Category: Czech Republic

Clifford Chance has advised KKCG on a commercial bond issuance totaling up to CZK 10 billion for retail investors. A&O Shearman advised the banks: J&T, PPF Banka, Ceska Sporitelna, and Komercni Banka.

KKCG is an investment and innovation group with expertise in lotteries and gaming, energy, technology, and real estate. 

According to Clifford Chance, the bonds will be listed on the Prague Stock Exchange. “The bonds, which will be available to both individual and institutional Czech investors, have a maturity of five years and an attractive interest rate of 7.75%. They will be issued in two tranches, with the first CZK 5 billion tranche scheduled for release in July this year, and the second tranche following in September 2024.”

In 2023, Clifford Chance advised KKCG on its acquisition of Avenga (as reported by CEE Legal Matters on December 22, 2023).

The Clifford Chance team included Prague Managing Partner Milos Felgr, Senior Associate Hana Cekalova, and Associate Lukas Ljubovic.

The A&O Shearman team included Partner Petr Vybiral, Associate David Mikyska, and Trainee Tomas Spacek.

Dentons has advised a syndicate of banks that included Bank of China, Deutsche Bank, Erste Group, HSBC, Raiffeisen Bank International, and UniCredit as joint bookrunners in CEZ’s EUR 750 million sustainability-linked bond issue.

According to Dentons, the bond aims to “reduce greenhouse gas intensity by 57.4% by 2030.”

In 2022, Dentons advised on another sustainability-linked bond issuance by CEZ (as reported by CEE Legal Matters on April 19, 2022).

The Dentons team included Prague-based Partners Jiri Tomola and Petr Zakoucky and Senior Associate Martin Fiala as well as further team members in London.

Dentons did not respond to our inquiry on the matter.

BPV Braun Partners, working with Kellerhals Carrard and Advant Beiten, has advised Helanis on its acquisition of the Schaltag Group – including Schaltag in Switzerland and the Czech Republic – and Pavis Engineering in Germany and Spain.

Helanis, headquartered in Zurich, is a newly formed holding company controlled by a Swiss management team led by Dominik Hanslin.

Schaltag provides services in the areas of automation, switchgear, instrumentation, machinery, equipment design, and cable assembly.

Pavis Engineering, based in Ravensburg, is a manufacturer-independent medium-sized automation company.

The BPV Braun Partners team included Managing Partner Arthur Braun, Lawyers Marketa Kleinova, Jindra Pozniakova, and Nikola Faltova, and Associate Sabina Skrobankova.

BPV Braun Partners was unable to provide additional information on the matter.

Kocian Solc Balastik has successfully represented REMA before the European Commission regarding a complaint to investigate whether the Czech Republic, acting through the Ministry of the Environment, violated its obligations under EU law by creating an anti-competitive environment in the packaging sector in favor of EKO-KOM.

According to KSB, “REMA AOS, like a number of other unsuccessful applicants, attempted to break EKO-KOM’s 20-year de facto monopoly and become the next authorized packaging company to provide take-back and recovery of packaging waste on the Czech market. However, in the authorization procedure conducted by the Ministry of the Environment, it encountered insurmountable obstacles, which were an indication that the measures taken by the Czech Republic in favor of EKO-KOM were causing very serious distortions of competition on the market and were completely preventing undertakings from emerging and efficiently competing with EKO-KOM.”

Furthermore, according to KSB, the European Commission issued a statement saying that “the conditions required for obtaining authorization, including the financial and contractual requirements, together with EKO-KOM’s ability to influence the authorization process, created significant barriers to the entry of new competitors into the market.”

“The Czech market for packaging waste collection and recovery has been dominated by the incumbent operator for more than two decades,” added the EC’s Executive Vice-President responsible for competition Margrethe Vestager. “We are concerned that Czech measures have prevented [the] entry of rival companies, with a consequent negative impact on prices, quality, innovation and choice. Therefore, we have sent a letter of Formal Notice to Czechia. Ensuring effective competition is essential for achieving a sustainable and circular economy, one of the main building blocks of the European Green Deal.”

Last year, in 2023, KSB helped REMA obtain electrical equipment collection system authorization (as reported by CEE Legal Matters on August 3, 2023).

