Authors: Václav Audes, Kateřina Slavíková, Denisa Fuchsová
In late 2021, the European Parliament adopted Regulation (EU) 2021/2282 of the European Parliament and of the Council on health technology assessment (the “Regulation”), which had been under discussion for several years. The European Union hopes that the adoption of the Regulation will establish a joint instrument that will help to enhance cooperation between the Member States in health technologies and reduce the administrative burden for applicants. As a result, it should provide a higher level of protection for patients and users and ensure better availability of innovative health technologies. The applicability of the adopted regulation has been postponed until 12 January 2025, giving stakeholders sufficient time to prepare for the new rules. Below is a brief summary of the main aspects of the Regulation.
The health technology assessment under the new Regulation will cover medicinal products, medical devices and in vitro diagnostic medical devices, medical procedures as well as measures for disease prevention, diagnosis or treatment. The assessment will cover both the clinical and non-clinical aspects of a health technology, including in particular a cost and economic evaluation and its ethical, organisational, social and legal aspects.
To accomplish the purpose of the Regulation, a coordination group will be established with responsibility for overseeing joint clinical assessments and providing methodological guidance to stakeholders by issuing guidelines and detailed procedures. The members of the coordination group will be appointed by each Member State. These members must not have any financial or other interests in the health technology development sector that could affect their independence or impartiality.
The Coordination Group’s task will also be preparing regular reports on emerging health technologies expected to have a major impact on patients, public health or healthcare systems.
The key element of the new Regulation is the joint clinical assessment that is to be carried out for new medicinal products subject to centralised marketing authorisation or for medicinal products authorised for a new therapeutic indication, and for medical devices and in vitro diagnostic medical devices of the highest risk classes for which the applicable regulations require the notified bodies to consult with an expert panel at the Commission level.
Joint clinical assessment will be conducted based on the annual work programme of the Coordination Group and to the extent of and according to the parameters defined by the relevant assessment subgroup for the given assessment. A health technology should be included in the programme based on activities such as ‘horizon scanning’. The joint clinical assessment will compare the given health technology against other health technologies and existing practices. If the Commission contacts a specific health technology developer to carry out a joint clinical assessment, that entity will be required to submit the required dossier.
Interestingly, the Regulation does not define in more detail the health technology developer; given the definition of health technology, it will primarily include manufacturers of medicinal products, medical devices and in vitro diagnostic medical devices. However, in principle, it cannot be ruled out that the Commission could contact anyone if it finds that they are an entity having the dossier required to conduct a joint clinical assessment, including, for example, entities that are yet to enter the market as manufacturers. One can only hope that these issues will be clarified in detail in the implementing acts that the Commission is authorised to issue under the Regulation.
The joint clinical assessment should then result in a joint clinical assessment report, which should describe the effects of the assessed health technology on the health outcomes against the chosen parameters, taking into account the strengths and limitations of the available evidence, but should not contain any conclusions in relation to the overall clinical added value of the assessed technology. The report will be made publicly available on a website set up by the Commission.
Besides joint clinical assessment, the Regulation provides for a procedure for joint scientific consultations to be carried out for the purpose of exchanging information between the Commission and health technology developers regarding their development plans for a specific health technology. These scientific consultations will be conducted for health technologies that are likely to be subject to joint clinical assessment in the future.
For completeness, please note that the adoption of the Regulation in no way affects the existing rules for clinical trials of medicinal products and medical devices (we presented our newsletter relating to the entry into force of the new regulation on clinical trials on medicinal products for human use here), nor the conduct of performance studies concerning in vitro diagnostic medical devices. Joint clinical assessments will be conducted independently and separately from the “regulatory” trials carried out to place a specific product on the market.
As for responses from the field, the new Regulation has been commented on, for example, by the European Federation of Pharmaceutical Industry Associations (EFPIA), supporting its adoption but wishing to see an even more ambitious form of the legislation. [1] For example, the Commission’s original proposal required Member States to apply the results of joint assessments carried out under the Regulation in their own assessments. However, the final proposal only includes an obligation to ‘give due consideration’ to such assessments. The extent to which the new system will bring uniformity in the field of health technology assessment will therefore depend to a large extent on how consistently Member States will apply and build on the results of joint clinical assessments in their own national assessments. It can be assumed that the quality of the outputs of joint clinical assessments will also play a major role in this.
