That the Office for the Protection of Economic Competition (ÚOHS) does not have sufficient force was shown in recent months, when the Czech Republic dealt with overpriced food. In its investigations, the authority came to the conclusion that these are oligopolistic markets, but at the same time stated that there is sufficient competition and therefore cannot intervene. A similar situation prevails in the mobile services market.
In a recent Global Competition Review, the Czech office led by Petr Mlsna came out as the worst of the 32 monitored institutions.
“He’s certainly not fast. Partially transparent. And of course the political pressures are there because the president is appointed politically. It was like that under all previous presidents, whether there was Pecina, Rafaj, or now Mlsna. The institution needs fundamental change,” says consultant David Ondráčka, former head of the Czech branch of Transparency International.
The change is already being prepared by the Ministry for Regional Development (MMR). The core of the reform, which the department wants to introduce in the middle of the year, is the weakening of the position of the chairman of the ÚOHS. He proposes a model in which decisions are made by senates composed of three experts: two members from within the office and one invited specialist for a specific case. An appeal, or dissolution, to the chairman of the ÚOHS, who today decides around 150 cases a year, would not be possible.
Ondráček also considers it crucial to dilute the authority of the chairman.
“The monopoly of the most powerful person who is at the head of the pyramid should be abolished, because he concentrates enormous power and in so many agendas. It decides whether companies can make an acquisition, whether there are no cartel agreements in the market, but at the same time it decides on every order that comes to that office.”
Slow decision making
ÚOHS tackles two big agendas at once. It monitors the competitive environment, but at the same time controls public contracts. According to Ondráčka, it’s too big a bite.
“We should think about whether the office should be such a juggernaut or whether it should be divided. I would divide it into a custom part and a competition and market part.”
The MMR also proposes speeding up decision-making – from two-stage to one-instance. The investigation showed that the antimonopoly office made a decision in most cases in three to seven months from the submission of the proposal. Within two months, he made a decision in only two percent of cases. “I would abolish the two-tier system, it is completely unnecessary. I would introduce one instance that would lead to speeding up the decision-making,” agrees Ondráčka.
“The office pretends that it is permanently overloaded, that it is not keeping up with the agenda, and thus all deadlines are a bit of an illusion, because they are not actually being followed. This is fatal in public contracts. Because if the contracting authority, who has a subsidy for awarding a contract, but it is time-limited, does not make it, he has to return the subsidy,” says the public procurement expert.
In recent months, Petr Mlsna’s office has been talked about mainly in connection with the problem of expensive food or mobile data. According to David Ondráčka, instead of key cartel agreements, which according to him influence final prices in the food industry, the inspectors focused on simpler agendas such as monitoring vertical agreements on the market.
“The fruit was low-hanging there, so it was easy to pick, it produced results, statistics that the office could present in annual reports.”
How to detect a cartel?
Uncovering a cartel is difficult, Ondráčka admits, but according to him, the so-called leniency program has proven itself as a good practice in the past. “This was a de facto effective apology offered to those involved in the cartel. If you confess and we prove it, you’ll either get a lesser sentence or almost none at all.”
According to David Ondráčka, prices in the food industry are driven up by vertical oligopolies, which the authority should not have allowed in the past. “We remember situations when Babiš met Pecin at gas stations and then simply bought bakeries, which certainly created a monopoly environment in some industry. That’s one of the many cases that happened here, and it’s very difficult to reverse it.’
Currently, the office may only assess mergers of companies whose total turnover exceeds 1.5 billion crowns and the individual turnover of at least two merged companies exceeds 250 million. The authority asked the government at the beginning of the year to lower the threshold for mergers.
We don’t want a sheriff confiscating computers
The Antimonopoly Office would also like to loosen the hands of its inspectors. He demands that they be allowed to check at random. “It’s sensitive. I don’t think we want a sheriff walking around the county, visiting businesses in the morning and confiscating computers. And I hope we’re not headed for that. But if the office has information supported by other findings, I think that the inspection is possible even on the spot,” explains Ondráčka.
ÚOHS also comes up with an idea for a wider use of wiretapping and rewards for whistleblowers. According to Ondráčka, however, the office does not even use its existing powers. “He is calling for new powers, he wants to be a stronger police officer who will be able to carry out, for example, checks in companies without a review, but at the same time he already has those options today and I think he is not using them enough.”
He perceives David Ondráčka as essential start cooperation in sharing information with other control institutions – with the Supreme Audit Office, the Financial Office and subsidy providers. The obtained data could then be used by the office through a team of data scientists, analysts and economists to analyze the market environment, so far, according to the expert, it is more like “a barracks full of lawyers”.
Does the Supreme Audit Office work better? Watch the entire interview with David Ondráčka.
