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Poland: Office of Competition and Consumer Protection
President of the Office of Competition and Consumer Protection
Last year was marked by intensive work on an amended competition and consumer protection law, approved by the government in July 2013 and by parliament in June 2014. Key changes include the introduction of a two-stage merger approval, which should shorten proceedings to one month for about two-thirds of cases. The Office of Competition and Consumer Protection (OCCP) will be able to express concerns about the more complex cases before issuing a formal decision, giving companies a chance to respond and modify their proposals.
The law introduces fines of up to 2 million zlotys for individuals who intentionally allow their companies to enter a cartel agreement. Up to this point, the cost of penalties for cartel participation was borne by the company and its shareholders, rather than the offending individual. Unlike bid-rigging, cartel participation is not a criminal offence in Poland. The new measure is expected to incentivise companies and their management to strengthen internal competition compliance.
Another amendment is an extension of the competition proceedings limitation to five years from its current one year, which, together with enhanced leniency mechanisms, should lead to better competition enforcement and prevention.
The new law, which will come into force at the turn of the year, as well as structural changes made at the OCCP, will go a long way towards our goal of improving the efficiency of both consumer and competition protection. Our priorities are to put consumers even more firmly at the center of our activities, respond promptly to market abuse, boost the role of economic analysis in enforcement and enhance procedural fairness in dealing with companies.
Growing importance of economic analysis in competition enforcement
The importance of economics in the OCCP enforcement practice has increased significantly since the Department of Market Analysis was created in 2002. Initially, the OCCP economists had only an advisory role in a limited number of cases. Over the years they have become an increasingly important voice in case selection and internal decision evaluation. They provide analytical input on individual cases as well as broader policy positions. As part of the OCCP reform announced in June, the head of the Department of Market Analysis, Wojciech Szymczak, assumed the post of chief economist and joined the OCCP leadership team along with the president and two newly appointed vice presidents. The new vice presidents are Dorota Karczewska, until now head of our outstanding branch office in Bydgoszcz in Northern Poland, who will supervise consumer protection activities; and Bernadeta Kasztelan-Świetlik, an experienced private sector competition lawyer, who will head the antimonopoly practice.
Auchan/Real conditional merger
Economic analysis in competition proceedings proved particularly important when, in January 2014, the OCCP approved the acquisition of Real Hypermarkets by Auchan Polska, itself part of a wider deal under which German Metro Group agreed to sell Real’s business in Central and Eastern Europe (ie, Poland, Romania, Russia and Ukraine). The European Commission was the relevant body to investigate the transaction; however the part related to the Polish market was referred to the OCCP.
The approval followed extensive market analysis, which led to a narrower definition of the relevant HSD retail market. It was concluded that supermarkets and discount shops were not in direct competition with hypermarkets. The transaction was found to incur the restriction of competition on 11 local markets where the total share of the merged entity would have been so high as to give it an unjustified advantage over its competitors. In order to maintain effective competition, OCCP approved the transaction on the condition that eight of Real’s 57 hypermarkets be sold to a third party.
Collusion in the mining sector exposed
Competition enforcement was intensive in 2013. The OCCP issued 15 decisions sanctioning horizontal agreements and 13 decisions exposing vertical agreements on various markets.
In December, three chemical companies were fined over 18 million zlotys for collusion in supplying chemical products used in mining. The OCCP proceedings revealed that the companies – Minova Ekochem, A Weber, and Schaum-Chemie Mikołów – aside from being engaged in price-fixing and market-sharing practices, had also formed a bid cartel. The prohibited agreement concerned tenders organised by mines and mining companies for the supply of products used for preventing underground fires.
The evidence gathered resulted from close cooperation with other institutions, including the prosecutor’s office and the internal security agency (ABW). It was established that the prohibited agreements had been concluded during meetings following tender announcements by the mining companies. Board members and sales and marketing executives colluded to decide which companies would obtain which contract, what would be their market share, and what prices would be offered during the tenders. This illegal collaboration was in effect from 2005 to 2010. As a consequence, Polish mines and coal companies were forced to pay approximately double for the products offered by the participants of the agreement for a period of five years. These higher operational costs borne by the mining and coal companies were then transferred to the end consumer in the form of higher coal prices.
Cement Cartel decision upheld by Court with reduced fine
In December 2013, a decision exposing a cartel within the cement market was upheld by the Court of Competition and Consumer Protection (SOKiK). The decision found that, beginning in 1998, or earlier, the leading cement producers had been sharing the market, fixing minimum cement prices and price increase rates, as well as deadlines and the order of their introduction. The companies involved were also exchanging sensitive information.
The Court upheld the agency’s findings but reduced the imposed fine from 411 million to 339 million zlotys, arguing that the method used by the OCCP to calculate the fine was inaccurate and failed to take into account mitigating circumstances.
The telecommunications and financial sectors
Regarding sectoral priorities going forward, the OCCP’s attention is especially fixed on the telecommunication and financial sectors. In April, we opened explanatory proceedings for an in-depth analysis of the telecommunications market as it undergoes an enormous technological change with high potential to impact competition, affect broad economic growth and consumer welfare. We will examine the extent of cooperation between mobile telephony operators in terms of granting access, combining and sharing telecommunication networks, infrastructure and frequency resources. More specifically, we will analyse those relationships and the impact of technological change in the context of the planned auction for the 800 MHz and 2.6 GHz frequencies (that may be used for broadband data transmission such as LTE). This auction is organised by the Office of Electronic Communications (UKE); however, the OCCP has commented on the process from the point of view of competition and consumer welfare concerns.
We have also started investigations into a range of banking advertisements and practices that have the potential to be harmful for consumers. We are concerned about the transparency and potential misselling of financial products and will engage with the industry to seek redress and promote best practice, particularly as the credit market seems to be recovering from the global financial crisis. We will not hesitate to take decisive action against financial institutions where evidence of consumer abuse has been found.
Procedural fairness and competition network
One key commitment for 2014 and beyond is to nurture the OCCP’s relationship with consumers, businesses and other public institutions. It is our ambition to create a results-oriented network for competition and consumer protection, encompassing sectoral regulators, consumer organisations, government and law enforcement agencies and business organisations. Only through close cooperation, burden sharing and exchange of expertise can we protect and enhance consumer welfare. To facilitate dialogue with external stakeholders on competition policy, we have reinstated an Advisory Council to the president of the OCCP, composed of leading experts in economic and competition law. Its task will be to advise and comment on consumer and competition policy, economic and regulatory issues, best practice and procedural fairness in the OCCP’s enforcement. One of its first tasks will be to review the procedural guidelines the OCCP is drafting to accompany the revised competition and consumer protection law.
President of the Office of Competition and Consumer Protection
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