By contrast, MedTech Europe (the European trade association for the medical technology industry) was highly critical of the Regulation. It expressed scepticism about the real added value of the Regulation.[2] In particular, the association pointed to the very different processes applied in practice in the pharmaceutical and medical device sectors and stressed the need to ensure that joint clinical assessments of health technologies do not interfere with the CE marking of medical devices nor delay their market access.
Distribution agreements often contain non-compete clauses. They impose restrictions on a distributor’s ability to manufacture or sell products competing with the products covered by the distribution agreement, the so-called contract products.
Let us make things concrete. A distributor is appointed to sell vacuum cleaners of brand A (the contract products). The non-compete restriction determines whether the distributor is allowed (and, if so, to what extent) to manufacture or sell vacuum cleaners of competing brand B or any other competing brand for that matter.
Such a non-compete provision does not always qualify as a restriction of competition. The absence of a restriction is for instance accepted in a franchising context. In many instances, however, such an obligation will be deemed to restrict competition and, for that reason, will need an exemption. The application of a block exemption regulation is the most efficient way to secure such an exemption.
The current vertical block exemption regulation applicable to distribution agreements is Commission Regulation 330/2010. It is often referred to as the VBER, which focuses on two types of non-compete clauses:
Non-compete obligations in distribution agreements benefit from an automatic exemption under the VBER if they comply with one important rule: their duration may not exceed five years. This time limit applies to both single branding and the 80%-rule. There are specific exceptions in cases where premises are made available by the supplier to the distributor. However, absent that exception, the general rule is that a limitation to five years must be respected.
The consequences of the rule are rather straightforward. The block exemption does not apply where the non-compete obligation:
The logic underpinning the rule is that a distributor must be able to give his “fresh” consent to a non-compete obligation upon the expiry of each five-year period. Put differently, a competing supplier (for instance of brand B) must be in a position to convince the distributor, at least once every five years, to commence the distribution of brand B.
The current proposals by the European Commission will leave the existing regime for non-compete obligations largely unchanged after 1 June 2022. They continue to cover both single branding and the 80%-rule. The five-year time limit also remains the norm to benefit from an automatic exemption.
However, the current proposals for the new Vertical Guidelines bring about one important change relating to tacit renewals.
Non-compete obligations may be tacitly renewable beyond five years on the condition that the distributor can effectively switch to a competing supplier after the expiry of the five-year period. This includes the possibility to terminate the cooperation with the supplier with a reasonable notice period and without incurring any unreasonable costs. With the reference to the absence of unreasonable costs, the draft Vertical Guidelines aim for instance at the burden presented by the need to repay a loan to the supplier.
With this additional flexibility an artificial difference seems to be made between non-compete obligations of indefinite duration and fixed-term non-compete obligations that are tacitly renewable. The first category would still fall outside the VBER. The second category is now block exempted provided that the distribution agreement can be effectively renegotiated or terminated. We fail to see the logical difference between a distribution agreement of indefinite duration that can be terminated with a reasonable notice period and at reasonable cost and the case where tacit renewal of a fixed-term non-compete obligation can be avoided under the same conditions. It is reasonable to expect that this apparent inconsistency will be remedied in the final texts. By the same token, it would be desirable that this new possibility is anchored in the VBER itself and not hidden somewhere in paragraph 234 of the draft Vertical Guidelines.
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Counting down towards 1 June 2022, we aim to provide you with regular updates and the necessary legal knowhow in order to fully prepare your business for the future. Please also check out the Distribution Law Center platform (www.distributionlawcenter.com) and our LinkedIn page for much more information on the laws governing vertical agreements, covering both competition and commercial law. 27 specialized teams from all over the EEA are working hard to turn the platform into your favourite source of guidance and information.
Authors: Robert Nešpůrek, Vojtěch Bartoš
With the New Year, new rules for the use of cookies and other tracking technologies on websites came into force. In this short article we offer you a simple overview of the most important information that you should definitely not miss.
The Electronic Communications Act has been amended with effect from 1 January 2022 in a way that means several significant changes for the practical use of these tools on your website. These changes relate in particular to the consent that must be obtained from the user before cookies can be used.
The most important thing is the reversal of the current concept of obtaining consent to the use of cookies. The user must actively give his/her consent to the use of cookies, and it is no longer sufficient for the user to be able to reject the use of cookies. The default setting for cookies on your website must therefore be “disabled until allowed by the user”, and not “allowed until disabled by the user”.
