Significant changes to Polish competition law

01 December 2014

The long-awaited amendments to the Polish Competition Act will enter into force on 18 January 2015, thereby influencing the Polish Competition Authority's decisive practice and introducing new ways to terminate anti-competitive practices. These changes are crucial for the consolidation of FMCG market in Poland.

At the moment the FMCG market in Poland is currently undergoing major changes.  Already this year the Polish Competition Authority ("UOKiK") has reviewed a number of large scale mergers and acquisitions.  In three cases UOKiK issued conditional consents for concentration.  These transactions concerned supermarket chains (Auchan/Real), washing powder producers (Henkel/PZ Cussons) and wholesalers of tobacco and impulse products (Eurocash/Kolporter).  Some high-profile transactions are still pending (Eurocash/Inmedio).  UOKiK also imposed a fine on bread producers (bid rigging case) and began an investigation regarding hygienic materials.  This month the European Commission presented the results of its study on choice and innovation in the EU food sector.  UOKiK may take more active steps towards food sector as more recent data are available in this study.  It is therefore worth taking a closer look at the amendments to the Polish Competition Act ("Act").

The amendments to the Act are designed to improve the effectiveness of regulations on terminating anti-competitive practices, as well as simplify and speed up proceedings, in particular, merger reviews.

One of the major changes to the merger control mechanism is the introduction of two-stage proceedings.  Currently, UOKiK is obliged to complete merger control proceedings within two months from their commencement.  Under the Act, such proceedings will only last up to one month, with exception of some complex cases (restricting competition or requiring a market study), in case of which UOKiK will be entitled to extend the proceedings by four months.  A similar mechanism is already available under EU law and in some Member States (France, Germany, UK).

Another change is that when reviewing transactions that may significantly restrict competition on the relevant market, UOKiK will be entitled to issue a statement of objection.  Therefore interested companies will have a chance to learn of the possible direction of UOKiK's decision, respond to raised objections and propose some modifications to the transaction.

The Act also mandates UOKiK to impose remedies in cases of anticompetitive practices and abuses of dominant positions. The Act contains an open catalogue of the remedies and provides several examples, i.e., granting an IPR license, providing access to infrastructure, changing the agreement, providing particular products or services to competitors.  If the remedies imposed are insufficient or excessively burdensome for companies, UOKiK is entitled to delegate the operation of a particular business activity to another company within the group, or to another entity within the company's structure.

To disseminate the leniency program as the way of terminating anticompetitive practices the Act further specifies the conditions that the applicant has to fulfil to obtain immunity from any fine imposed.  Individuals managing the company involved in the anticompetitive practice will be covered by such leniency program.

Furthermore, the Act introduces the leniency plus program.  If the company files a leniency application, but is not the first one to do so and is not entitled to obtain immunity, the applicant can still have the fine reduced provided that it informs UOKiK about another anticompetitive practice which is unknown to UOKiK.  In return the informant company can be granted a 30% fine reduction for the first information application and immunity from the fine for the second information application regarding the previously unknown cartel.

Furthermore, the Act introduces the leniency plus program.  The company which informs UOKiK about a cartel, which is not the first one to do so and did not obtain immunity, will be able to inform UOKiK about other cartels.  In return the informant company can be granted a 30% fine reduction for the first information and immunity from the fine for the second information regarding the previously unknown cartel.

Other key changes to the Act include a new settlement procedure and personal liability for individuals managing a company involved in a competition-restricting agreement.  The anti-monopoly limitation period will be five years (currently one year) from the end of the year in which such illegal practices were terminated.

The above described amendments to the Act were needed and much awaited.  However, it must be noted that it will be UOKiK's practical implementation of those amendments, that amendments that will be crucial in assessing their influence on the FMCG market and beyond.