The KSB team included Managing Partner Pavel Dejl, Partner Tomas Sequens, Counsel Petra Mirovska, and Lawyer Martin Vrab.

BBH, working with Seitz, has advised 11teamsports on buying out its joint venture partner and obtaining full ownership of Top4Sport.

11teamsports is an online shop for football and team sports in Europe.

Top4Sport is a sporting goods store.

The BBH team included Partner Petr Precechtel and Junior Associate Adam Krejci.

BBH did not respond to our inquiry on the matter.

Havel & Partners has advised the Edera Group on its sale to Telco Pro Services.

Edera Group is a regional Internet provider in Eastern Bohemia and Vysocina, in the Czech Republic.

Telco Pro Services is a subsidiary of the CEZ Group.

The Havel & Partners team included Partner Jan Koval, Senior Associate Ivo Skolil, and Junior Associate Johana Nemeckova. 

Havel & Partners did not respond to our inquiry on the matter.

Have you noticed the latest development in the placement of behavioural advertising? You have basically a binary choice between consenting to the processing of a “complex” bundle of your personal data for behavioural advertising purposes or paying a fee. After paying the fee, you can use the platform without being targeted by behavioural advertising.

Data protection authorities across a number of European countries recently addressed the “pay or consent” model. As there is no consistent European approach, the European Data Protection Board (“EDPB”) issued an official opinion addressing this issue. While the EDPB does not reject this method of giving consent, it has also set a number of conditions under which the consent is valid. The pay or consent model is used by social media platforms such as Facebook and Instagram and by information platforms such as Seznam.cz

The pay or consent model must follow all the principles set down by the GDPR. It emphasises whether consent is freely given, informed and specific.  It also evaluates whether there is an imbalance of power between the user of the platform and the platform owner, i.e. the personal data controller.

It is further assessed whether:

• by refusing to pay a fee, the platform user will be denied access to a platform or service that plays a significant role in his professional or personal life;
• the platform user would be significantly harmed by denying him access to the platform;
• the required fee, or fear of not paying the fee, does not prevent the platform user from making a free choice;
• the processing of personal data based on the platform user’s consent is necessary for the performance of the contract, emphasising the primary use of other reasons for personal data processing;
• consent is granted for a “specific purpose” only; it should not serve as comprehensive consent for all possible scenarios necessary for the platform user to target the advertising;
• personal data is processed only to the extent necessary for the given purpose;
• there is an imbalance of power between the platform user (data subject) and the platform owner (personal data controller);
• the platform user is offered a “third equivalent alternative” that does not entail the payment of a fee.

The EDPB further stresses the special protection of children, who should not face behavioural advertising at all and should not be confronted with the choice between paid and free use of the platform.

The controller should provide the platform user with the possibility to withdraw his consent in the same simple way it was granted. Consent should not be granted for an indefinite period, but should instead be renewed regularly, ideally every year.

If we look at the EDPB’s opinion critically, it leaves quite a few legal issues open, requiring ad hoc assessment, and provides rather unspecific guidance. The following are subject to ad hoc assessment:

• whether a platform user suffers harm by denying him access to a platform; how to quantify such harm;
• the correct amount of the possible fee to access the platform, what is too much and what is too little;
• the correct equivalent alternative to access the platform;
• the length of time a platform user (data subject) must use the platform to be able to cite the lock-in or network effect (see below).

The EDPB’s opinion assumes that a platform user has an absolute right to access the platform because he has already established a social network and other useful contacts, and orders good and services. This is known as the lock-in or network effect.

The EDPB’s view recalls the competition doctrine of “essential facilities”. But even access to the necessary infrastructure is not provided for free. What is the value of free enterprise? The EDPB points out that the right to personal data protection is protected by the Charter of Fundamental Rights of the European Union, but so is freedom to conduct a business. A platform founder spends plenty of time administering, running and improving his platform.

The EDPB’s guidance should help national data protection authorities answer legal issues relating to pay or consent models. Additional answers may come from the Court of Justice of the European Union, which was asked to interpret the pay or consent model. It will show whether personal data protection is the first right among equals.

