In today’s business news: The European Commission launches an antitrust investigation into the Czech energy giant ČEZ, self-employed individuals may be among those who profit from an overhaul of the Czech pension system, a new law eliminates advertising on two public TV channels, Czech tennis star Petra Kvitová’s marketing potential receives a significant boost due to her Wimbledon victory, the regional brewery Svijany posts record profits in 2010 and Czechs pay up to 20 percent more for mobile phone services than clients in neighboring countries.
The European Commission has launched an investigation into Czech state-controlled energy giant ČEZ on suspicion that the power company has been blocking rivals from the domestic wholesale market. Should the investigation find ČEZ guilty of abusing its dominant market position to undermine its competitors, the energy giant may face fines of up to ten percent of its global turnover. This penalty, which has been effective in enforcing energy market liberalization across the EU, could force ČEZ to sell part of its assets. In November 2009, as part of the investigation, regulators raided ČEZ and its business partner J&T.
Self-employed individuals may profit from a planned overhaul of the pension insurance system, which is part of the second phase of the pension reform. The bill, which has been tabled in Parliament and is now set to undergo the legislative approval process, seeks to introduce a second-pillar pension fund along with making significant changes to the existing supplementary pension system. Under the new legislation, self-employed individuals, who pay 6.5 percent of their monthly income towards their pension insurance, could opt to pay up to 3 percent of what they make into a private rather than into the state-subsidized pension fund. As a consequence, they would be among those least affected by planned cuts of 15 percent to state-financed pensions. By contrast, regular employees can only opt to have ten percent of what their employer pays into their pension insurance fund transferred to a private savings plan.
The Czech Parliament has approved a bill that will eliminate advertising on the main public television channel ČT1, as well as the news channel ČT24 starting January 1, 2012. Two other public TV channels, ČT2 and ČT4, will be able to devote 0.5 percent of their airtime to commercials. While ČT2, which features many cultural programs, will be required to send its ad revenue to the State Culture Fund, the sports channel ČT4 will have to invest its advertising proceeds into the production of sports programming. The two biggest commercial TV stations, TV Nova and TV Prima, oppose advertisements on either channel. The bill will now be debated in the Senate. In 2010, Czech TV’s proceeds from advertising accounted for 530 million of the channel’s 7.3 billion crown profit.
Czech tennis star and recent Wimbledon women’s singles winner Petra Kvitová has increased her earning potential significantly, from tens of millions to hundreds of millions of Czech crowns, her marketing manager Miroslav Černošek told the online version of the daily Mladá fronta Dnes. He added that companies are now fighting to get the young tennis player, who recently renewed her contract with the US sports company Nike. Petra Kvitová has also agreed to lend her face to a marketing campaign for the Czech state-controlled energy company ČEZ, which signed a deal with her on the spot in London after the Wimbledon final. Currently, the tennis star has sponsorship and marketing deals with the American tennis racket company Wilson, Swiss watchmaker Ulysee Nardin and the Romanian clothes company Steilmann.
The regional brewery Svijany increased its profits by 56 percent to a record of 261 million Czech crowns in 2010. The largest brewery of the Liberec region produced 437,000 hectoliters of beer in 2010, still only about a third of the national brewing giant Budvar’s output of 1.25 million hectoliters in the same year. Yet Budvar saw profits of only 174.2 million Czech crowns, significantly lower than Svijany’s. Its market share dropped by 5 percent year-on-year. While Svijany was able to increase its production by 13 percent in 2010, overall Czech beer production dropped by 8 percent year-on-year. Svijany is part of the LIF group, which also owns the Rohozec and Primátor breweries.
According to the daily Právo, Czechs pay overpriced rates for their mobile phone services. Citing expert analyses as well as an internet poll of 24,000 mobile phone users, the daily writes that three mobile phone operators on the Czech market charge rates that on average are 20 percent higher than those in neighboring countries. Outside of the Czech Republic, unlimited text messaging is not unusual and relatively cheap, while this service can cost a few thousand crowns with most Czech operators, the daily writes. In addition, mobile phones are also sold at much steeper prices in the Czech Republic than abroad. According to Právo’s internet poll, about 50 percent of Czech mobile phone users believe they have been subject to overbilling by their operator in the past. Only 17 percent responded that they have filed a complaint regarding their phone bill before.