The consent to the use of cookies must itself meet specific qualitative criteria to be considered validly given. It must be a voluntary, informed and unambiguous expression of will, obtained in a demonstrable manner specifically for the individual purposes.
In practice, this means that the user must in particular be given relevant information in advance in a comprehensible and proportionate manner about what he/she is to agree to (i.e., what cookies are to be used, for what purposes, for how long they will be active, etc.).
For this purpose, a cookie banner must be set up appropriately so that it contains all the essential information and allows the user to accept or reject cookies in a simple way.
A specific topic is the so-called “dark patterns”, i.e., various practices that consist of setting the cookie banner in such a way as to guide the user towards the operator’s preferred option (e.g., to accept cookies as widely as possible). These practices are inherently contrary to the voluntary nature of consent and are strongly recommended to be avoided.
The user must clearly indicate his/her will to allow cookies or not. Thus, the most appropriate way is probably to actively click on the respective consent box.
On the other hand, a pre-ticked box, simply scrolling through the website or simply staying on the website cannot be considered an active expression of consent to cookies. This also implies that simply visiting the website cannot be considered an active expression of consent, and if the visitor does not select any option in the banner, this is identical to not giving consent at that moment.
It also appears from the supervisory authorities’ recent statements that it will not be considered sufficient in terms of the above consent requirements if the user is only referred to his/her browser settings. Ensuring the cookie banner and its correct settings will thus become a necessity.
Contrary to previous practice, consent given to the use of cookies by a particular user cannot be considered as consent given forever. There has not yet been a common view among European supervisory authorities on the specific period for which consent to the use of cookies can be given.
However, a statement from the Office for Personal Data Protection suggests that a period of approximately one year should be considered acceptable. Nevertheless, once one year has elapsed since a particular user has given his/her consent to the use of cookies, the user must again be offered the opportunity to give opt-in consent as described above. Thus, even this “repeated” consent cannot be in opt-out mode.
Withdrawing consent must be as simple as giving it. Thus, there must be a clear link on the website or another way how to retrieve the banner again where the user can change the settings.
However, it is quite common on the Czech Internet for the cookie banner to be displayed repeatedly, i.e., each time the user reloads the website, especially if he/she does not give his/her consent to the maximum extent possible. Such practices could be assessed a de facto coercion of consent and in any case as user nuisance.
If the user rejects the use of cookies (or the extent to which he/she rejects them), the website operator should ensure that such a user is not shown a cookie banner on each reload of the website. Currently, the prevailing view among the professional community is that a reasonable period for which the user who has rejected the use of cookies should not be repeatedly shown with a cookie banner asking for consent is approximately 3 to 6 months, depending on the type of a web service.
All these aspects of digital analytics and marketing tools, as well as their development, are closely monitored by our team of experts. They are ready at any time to advise you on setting up your website exactly according to your needs, so that you can take full advantage of the information that correctly collected data about your website visitors can provide you.
HAVEL & PARTNERS has provided comprehensive legal advice to Czechoslovak Capital Partners on the acquisition, reconstruction and subsequent lease of a residential building at Tusarova 52, Praha 7 Holešovice.
The specialised team led by partner Lukáš Syrový, managing associate Lena Fryčová and associate Jorika Němcová provided transactional advice on the purchase of a building from an Italian owner, including due diligence and preparation of contractual documentation.
The legal advice also included assistance in arranging a bank loan for the refinancing of the purchase price and reconstruction of the building, ensuring documentation with the general contractor and, after completion of the reconstruction, arranging contractual relations with the tenants of the residential building.
The investment group Czechoslovak Capital Partners is the successor of Šestý uzavřený investiční fond, a.s., which was established in 2012. The group has extensive experience across the entire investment spectrum and has invested more than CZK 3 billion since its establishment.
Authors: Josef Žaloudek, Kamila Chládková
Please note that by the end of January 2022, it is necessary to file an annual Notification of Income Paid to a Foreign Country in 2021 that is exempt from withholding tax or on which the application of withholding tax is prevented by a double taxation treaty (“exempt income”). The annual form has replaced the original monthly report (last filed for 12/2020). Due to the nearly one-year “hiatus” since the last time this notification obligation was met, many may have forgotten about it.
However, in early January 2022, a new form for this filing was published, including basic instructions, which is based on an amendment to the Income Tax Act of late 2020. An increase in the limit of declared income to CZK 300,000 of the same type of income for one recipient per month and a change in the form was intended to reduce the administration of this agenda for taxpayers. We provide more detailed information on what income is usually reported in the Notification and recommendations on how to complete the new form in our article below.
