In 2009, the Slovak Antitrust Authority (body for protecting competition in the Slovak Republic, hereinafter referred to as the “Authority”) imposed a fine of over ten million euros on three major Slovak banks – Československá obchodní banka a.s., in the amount of EUR 3,183,427, Slovenská sporiteľna, a.s. (hereinafter referred to as “Sporitelna”), in the amount of EUR 3,197,912, and Všeobecná úverová banka a.s., in the amount of EUR 3,810,461.

The Authority found out that the three banks decided in a coordinated fashion to terminate their current account agreements with the Czech corporation Akcenta CZ, a.s (hereinafter referred to as “Akcenta”). Akcenta is a non-banking institution providing cashless non-banking services, for which purpose it needs to have current accounts opened with banks. The agreement of the above-mentioned banks was thus aimed at eliminating or at least restricting Akcenta’s operations on the Slovak Market.

Sporitelna challenged the Authority’s decision by an action filed with the Regional Court in Bratislava. According to the action, Akcenta could not be considered to be competition for the bank as it was operating on the Slovak market without the relevant foreign exchange licence and its illegitimate business therefore cannot enjoy legal protection. The only purpose of the agreement was to protect competition, as it was aimed at preventing Akcenta from engaging in illegitimate business.

Furthermore, Sporitelna claimed that it cannot be responsible for the actions of its employee who entered into the agreement on its behalf, as that employee was not the bank’s statutory body and was not authorised to engage in such actions.

The dispute reached the Supreme Court of the Slovak Republic which submitted the matter to the Court of Justice of the EU, asking it to resolve several preliminary issues, namely:
(i) Whether the fact that a competitor concerned by a cartel agreement is operating on the market illegally is relevant for evaluating that cartel agreement;
(ii) Whether the exemption set out in Article 101 (3) of the Treaty on the Functioning of the European Union (hereinafter referred to as “TFEU”) can be applied to such a case,
(iii) Whether it is necessary to prove the personal actions of a statutory body or his authorisation to enter into a cartel agreement.

The Court of Justice resolved the first issue by a reference to Article 101 (1) of the TFEU, which prohibits agreements between undertakings which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market. The fact that Akcenta operates on the Slovak market illegally consequently cannot have an impact on the evaluation of whether competition rules have been breached or not. Furthermore, the Court of Justice added that ensuring compliance with competition rules is the sole power of public authorities that cannot be substituted by companies or other private entities in exercising that power.

With respect to the second issue, the Court of Justice stated that the application of the exemption under Article 101 (3) of the TFEU is possible if four conditions are met simultaneously:
(i) The agreement must contribute to improving the production or distribution of products or to supporting technical or economic progress;
(ii) The agreement must reserve an appropriate share of the benefits obtained through the agreement for consumers;
(iii) The agreement must not impose on the relevant enterprises any restrictions that are not necessary for achieving those goals;
(iv) The agreements must not make it possible for those companies to eliminate competition in relation to a substantial part of the products thus concerned.

Sporitelna claimed that the objective of the anti-competition agreement was to prevent Akcenta from engaging in illegitimate business, thereby protecting the conditions of healthy competition and, in boarder terms, to thereby contribute to economic development.

Even if this condition were met, it is, according to the Court of Justice, only one of the four conditions required. The remaining three were not either claimed or documented, in particular the third condition according to which the agreement must not impose on the relevant enterprises any restrictions that are not necessary for achieving those goals. As was stated above, the banks only option was to file a complaint with the relevant authorities, but not to exclude a competitive enterprise from the market.

The clear conclusion flows from the said ruling of the Court of Justice that competitors in competition are not entitled to fight their competitors engaging in illegitimate business in a way that would constitute violation of competition.

The fact whether the enterprise engaging in illicit business is a direct competitor of the companies that are party to the agreement, or not, is not relevant, either. High fines may be imposed for taking part in such an agreement.

The only legal solution to such a situation would be filing a submission with an antimonopoly body (the Office for the Protection of Competition in the Czech Republic), and awaiting the results of the relevant proceedings.

For more information, please contact our partner, Mgr. Jiří Kučera, e-mail: jkucera@kuceralegal.cz ; tel.: +420604242241.