Competition law in Poland: businesses should be aware about new guidelines on penalties for competition law infringements

If you’re a small business owner in Poland, you should not worry too much about the new guidelines issued in April 2024 by the Polish Antimonopoly Authority (UOKiK) on penalties for competition law infringements. This does not apply to you.
 
However, if you’re a part of the capital group operating in Poland, you should be aware about these new guidelines on penalties because it could be about you. Competition law is not only a concern for big companies - smaller firms and even charities have been among the recent targets of antitrust authorities in Europe.
 
Based on the new guidelines (which will apply to cases initiated after 1 January 2024) penalties for competition law infringements could reach in practice the maximum level of up to 10% of worldwide turnover of the entire capital group. Moreover, individual managers of a parent company can also face serious penalties.
 
What matters will be covered by the new guidelines on penalties?
 
The new guidelines on penalties for competition law infringements will cover matters regarding agreements restricting competition and matters regarding the abuses of the dominant position. The new rules will not cover merger control issues, practices infringing the collective consumer interests and abusive clauses in contracts with consumers.
 
It is worth reminding about the most common anti-competitive practices under Polish law.
 
1. Illegal contacts and agreements 

The most flagrant example of illegal conduct infringing competition rules is the creation of a cartel between competitors, which usually involves price fixing. A cartel is where two or more businesses agree not to compete with each other. This conduct can take many forms, including price fixing, market sharing, rigging bids or restricting output of goods and services. These practices are forbidden because they restrict competition. They can take many forms and need not be officially approved by the companies involved. The most common examples of these practices are:
 

• • price fixing is where two or more businesses agree on what prices they will charge to avoid having to compete which each other. Price fixing is not limited to agreements between competitors setting a specific price for goods or services – it also includes competitors agreeing to fix any part of a price or to set price according to an agreed formula)
  • market sharing (market sharing occurs when businesses collude to carve up markets and not compete for the same customers. This could be in relation to the sale of a specific product, a geographic area or a particular type of customer)
  • agreement on customer allocation
  • agreement on production limitation
  • distribution agreements between suppliers and re-sellers where, for example, the price charged to customers is imposed by the supplier
  • limiting access to the market or eliminating from the market entities which are not parties to the agreement.
   
  All agreements and exchanges of information between you and your competitors that reduce your strategic uncertainty in the market (around your production costs, turnover, capacity, marketing plans, etc.) can be seen as anti-competitive.
   
  2. Abuse of a dominant position
   
  If your company has a large market share, it holds a dominant position and must take particular care not to:
   
  • • unreasonably high prices which would exploit customers;
    • charge unrealistically low prices which may drive competitors out of the market;
    • discriminate between customers;
    • force certain trading conditions on your business partners;
    • prevent the formation of conditions necessary for the emergence or development of competition;
    • share markets according to territorial, product, or entity-related criteria;
    • limit production, sale or technological progress to the prejudice to contractors or consumers.
    
    Are you a part of the capital group? Be aware of responsibility
     
    Up until May 2023, entrepreneurs who directly infringed the anti-competitive prohibitions in Poland could be given a fine of up to 10 % of their turnover in the financial year preceding that in which the fine was imposed. Additionally, penalties of up to PLN 2 m could have been imposed on managers who intentionally allowed the company to infringe such prohibitions.
     
    This was changed in May 2023 and the liability of parent companies for anti-competitive practices was introduced into the Polish law. Under the current rules, in cases where a Polish company (i.e. a direct infringer) infringes Poland’s competition rules, an infringement is also considered to be committed by a company that exercises a decisive influence on the Polish company. A decisive influence is deemed to be exercised if the parent company holds more than 90% of the Polish company’s share capital.
     
    The legislation, however, does not provide detailed rules for calculating penalties imposed on more than one company within the same group where the liability of the parent company is based only on the fact that it exercised a decisive influence.
     
    How will UOKiK impose a penalty on a capital group?
     
    It seems that the UOKiK will tend to carry out proceedings only against one company (i.e. against the direct infringer) but a fine to be imposed will be a combined fine taking into account a Polish company that has directly infringed competition law and a parent company. This does not mean, however, that the UOKiK rules out the possibility of imposing more than one penalty. It is possible that the UOKiK would consider imposing more than one penalty in a situation where two group companies have an independent stand-alone role in a competition law infringement.
    
    As regards the amount of the penalty, the UOKiK will take into account the relevant turnover i.e. the turnover of a company or companies directly involved in the infringement in the last calendar year of the infringement period. However, the turnover of the entire group will be taken into account when calculating the maximum penalty that can be imposed (i.e. 10% of the turnover achieved in the financial year preceding the year when the fine is imposed).
     
    In addition, both the management of the parent company and of the direct infringer in Poland can be held liable for infringements of competition law. The UOKIK can impose fines of up to PLN 2 m to individual managers for intentionally allowing an infringement of competition law to be committed.
     
    What do the new guidelines mean in practice?
     
    For many years now, a visible trend in the UOKiK’s decisions has been to increase the amount of fines imposed on economic operators. The new guidelines are undoubtedly part of this trend.
     
    The new guidelines are particularly relevant for capital groups whose liability for an infringement often arises from their control over a company infringing competition law rather than from direct participation in the infringement through more than one company in the group. The maximum penalty that can be imposed under the new rules is up to 10% of the group’s worldwide turnover.
     
    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 holds a dominant position.