Upon your request, the tax administrator may exempt the taxpayer from the notification obligation for a maximum period of 5 years in justified cases (e.g., if it is very difficult to identify the income in question in a particular case). However, our experience shows that there is no established methodology according to which the tax administrator would proceed when handling requests and to date it has not been used to any great extent by taxpayers. The request must be duly substantiated, and the exemption is usually issued for a period shorter than 5 years.
We will be happy to assist you in setting up the methodology for submitting the notification of income paid to a foreign country and related processes. Similarly, if you decide to apply for an exemption from the obligation to submit the notification of certain income for the next period and would like a consultation on the appropriate arguments, please do not hesitate to contact our team of specialists.
Over the past few years, a trend has been noticeable toward a commercial strategy combining agency and distribution models. In particular, depending on the products or customers involved, a business partner is sometimes requested by the same supplier to act as both its independent distributor and its commercial agent. Such business partners are often referred to as “dual role” agents.
Let us make things concrete. A supplier of cooking appliances relies on independent distributors for the distribution of the majority of its appliances. For a new, innovative type of cooker hood, the supplier wishes to keep a tight control over the launch and, in particular, over the price level, the distribution channels and the customer relationships. The distributors who are interested to participate in the launch are therefore invited to do so in the capacity of a genuine agent and not as an independent distributor.
The key question in this context is whether, and under what conditions, the business partner can qualify as a genuine agent (from a competition law perspective) for the new cooker hood notwithstanding his mixed role. As set out in the DLC countdown 04 , the genuine agency test is only met if the agent does not bear any or only insignificant risks associated with the transactions it concludes or negotiates on behalf of the principal.
The difficulty with the application of the test in this scenario is to distinguish between investments and costs relating to the agency set-up and those relating to the independent distributorship. This applies in particular to market-specific investments, i.e. investments in sales promotion or investments specifically linked to the transactions, such as equipment, premises or training of personnel.
No relevant guidance is provided under the current VBER and Vertical Guidelines with respect to “dual role” agents.
Following the adoption of the VBER and the Vertical Guidelines, there seems to have been a growing concern on the part of DG Competition of the European Commission that the agency may trigger spill-over effects into the business partner’s role as an independent distributor. If the business partner qualifies as a genuine agent, the supplier is entitled to set the price for the product (in our example: the new cooker hood) and to restrict the customers to whom sales are made. The perceived competition law risk is that, as a result, the agent is incentivized to set higher prices for the other cooking appliances it sells as an independent distributor. In other words, the implementation of the pricing policy the agent must comply with in relation to the sales under the agency agreement would cause the application of higher prices for the other products.
In 2021, the European Commission drafted a Working Paper on “Distributors that also act as agents for certain products for the same supplier” (“Working Paper”). The Working Paper reflects the above-mentioned concerns and provides a framework for the assessment of “dual role” agents.
The Working Paper is very much reflected in the current proposals of the Vertical Guidelines.
According to these proposals, an independent distributor of a supplier may also act as an agent for other products or services of the same supplier, provided that each of the following conditions is met:
With respect to the market-specific investments, the current proposals of the Vertical Guidelines provide that the principal is required to reimburse all investments made in the framework of the agent’s activity. Only those investments that concern exclusively the sale of differentiated products (even within the same product market) as an independent distributor must not be reimbursed.
However, the example provided in the draft Vertical Guidelines applies these principles very rigidly. Even for differentiated products belonging to the same product market, the rule seems to be that the market-specific investments related to the entire product market must be covered in full by the supplier. If such condition is not fulfilled, the rule seems to exclude the possibility of qualifying as a genuine agent.
This means concretely for our example that a principal must pay for the shop lay-out or promotional investments not only related to the new innovative cooker hoods, but also for any other cooker hood models that are sold as an independent distributor. The principal is not required to cover any investment relating to other cooking appliances, such as dishwashers and ovens.
The test to qualify as a genuine agent (in a “dual role” scenario) becomes very burdensome and costly. In order to organize the launch of a particular new product by means of genuine agency, the supplier shall in principle cover all the market-specific investments related to the entire product market to which the new product belongs.
