Competition Office Issues Draft Guidelines on Turnover Calculation - International Law Office

The Office for the Protection of Competition has invited the general public to provide comments on its draft guidelines regarding the calculation of turnover for the purposes of merger control notification. The aim is to help merging undertakings to determine whether a transaction requires clearance from the Office for the Protection of Competition.

The Competition Act provides for turnover thresholds to be reached by merging undertakings to trigger mandatory approval from the Office for the Protection of Competition. With respect to transactions that qualify as a merger under the Competition Act, these turnover parameters serve as the only decisive criteria for determining whether the Office for the Protection of Competition's approval is required. In light of the fact that the Competition Act itself provides little additional information as to the manner of calculating turnover figures, the Office for the Protection of Competition has decided to issue explanatory material to assist merging undertakings.

The draft guidelines:

• define the terms ‘turnover’ and ‘net turnover’;
• explain the manner in which turnover is calculated, including the turnover of groups of companies and state-owned entities;
• deal with the issue of geographical division of turnover in the case of service provision and product sales;
• provide for a particular method for calculating the turnover of banks and insurance companies; and
• because the turnover thresholds contained in the Competition Act are set in Czech crowns, provide for a manner of converting figures in foreign currencies into Czech crowns.

Comments on the draft guidelines should be sent to the Office for the Protection of Competition by May 16 2008.

For further information on this topic please contact Lucie Bányaiová at Salans by telephone (+420 236 082 111) or by fax (+420 236 082 999) or by email (lbanyaiova@salans.com).