be banned. Telefónica further stated that the only reason for the Office requesting the information was to remedy procedural defects in the preliminary investigations discontinued by the court.
The Office rejected the arguments of Telefónica and stated that (i) it is obtaining all information and documents in compliance with law in order to undertake a proper assessment of the present case, (ii) it is proceeding within the framework of its powers and (iii) the request for information cannot be considered as an unlawful infringement since such request has the form of a decision which is taken in administrative proceedings and which can be subject to a review procedure.
Findings of the court
Taking into consideration existing case law,[4] the Regional Court in Brno concluded that a request for information could be considered as an unlawful infringement within the meaning of Section 82 of the Code of Administrative Court Proceedings.[5] However, such request could be considered as an unlawful infringement only if the Office was not obviously entitled to conduct the proceedings during which the request was made (i.e. it would obviously exceed its powers in excessive way). This conclusion follows the view that the procedural defects should primarily be rectified by the remedial measures provided by law,[6] whereas the right to seek protection against unlawful infringement has only subsidiary role.
The Regional Court in Brno concluded that since the Office has duly initiated the proceedings and the request for information was made within such proceedings, it proceeded in compliance with law and was entitled to request the information.
Conclusion
A request for information is an important tool used by the Office during administrative proceedings. It enables the Office to gather the information necessary for its decision. The Office is in general free to determine the course of action during an administrative procedure. The Regional Court in Brno confirmed the view that the courts may interfere during such proceedings only in exceptional cases and only provided that there is no other possible remedy, such as a remonstrance with the Chairman of the Office or a judicial review of the Office’s final decision (which is the case in the event of a request for information issued by the Office in course of the antitrust proceedings).
For further information contact Tomas Cihula, Counsel, at , or Michal Forytek, Senior Associate, at .
Source: Tomáš Čihula, Michal Forýtek, A Czech court holds that a request for information is inadmissible only if clearly excessive in a case concerning an abuse of dominance in the telecom sector (Telefónica), 29 March 2012, e-Competitions, No45893, www.concurrences.com
[1] See judgement of the Regional Court in Brno, ref. no. 62Af69/2010-78, dated 13 January 2011.
[2] See judgement of the Supreme Administrative Court, ref. no. 5Aps4/2011-326, dated 22 September 2011.
[3] See notice on opening the administrative proceedings, ref. no. ÚOHS-S109/2011/DP-4675/2011/820/JKo, dated 25 March 2011.
[4] See particularly judgement of the Supreme Administrative Court, ref. no. 5Aps6/2009-2007, dated 29 January 2010.
[5] Act No. 150/2002 Coll., Code of Administrative Court Proceedings (the „CACP“).
[6] Sect. 65 CACP, Sect. 152 of Act No. 500/2004 Coll., Code of Administrative Procedure.