It is difficult to understand why the concerns outlined above (spill-over effects on pricing as an independent distributor) are translated into an extreme position in terms of the market-specific investments to be carried by the supplier. If the agency scenario is used to put pricing pressure in the context of the independent distributorship, the proper way to tackle this is by means of the RPM route. The chosen “allocation of costs” route is in practice simply a showstopper for “dual role” scenarios. The reason is twofold: the costs are too high and, when getting it wrong, the consequences are too serious (the set-up comes into conflict with the black list of the block exemption).
It is doubtful that the chosen approach matches with the test put forward in the case law of the European Court of Justice. In order to comply with such case law, a “but for” test would seem to be sufficient: consider a scenario in which the agency would not exist and consider the costs that would disappear. These costs are the ones which must be covered by the supplier.
The fact that this criticism has merit is proven if one contemplates a scenario where the supplier does not appoint its own distributor, but that of a competitor as its (genuine) agent. In that scenario, the supplier would have to cover only the market-specific investments related to the agency, and not the investments made by the distributor with regard to the products of the competitor that belong to the same product market. This is simply not logical and, furthermore, inconsistent with the theory of harm that is invoked to justify the extreme cost allocation requirement in order to qualify as a genuine agent.
The “DLC countdown” newsletters are offered to you by HAVEL & PARTNERS.
If you need more information or our assistance with setting up the distribution system, please contact Robert Neruda or Štěpán Štarha, who are the firm’s partners responsible for this area.
WANT TO KNOW MORE? STAY TUNED…
Counting down towards 1 June 2022, we aim to provide you with regular updates and the necessary legal knowhow in order to fully prepare your business for the future. Please also check out the Distribution Law Center platform (www.distributionlawcenter.com) and our LinkedIn page for much more information on the laws governing vertical agreements, covering both competition and commercial law. 27 specialized teams from all over the EEA are working hard to turn the platform into your favourite source of guidance and information.
HAVEL & PARTNERS, in association with the financial advisor Arbol Advisory, participated in another major transaction in IT and telecoms in the Czech market. The firm’s M&A specialists provided comprehensive legal advice to Marek Bukal and Pavel Vávra, the majority owners of SMART Comp, in the sale of their shares to Nej.cz.
SMART Comp is a major provider of Internet and mobile services and the operator of the NETBOX network offering fibre-optic Internet connection, Kuki Internet TV and the services of the virtual mobile operator NETBOX Mobil.
Partner Václav Audes, senior associate Juraj Petro and legal assistant Filip Pavlík advised the owners on the sale of approximately 64% of the shares.
Nej.cz, a member of the Kaprain Karel Pražák group, currently provides Internet connection to more than 200,000 households and 10,000 companies. The transaction follows a series of mergers with six other telecommunications companies completed by Nej.cz last year.
HAVEL & PARTNERS as a founding member has joined the association Climate and Sustainable Leaders Czech Republic, where leading companies from various sectors of the Czech economy have joined forces. The aim of the platform is to track, through the first comprehensive report in the Czech Republic called “Carbon Tracker”, the ambitions of the largest domestic companies to reduce their carbon footprint and motivate other companies to launch projects contributing to sustainability and climate protection.
“The transition to sustainable operations is already a significant business advantage and will be a necessity in the future. At HAVEL & PARTNERS, however, we see sustainability not only as a fundamental issue of survival in business, but also as a huge opportunity to contribute to the transformation of society as a whole. Leaders in individual industries should set an example and actively contribute to rational solutions to this issue, which is why we have joined the Climate and Sustainable Leaders Czech Republic initiative,” commented partner Jan Koval on HAVEL & PARTNERS’ participation in the project.
The Climate and Sustainable Leaders Czech Republic platform wants to help companies make the transition to sustainable operations, support their efforts to reduce CO2 production and other goals related to the implementation of expected changes in legislation and the transition to a new, carbon-neutral economy.
The intention of the association is also to publish annually a comprehensive overview of the CO2 emissions production and reduction ambitions of the largest companies in the Czech Republic. The chosen methodology for calculating the carbon footprint, which the platform uses to compile the overview, is based on the calculation according to the internationally recognized GHG protocol methodology. The result will be a ranking based on a comparison of data obtained from public sources and, in particular, from questionnaires sent to 150 companies with the largest turnover in the Czech Republic. The report with professional commentary will be published by the platform under the name Carbon Tracker (https://www.carbontracker.cz/) for the first time this year at the end of May and beginning of June.
