EC issues EPH a Statement of Objections

The European Commission has sent two Czech companies a Statement of Objections, a formal written notification in anti-trust investigations that informs companies of the allegations against them. J&T Investment Advisors and its energy company subsidiary, Energy and Industrial Holding (EPH), are accused of hampering a European Commission (EC) investigation between Nov. 24 and 26, 2009, by failing to block employee access to e-mail accounts under investigation as well as not turning over passwords, the commission said in a statement released Dec. 22 on its website.

The EC had opened proceedings to determine if there had been such obstruction in May 2010. Seven months later, the commission is citing incidents in which the companies failed to block an e-mail account, did not open encrypted e-mails for investigators and diverted incoming messages.

"The power to carry out inspections is one of the commission's most important investigative tools to detect infringements of the anti-trust rules," the commission said. "In particular, inspectors identify the e-mail accounts of key persons in a company under inspection and block access to these e-mail accounts during the inspection in order to prevent destruction. The commission needs to review not only e-mails that pre-date the inspection, but also e-mails that are exchanged in the course of the inspection."

The EC has the power to fine both companies up to 1 percent of their annual worldwide revenue if its investigation finds the companies guilty of obstruction. Both companies will be allowed to appeal the decision.

On Nov. 24, 2009, inspectors sent by the EC and the Czech Anti-Monopoly Office (ÚOHS) raided the offices of ČEZ and EPH, sealing offices and seizing laptops and mobile phones. The EC said in a statement that it was acting on allegations of unfair competition, accusing both companies of engaging in illegal anti-competitive practices.

"The commission has reason to believe that action carried out by ČEZ unilaterally or together with other players may have led to a substantial distortion of competition and resulted in the enhancement of ČEZ's dominant position on the Czech wholesale electricity market. The suspected illegal conduct may comprise excluding competitors and raising prices on the Czech wholesale electricity market," an EC statement at the time said.

The EC also added that Czech Coal was one of the parties that submitted complaints to the EC that the collaboration between the two companies was causing a growing imbalance in the power production markets.

EPH was quick to distinguish the proceedings initiated in May 2010 from the overall investigation into market practices, the company said in a May 28 statement.

"We emphasize that the proceedings commenced by EC relates only to procedural issues that should have been caused by improper conduct by the holdings' employees during the course of the inspection. The subject matter of the proceedings therefore does not concern ... the conduct and/or position of EPH on the market or any related matter."

EPH is a relatively new company, having launched operations Oct. 15, 2009, when the J&T Group and PPF Group both invested 40 percent each into the holding company.

On Dec. 15, 2010, the European General Court upheld a fine the EC levied on E.ON, a German utility, for breaking a seal during an anti-trust raid in 2006. The General Court confirmed the 38 million euro fine that was originally levied on E.ON in 2008, a sum that is 0.14 percent of the company's annual revenue, according to the court.

Claire Compton can be reached at
ccompton@praguepost.com