The Polish Office of Competition and Consumer Protection (Urząd Ochrony Konkurencji i Konsumentów, “UOKiK”) has recently published its 2015 annual report presenting its first experiences with the recent amendments to Polish merger control regulations. However, only future developments will show the effects of the new much more severe rules on cartel infringement proceedings and sanctions for cartel behaviour.
On 18 January 2015 far-reaching changes to the Polish Act on Competition and Consumer Protection (Ustawa o ochronie konkurencji i konsumentów), alternatively named “Antimonopoly Law” (prawo antymonopolowe), came into effect. These have been made to close previously identified gaps and strengthen competition and consumer protection. In addition to important changes with respect to merger control and anticompetitive practices, the Antimonopoly Law as amended has introduced changes that allow for more open dialogue between undertakings and the UOKiK.
Faster and more flexible merger control proceedings
According to UOKiK’s 2015 annual report the average duration of merger control proceedings could be reduced by half despite the fact that the overall number of merger control proceedings increased. The average duration dropped from 57 days in 2014 to 34 days in 2015. Of all merger control proceedings that UOKiK completed in 2015 only three (of 235) were Phase 2 proceedings. This can be explained by the following amendments introduced in early 2015:
- A new two-stage merger control process: Phase 1 (1 month) and Phase 2 (4 months). The waiting period may be extended by UOKiK in the event that UOKiK requires additional information and documents from the parties;
- New approach in case of competition concerns: UOKiK informs undertakings about its competition concerns so that they may alter the proposed concentration to alleviate UOKiK’s concerns, e.g. through adequate remedies;
- Approach towards remedies: Undertakings may request UOKiK that it refrains from publishing in its decisions the deadline by which divestments must be made;
- De minimis clause extended: mergers and the creation of joint ventures explicitly (just like acquisitions of control already under the old law) do not need to be notified to the UOKiK if the turnover in Poland of each of the parties to the transaction does not exceed the equivalent of EUR 10 million in each of the two financial years preceding the transaction. The de minimis clause also applies to concentrations whereby control and assets are being acquired simultaneously.
Effective fight against cartels
New rules for more effective fights against cartels have been introduced but could not yet show any significant effect in 2015. The number of started proceedings (from 87 in 2013 down to 34 in 2015) and of leniency applications (from 10 in 2014 down to 2 in 2015) has dropped. UOKIK explains the reduction in numbers with the application of its new “soft approach” that contains inter alia best practices and the authority’s possibility to request undertakings to voluntarily terminate an infringement and to apply its best practices.
Nonetheless, one should keep in mind the following amendments to the law:
- New provisions concerning fines on individuals: individuals can now be fined up to PLN 2 million (approx. EUR 460,000);
- Limitation period: the limitation period has been extended from one to five years following the cessation of the anticompetitive practice. Through this extension of the limitation period, there is now a higher probability that UOKiK will be in a position to unearth, prevent and punish cartel activity;
- New provisions concerning leniency: (i) the introduction of leniency plus means that an undertaking may receive a reduction in fines of up to 30 percent for revealing another cartel, (ii) the obligation to end the anticompetitive practice starts with the leniency application (prior to the amendment it could have been continued until the actual presentation of evidence), (iii) even the ringleader of a cartel may apply for a full reduction of the fine that would otherwise have been imposed, and (iv) leniency applicants can benefit from fine reductions according to percentage bands (beforehand, leniency only led to a reduction of the fine’s ceiling);
- New provisions concerning settlements: these provisions have been introduced in order to simplify and accelerate proceedings. Specifically, settlements may lead to reductions in the fine of up to 10 percent;
- New provisions concerning behavioural and structural remedies: these new provisions are intended to more effectively eliminate the effects of anticompetitive practices;
- New provisions pertaining to dawn raids: appeals can now be brought in the event that the rights of the dawn raid’s addressee or a third person are violated during a dawn raid; the appeal has to be filed within seven days after the unlawful action occurred; as a result of a successful appeal the relevant evidence cannot be used in the proceeding concerned or in any other proceeding.
Authority’s open and soft approach
The UOKiK has adopted a more open approach permitting undertakings to contact the authority directly. New clarifying notices have been drawn up with the purpose of facilitating dialogue between undertakings and the authority. Moreover, UOKiK has updated its guidance (i) on how fines are to be calculated, (ii) on leniency application procedures, (iii) on issuing the commitment decision, (iv) on UOKiK’s detailed statement of objections, (v) on publications concerning sector enquiries, (vi) on merger control notifications and (vii) on UOKiK’s rules for contact with enterprises (see most recent documents and older ones available in English). In 2017, UOKiK will again review the new rules in consultation with undertakings and if necessary amend the provisions accordingly.