“Every industry and every company have a different starting point, and in some industries a number of innovations are needed to even approach carbon neutrality and maintain their basic competitiveness. We want to track the ambition of individual companies in this area, connect them and motivate them to sustainable projects,” said Jakub Skavroň, chairman of the administrative board of Climate and Sustainable Leaders Czech Republic, of power2green.
In addition to the Carbon Tracker report itself, the platform is preparing other activities in the field of education, awareness raising and methodological support in sustainability and achieving climate goals.
Leading companies from the professional services, finance, insurance and telecommunications sectors, as well as academia, have joined the association. In addition to HAVEL & PARTNERS, founding members include Allianz pojišťovna, Česká spořitelna, Czech Technical University in Prague, Československá obchodní banka, The CO2IN, Mastercard Europe, power2green, PwC Czech Republic, Raiffeisenbank, UniCredit Bank Czech Republic and Slovakia, Vodafone Czech Republic, and White & Case.
The association is an open platform, of which other companies can also become members.
In the previous countdown it was highlighted that EU competition law applies a particular definition of agency. Not every agent in the sense of commercial or business law will be treated as an agent for EU competition law purposes.
The agency test under EU competition law is met if the agent assumes no or only insignificant risks associated with the agreements concluded or negotiated on behalf of the principal. If the agency test is met, the agent will be deemed an integral part of the principal and the rules of EU competition law will not apply to agreements between the principal and the agent relating to the transactions negotiated for the principal. If the agency test is not met, the rules governing independent distributors will have to be adhered to. This will imply, for instance, that the agent cannot be compelled to apply a particular fixed price level or cannot be forbidden to deal with certain customers or in certain territories.
A typical feature of the commercial or business law concept of agency is that the agent does not acquire the ownership of the relevant products. Ownership will pass directly from the principal to the customer and will not transit via the agent. Otherwise, a resale transaction between the principal and the agent is involved which is typically incompatible with agency in the commercial or business law sense.
According to the current Vertical Guidelines, an agent is a legal or physical person having the power to negotiate and/or conclude agreements on behalf of a principal, either in the agent’s own name or in the name of that principal, for the purchase of goods or services by the principal, or the sale of goods or services supplied by the principal.
This definition covers a number of important features that are unique to the agency concept:
It has become apparent over the years that, for reasons having nothing to do with EU competition law, the temporary acquisition of ownership of the contract goods by the agent may be needed or desirable. The relevant reasons are typically related to tax or accounting laws, local regulations or the wish of the customer to have the agent, rather than the principal as his counterpart.
The current Commission proposals address this particular need. If the agent acquires the ownership of the goods temporarily, i.e. for a very brief period of time, while selling them on behalf of the principal, this does not necessarily preclude the agreement from being qualified as an agency for EU competition law purposes. In such a case the agency qualification is preserved as long as the agent does not incur any or only insignificant costs or risks related to such transfer of property and the agency in general.
The current proposals of the Vertical Guidelines do not eliminate the agency treatment for EU competition law purposes in the case of a brief transfer of ownership of the goods by the principal to the agent prior to such goods being sold to the customer.
The possibility to acquire the goods for a very brief period of time provides additional and useful flexibility for agents in the performance of their activities. Such a temporary acquisition may serve useful purposes in a commercial context, without endangering the application of the agency test (no or only de minimis risks) under EU competition law.
It is however not clear why the current proposals of the Vertical Guidelines are limited to sales scenarios and do not extend to purchasing scenarios. From an EU competition law perspective (coherent application of the agency test), there is no obvious reason for such a difference in treatment. The failure to amend the proposals on this point may entail the risk of an a contrario interpretation.
The “DLC countdown” newsletters are offered to you by HAVEL & PARTNERS.
If you need more information or our assistance with setting up the distribution system, please contact Robert Neruda or Štěpán Štarha, who are the firm’s partners responsible for this area.
WANT TO KNOW MORE? STAY TUNED…
Counting down towards 1 June 2022, we aim to provide you with regular updates and the necessary legal knowhow in order to fully prepare your business for the future. Please also check out the Distribution Law Center platform (www.distributionlawcenter.com) and our LinkedIn page for much more information on the laws governing vertical agreements, covering both competition and commercial law. 27 specialized teams from all over the EEA are working hard to turn the platform into your favourite source of guidance and information.
