Competition law is not only a concern for big companies

Competition law is not only a concern for big companies - smaller firms and even charities have been among the recent targets of the Polish Antimonopoly Authority (UOKiK) and the European Commission investigations, with the prospect of fines of up to 10 percent of turnover where infringements are discovered. It is now vital for every manager to have a working knowledge of the competition law and be aware of the consequences, especially if the business has a dominant position on the relevant market.

For any field of law, the goal it was designed to achieve permeates every aspect of its application and interpretation. This is particularly true when the black letter of the law is cryptic and silent on most aspects of how it should be interpreted and applied, as is the case with competition law. In most cases it revolves around a small number of highly abstract provisions which have to be explained by the case law. By and large everybody agrees that the effective competition contributes to economic development and technical progress. The necessity to compete in the market forces entrepreneurs to reduce costs, increase efficiency and develop new products. For consumers, it means lower prices, bigger choice of products and better quality of goods and services offered.

In order to protect competition, the Polish Antimonopoly Authority is combating practices which undermine a fair rivalry among businesses. The main instrument in this respect is carrying out antitrust proceedings against businesses which violate the prohibition of competition restricting practices. These include anti-competitive agreements and abuses of a dominant position. As a result of such proceeding, the authorities may issue a decision ordering the business involved to cease the unlawful conduct and pay a fine of up to 10 % of turnover if infringements are discovered.

In Poland the antitrust proceedings can only be initiated ex officio. Everybody is entitled to submit a written notification concerning the suspicion of anti-competitive practices but it is not binding for the Polish Antimonopoly Authority, which means that the authorities are not obliged to initiate proceedings on its basis.

Here are the main practices which are forbidden:

1. Competition restricting agreements, in particular:
 

• direct or indirect price fixing,
• limiting or controlling production or sale and technical development or investments,
• sharing markets of sale or purchase,
• applying to equivalent transactions with third parties onerous or not homogenous agreement terms and conditions, thus creating for these parties diversified conditions of competition,
• making the conclusion of an agreement dependent on the acceptance or fulfillment by the other party of another performance, having neither substantial nor customary relation with the subject of such agreement,
• limiting access to the market or eliminating from the market entities which are not parties to the agreement,
• collusion between tender participants or between the participants and the organizer of the tender, of the terms and conditions of the bids to be proposed.

2. Abuse of a dominant market position, in particular:
 

• direct or indirect imposition of unfair prices, including predatory prices or prices glaringly low, delayed payment terms or other trading conditions,
• limiting production, sale or technological progress to the prejudice to contractors or consumers, 
• applying to equivalent transactions with third parties onerous or not homogenous agreement terms and conditions, thus creating for these parties diversified conditions of competition,
• making the conclusion of the agreement dependent on the acceptance or fulfillment by the other party of another performance having neither substantial nor customary relation with the subject of agreement,
• preventing the formation of conditions necessary for the emergence or development of competition, 
• applying burdensome contractual terms and conditions of contracts in the market, yielding to this business unjustifiable benefits,
• market sharing according to territorial, product, or entity-related criteria.

 
Competition law and enforcement are experiencing something of an awakening in the last years. Having remained relatively quiet before the pandemic and with a reduced role for competition law to correct the occasional unlawful behavior in the market, a series of high-profile cases and growing dissatisfaction with economic power (particularly in high technology markets) have re-launched competition law to the forefront of governments’ tools to restore trust in the markets. This trend is going to continue. It applies to all companies with significant position on the market and even to charities and foundations if they are involved in any form of economic activity.