By Vladena Svobodova, Senior Associate, JSK, PONTES

Class Actions Act in force: a game-changer in consumer claims enforcement against businesses in the Czech Republic?

The Czech Class Actions Act implementing the EU Directive on representative actions will likely come into effect on 1 July 2024. The draft law was signed by the President of the Czech Republic on 7 June 2024, only a couple of days before this article was written and is yet to be published in the Collection of Laws. Nevertheless, its final wording is already clear.

This long-awaited legislation will enable the collective enforcement of consumer claims against businesses, which has been very limited in the Czech Republic so far. This brings risks, especially for businesses with a larger number of consumers in the financial services, insurance, energy and telecommunications sectors. Surprisingly, besides consumers, the final wording of the Czech Class Actions Act also brings small businesses into play as claimants.

This article introduces a series focusing on the key aspects of the new legislation that may pose increased risks to businesses. Our class actions series will be released regularly and will address questions retail businesses may have, focusing on practically navigating the often reputationally challenging class action landscape.

Who can bring a claim and what claims are eligible?

The class action may be filed only by registered non-profit organisations active in consumer rights protection for at least 12 months. These organisations must be independent of entities having an economic interest in the filing of a class action.

Individuals and small businesses may opt into the class action by submitting an application. The class needs to have at least 10 members. This is a significant drop compared to the original draft bill, which called for at least 20 members.

Another surprising change is the shift from initial exclusive targeting of B2C relationships. The current Czech Class Actions Act also considers small companies employing less than 10 employees and with annual turnover or annual balance sheet sum not exceeding CZK 50m (approx. EUR 2m) to be consumers. Therefore, also small businesses will be able to jointly bring their claims against corporations.

Consumer claims from these relationships must follow a similar factual and legal basis and will comprise only disputes arising after 24 November 2020, i.e. from the effectiveness of the EU Directive implemented by the Czech Class Action Act.

Financing and risk of competitive abuse

The new Czech Class Action Act allows third-party litigation financing. However, the court may require the claimant to provide an overview of its financial resources and their origin. The rationale behind this is to mitigate conflicts of interest and the risk of a class action being brought by a competitor. The true effectiveness of this tool is yet to be examined.

Another interesting shift occurred in connection with the remuneration of the claimant increasing from the original maximum of 5 % to 16 % of the award, while a cap of CZK 2.5m (approx. EUR 100,000) has been set for certain types of awards.

What’s next?

Many other topics and issues, such as reputational risks due to the publicity of admitted class-action proceedings and risks related to the obligation to provide the court with evidence (including confidential information), as well as more details on all the topics outlined above, will be covered in our regular series on Czech class actions.

By Natalie Rosova and Kristyna Zmatlikova, Attorneys at Law, Schoenherr

Weinhold Legal has advised the founders and full owners of Libristo Media on its sale to the Albatros Media Group. Havel & Partners reportedly advised the buyer.

Libristo Media operates online bookstores in Europe. According to Weinhold Legal, “originally starting out as a Czech-only online bookstore, it has grown to serve more than 2 million customers in 25 European Union countries each year. The move gives Albatros Media Group, a leading player in the book publishing and sales market in the Czech Republic and Central Europe, a strong position in foreign language literature and online sales.”

The Weinhold Legal team included Partner Martin Lukas, Managing Associate Jakub Nedoma, and Junior Associate Matej Novak.

Editors Note: After this article was published, Havel & Partners confirmed its role on the deal. The Havel & Partners team included Partner Jan Koval, Senior Associate Ivo Skolil, and Associates Simona Tziata, Tomas Jansa, and Martin Rott.

Kocian Solc Balastik has advised Igor Strecek and Sandberg Capital on the sale of the Czech part of Webglobe to Group.one.

Webglobe is a web hosting company that manages almost 300,000 registered domains and registers approximately 10% of the national domains in Slovakia, the Czech Republic, and Serbia.

Group.one is a Swedish group known for cloud and hosting services.

The KSB team included Partner Drahomir Tomasuk, Lawyers Jan Beres, Karolina Vosatkova, Viktor Zelinka, and Jaroslav Zahradnicek, and Junior Lawyers Josef Novotny and Patricie Stara.

KSB did not respond to our inquiry on the matter.