Michelin, a prominent global manufacturer and distributor of tyres, has completed its acquisition of ČEMAT in the Czech Republic and Slovakia. The law firm HAVEL & PARTNERS acted as the legal consultant on the part of the seller in the transaction. ČEMAT is a major provider of mobile servicing and maintenance services for special industrial and construction machine tyres and is one of the largest suppliers of products for handling, construction and agricultural equipment.
A legal team consisting of the law firm’s partners Petr Dohnal and Jan Koval and senior associate Ivo Skolil provided comprehensive transactional advice to the sole owner of ČEMAT in the Czech Republic and Slovakia.
“ČEMAT, as a major player on the market that continues to see strong further potential for growth, perceives the merger with such a strong multinational strategic partner as an opportunity for further achievements, strategic development, improvement in internal organisation and strengthening the internal stability of the Czech and Slovak ČEMAT companies,” Michal Džupin, the executive director of the Czech company, commented on the acquisition.
ČEMAT has been a major supplier of industrial tyres and the provider of related servicing in the Czech Republic and Slovakia for over 25 years. The company supplies tyres for handling, construction and agricultural equipment, special wheels and pulleys, load-bearing forks and attachments. It also offers construction and agricultural belts and conveyor systems.
For Michelin, this is a significant acquisition that will strengthen the company’s position on the Czech and Slovak markets and expand its activities in handling, construction and agricultural equipment and the distribution of special tyres in Central Europe.
Authors: David Krch, Kamila Chládková
Up until the summer of 2019, incentives were a popular tool for many companies seeking support for their investments. As a result of the tightening of the rules, the past two years have seen a significant drop in the number of submitted applications and a single-digit number of projects approved by the Government of the Czech Republic since September 2019. For 2022 and beyond, the outgoing cabinet has passed several major changes to investment incentives.
The first one is a new regional aid map setting out the percentage of aid granted in each region. In a large part of the Czech Republic, the conditions will be more favourable and the maximum aid framework will be increased. Unfortunately, the incentives provided will be restricted in some regions as a result of the new EU rules. Other changes will affect aid for strategic investments and projects with an active R&D element.
The main change affects the expected approval of a government regulation setting out the maximum permissible level of State aid in individual cohesion regions of the Czech Republic. After seven years, the percentage of aid granted is changing in connection with the new regional aid map approved by the European Commission. The map will apply for granted incentives or subsidies until 31 December 2027.
The previous regulation provided for a uniform rate of 25% of eligible costs for large undertakings from the whole country (Prague excluded). For small and medium-sized enterprises, the rates were 20% and 10% higher, respectively.
The new maximum aid for large undertakings will be as follows:
In the regions with reduced aid, large undertakings will be most severely affected by the end to incentives to expand their existing activities that have been most in demand in recent years. From 2022 onwards, large enterprises in these regions may only apply for aid for projects for a new business activity, i.e. a completely new establishment or an extension of an existing one, provided that the purpose of the extension is a NACE activity different from what the establishment has performed to date.
In regions where the aid is increased, applications submitted in 2021 that have not yet been granted the incentive by 31 December 2021 will receive aid at the original maximum rate of 25%. On the other hand, in regions with reduced aid or complete discontinuation of incentives, such applications will receive aid under the new regulation.
The second change is aimed at progressive industries and at support for projects with a higher added value. Investors in the manufacturing industry actively conducting research and development have so far been unable to obtain any investment incentive other than the corporate tax credit.
Now, selected projects approved by the government will be classified as strategic investment actions and will be eligible for an investment incentive also in the form of material aid for the acquisition of tangible and intangible fixed assets. This “cash” aid has increased from the current 10% up to 20% in the Ústí nad Labem, Karlovy Vary and Moravian-Silesian Regions. In addition, these projects will not be subject to the other restrictions for strategic investment actions (amount of asset acquisition and job creation).
All investments in the following areas will be considered strategic with the benefit of monetary aid without further restrictions:
Key technologies are defined as, for example, nanotechnologies, biotechnologies, photonics, microelectronics, nanoelectronics, artificial intelligence technologies, advanced material technologies and advanced manufacturing technologies.
For strategic investment that is not subject to the above condition, the government has reduced the minimum number of new jobs required from 500 to 250 in the amended regulation. At the same time, it has increased the minimum investment in fixed assets from the current CZK 500 million to CZK 2 billion, while at least CZK 1 billion must be used to purchase machinery.
It will be interesting to see whether the amended conditions will spur further investment and new incentive applications, or whether the incentives will continue to decline like in the past few months. What will be of decisive importance apart from the legislation is the new government making “positive” decisions when approving individual projects, and a possible major change in the basic conditions for investment projects.
