J. Sroczyński for WuW No. 6/2015 – An overview of the amendments to the Law on the Protection of Competition and Consumers

The President of the Office of Competition and Consumer Protection (“OCCP”) has decided that PZL Swidnik abused its dominant market position. PZL Swidnik is a producer of helicopters Mi-2, used by the Polish Army, which organized a tender for servicing its helicopters. PZL Swidnik and competitor Navcom were participating in that tender, won by Navcom which offered a lower price. Subsequently, Navcom requested PZL Swidnik to supply spare parts necessary to perform the services but was faced with a refusal. Upon Navcom’s complaint, the OCCP issued a prohibition decision, declaring that the refusal-to-deal of PZL Swidnik was anticompetitive. The OCCP imposed a relatively small fine on PZL Swidnik. The fine amounts to USD 85,000, which constitutes only 0.03% of PZL Swidnik’s turnover. A maximum fine of 10% turnover could thus amount to USD 25 million. The OCCP has taken into account a number of mitigating circumstances, including an incidental nature of the refusal and its short duration (less than a year), a commitment of PZL Swidnik to introduce internal by-laws to regulate supplies of spare parts to clients in a transparent way, and the fact that the sales of spare parts were only a small fraction of PZL Swidnik’s total turnover.

The amended Law on the Protection of Competition and Consumers entered into force on January 18, 2015. The new law introduces remedies which can be imposed in decisions prohibiting anticompetitive arrangements and abuses of dominance. Remedies may include an obligation to change the agreement, grant a license, provide continued supplies or provide access to an essential facility. The President of the OCCP will also have the right to decide a vertical disintegration of the undertaking, for example, to separate wholesale from retail activities. Concerning merger control, the new law introduces a two-phase proceeding. Phase one, destined for easy notifications, should last one month. Phase two will be opened in complicated cases, when market research is necessary and if the notification raises competition concerns. The second phase will last for an additional four month period. The new law also brings numerous procedural changes, including a prolongation of the statute of limitation to five years from the current one year, the new institution of settlement with the authority (in exchange for a ten percent maximum reduction of fine), an extension of the leniency benefits to additional anticompetitive arrangements (so-called leniency plus), various changes in the provisions concerning dawn raids, and the statutory list of aggravating and mitigating circumstances, taken into account when fines are imposed by the authority. Concerning fines, also individuals will become subject to financial liability for participating in anticompetitive arrangements. A fine imposed on a manager can reach 500 thousand euro.

J. Sroczyński, Wirtschaft und Wettbewerb. Developments in national competition law, No. 6/2015.