ÚOHS fined for the first time the total turnover of the members of a professional association

Recently, the Office for the Protection of Competition has been closely monitoring the impact of the conduct of specific professional associations on competition. The Czech Association of Meat Processors was criticised for public price statements commenting on the development of prices of meat and meat products, namely predictions of possible price increases. Now, the Office has toughened its stance and fined the Association of Language Schools over CZK 9 million for repeatedly setting the minimum price for one hour of foreign language instruction for tenders for the provision of language education services. Why is the fine so high?

It is clear from the recent actions of the Office of the Competition Authority that any comments by professional associations on future price developments are perceived by the Office as a potential distortion of competition, as they may constitute a form of prohibited agreement between the members of the association. An association of competitors should never comment on future price developments, even in the form of a prediction or recommendation, as it may influence the competitive behaviour of its members in the same way as a cartel agreement at the horizontal market level. In particular, a trade association must not set a minimum or maximum price and communicate it to its members.

Since the Association regularly discussed the issue of minimum prices at its meetings, checked its members to ensure that they complied with the set rates and called on them to correct them, the Office of Competition and Consumer Protection resorted for the first time to imposing a fine based on the turnover of the members of the punished association. The maximum amount of the fine can reach up to 10% of the members' turnover, which in this case exceeded CZK 900 million. Previously, the Office imposed fines on professional associations on the basis of the turnover/assets of the association itself, but this was not very dissuasive. The new method of calculating the fine was made possible by an amendment to the Act on Protection of Competition effective from 2018.

Dear professional associations, think about whether some of your certainly well-intentioned actions towards your members or externally have an impact on competition in your market. Not sure? Talk to us.