October 22, 2014
October 21, 2014
October 20, 2014
Poland in the Spotlight: Extensive Changes to Polish Competition Law
Polish legislators have confirmed their commitment to change significantly the provisions of the Polish Competition Act. The proposed amendments will undoubtedly change Polish competition law substantially, by improving and strengthening the position of enterprises and enhancing legal certainty. Furthermore, the intended increase in procedural efficiency will likely translate into a faster and more effective system that will not only speed up the relevant processes, but will also allow the stakeholders to obtain the necessary knowledge about their legal situation, enabling them to adjust their market strategies accordingly.
Polish legislators have confirmed their commitment to change significantly the provisions of the 16 February 2007 Act on competition and consumer protection (the Competition Act), with a view to increasing the effectiveness of the current legal framework, simplifying and shortening the underlying processes and reducing the existing procedural uncertainties. Specifically, the proposed amendments are expected to strengthen the position of the Polish Competition Authority (PCA) vis-à-vis undertakings that violate antitrust laws, thereby providing further protection to consumers and small and medium enterprises, both of which are susceptible to harm as a result of competition law infringements.
On 20 November 2012, the Polish Council of Ministers gave its approval to the draft proposal to amend the Competition Act. Amending the Act is a fundamental goal of the Polish Competition Policy for 2011-2013, which is designed to identify and tackle the most important issues surrounding competition in the economy. Despite still being at an early stage in the legislative process, the endorsement of the project by the Council of Ministers means the PCA will be able to initiate the drafting process. The amended Act will then be subject to a consultation procedure.
It has been made clear by the PCA that the proposed amendments have two main purposes. The first is to clarify the obligations and conditions applicable to entrepreneurs; the second is to clarify the provisions of the rights enjoyed by parties to proceedings. As such, the most significant amendments include the following:
- The introduction of a two stage merger review procedure. At the moment, regardless of the type of concentration, merger filings are subject to a two month review process. With the introduction of the suggested alterations, however, non-problematic concentrations will be cleared in a one month, simplified procedure (Phase I), whereas complex cases and cases giving rise to further concerns will take an additional four month period to clear (Phase II).
- Communication of competition concerns. Before reaching its final decision, the PCA will communicate to the relevant parties its concerns in relation to the notified merger. This step would improve significantly the dialogue between the PCA and the undertakings, and would allow parties to adapt to the conditions and requirements that the PCA intends to impose.
- Confidentiality in merger decisions. It is proposed that the section of a merger decision that discloses the deadlines by which the proposed commitments (i.e., conditions for clearance, such as the sale of a subsidiary) have to be complied with, will remain confidential. The rationale is that companies might otherwise be put at a significant commercial disadvantage when selling the divested assets if the buyer knows the company has an immovable deadline.
- Expansion of the leniency programme. Under the current Competition Act, only the first leniency applicant benefits from full relief; other applicants are eligible only for reductions of their respective fines. Under the suggested amendments, however, the PCA intends to offer additional incentives for cooperation by allowing subsequent leniency applicants to benefit from further reductions in the penalty, if and when they inform the Authority of any other cartels or practices that the undertakings had participated in (i.e. ‘leniency plus’);
- Individual liability. The amended Competition Act also foresees the imposition of financial penalties of up to €500,000 on the key managers and/or directors of companies that participated in a cartel.
- Settlement with the PCA. Companies charged with violations of the Competition Act will have the possibility of settling with the PCA. Provided that the relevant undertaking declares and admits to infringing competition law, and accepts the full amount of the proposed fine, a 10 per cent reduction in the penalty could be considered by the antitrust regulator.
- Identification of remedies. With a view to increasing clarity and ensuring legal certainty, it has been proposed that the PCA’s decisions will include a list of remedies the investigated undertakings will be obliged to comply with. The purpose is to end the anti-competitive practices or to limit the unwanted effects of the violations.
The proposed amendments will undoubtedly change Polish competition law substantially, by improving and strengthening the position of enterprises and enhancing legal certainty. Furthermore, the intended increase in procedural efficiency will likely translate into a faster and more effective system that will not only speed up the relevant processes, but will also allow the stakeholders to obtain the necessary knowledge about their legal situation, enabling them to adjust their market strategies accordingly.
Michal Kocon also contributed to this Article.