Do not hesitate to contact us if you wish further details in this area or are considering having your projects supported through investment incentives. We will be happy to assist you to handle this agenda.
Another wave of internal promotions marks a follow-up to the largest Czech-Slovak law firm’s successful year. Existing partners Veronika Dvořáková and Ivan Rámeš become the firm’s shareholders, while counsels Lenka Štiková Gachová, Michal Smrček and Josef Žaloudek were promoted to partners as of 1 January 2022. An additional 12 lawyers of the firm at three senior levels have also been promoted.
“2021 saw the firm celebrating its twentieth anniversary and the most successful year in its history, as we further strengthened our position as the leader of the Czech-Slovak legal market. At the top level of the firm’s management, Veronika and Ivan, key members of our team, have been making a significant long-term contribution to the firm’s success, and will now be even more intensely involved in the firm’s management as equity partners,” said Jaroslav Havel, the firm’s managing partner.
Veronika Dvořáková is Marketing Director at HAVEL & PARTNERS. In addition to marketing, communications and business support for the group, she is also responsible for the firm’s pro bono and CSR policy, and manages the HAVEL & PARTNERS ACADEMY. She also advises major clients on strategic marketing, PR and public affairs. As an equity partner, she will be responsible for strengthening the HAVEL & PARTNERS brand, which is one of the strongest on the market, as well as for further developing marketing and PR activities, which are an integral part of the group’s comprehensive business strategy. Before joining the law firm, Veronika worked as head of the press department and spokesperson at the Ministry of Justice and the Government Legislative Council as well as senior director of the justice minister’s cabinet. She also gained media experience, working as a journalist for several national media outlets, including Czech Television.
Ivan Rámeš has 15 years of experience working at the top level of the bar. Starting as a student in our firm, he has worked his way up to equity partner. He is particularly an expert in intellectual property and technology law. He focuses on comprehensive IP strategy set-ups in the Czech Republic, Slovakia and abroad. He also specializes in e-commerce, advising start-ups, larger companies and international corporations. The clients he advises in IP matters further include investors, investment funds and venture capital start-ups. As an equity partner, Ivan will be responsible for the further development of the business unit focusing on new technologies.
As of the beginning of 2022, HAVEL & PARTNERS has three new partners. The first of them is Lenka Štiková Gachová, who has worked as counsel. Lenka is a top expert in competition law, including state aid and significant market power. She assists clients in competition compliance and represents them before the Czech Office for the Protection of Competition and the Antimonopoly Office of the Slovak Republic, as well as before courts in all areas of competition law. Before joining our law firm, she worked at the Office for the Protection of Competition for eight years.
Michal Smrček also becomes a partner of the firm. He focuses on comprehensive advisory services in the field of regulation and private law aspects of insurance, pension companies, insurance intermediaries, leasing companies, representation of clients before courts, as well as investigations and compliance. Before joining HAVEL & PARTNERS, he worked as a lawyer in several major insurance and pension companies, and headed the legal and investigations departments as a senior manager. After that, he worked at a law firm, providing services to leading financial institutions. He also served in the legislative section of the Czech Association of Insurance Companies and was chair of the Corporate Governance Committee as well as a member of numerous other committees in insurance companies.
Josef Žaloudek has also been promoted to partner as of January 2022. He specialises in corporate tax law, international taxation, restructuring and related aspects of civil and commercial law. He has many years of experience in advising major international and local companies operating in IT, the automotive industry, engineering, the food industry, and other fields. Before joining our law firm, he worked at the Ministry of Finance and at a major multinational consultancy.
Other lawyers have also been promoted. Romana Derková advances to the position of a counsel. Štěpán Černý, Ján Kapec, Kamila Kulhánková and Petr Vohnický are new managing associates, and Zuzana Hájková, Adam Karban, Petra Kašpárková, Jan Králíček, Štefan Potočňák, Jana Šimková and Jakub Vojtěch are new senior associates.
“At HAVEL & PARTNERS, we create conditions for rapid career growth for colleagues who demonstrate excellent knowledge of law or taxes, an exceptional ability to address our clients’ needs, including in the context of their business, high commitment and managerial skills. All the promoted colleagues have proven that they are able to combine all these demanding requirements together. I congratulate them and look forward to our further successful cooperation,” said Jaroslav Havel on his colleagues’ career advancement.
