J. Sroczyński for WuW No. 9/1998 – A review of rulings by the OCCP and the Antimonopoly Court

Several rulings of the Office of Competition and Consumer Protection (“OCCP”) and the Antimonopoly Court concerned merger control. Two of those rulings pertained to the mass media market. The OCCP opposed an acquisition by a Dutch publisher, Reed Elsevier, of a specialist Polish magazine devoted to horticulture. In the second mass media ruling, the OCCP prohibited a merger of two cable television operators. The OCCP claimed in both cases that the concentrations would worsen the competitive situation on the respective relevant markets, due to high market shares of the involved undertakings. Both prohibitions were rejected by the Antimonopoly Court which held that the Polish mass media market is “young” and constantly changing, with numerous new entries and almost total exposure to international competition. In consequence, the Antimonopoly Court ruled that a more liberal approach is required to concentrations which are unlikely to have an adverse effect on competition on the long run.

In another decision, the OCCP prohibited acquisition of a local cement producer in South-Western Poland by CBR, a Belgian company with allegedly significant market share in the region. Even though the applying parties argued that the geographical market was defined too narrowly by the OCCP, and this resulted in the high market shares, the case was finally decided positively based on the failing company defense (in addition, the acquired company suffered heavily from the extremely disastrous flood which had taken place in Poland in the summer of 1997).

The same failing company defense was used in a case where the OCCP prohibited multinational ABB, which has a strong presence in the Polish energy sector, from investing in a Warsaw’s company producing certain electrical products. Rendering finally a positive ruling, the OCCP emphasized that the acqusition may create a particularly strong vertical integration. In this respect, the OCCP imposed on ABB an obligation to provide during the next few years detailed reports concerning its activities on the Polish market. In addition, the target company obligated to continue deliveries of specific railway electrical products to PKP, the national railway company.

The Antimonopoly Court found the Gdańsk Oil Rafinery (“GOR”) guilty of committing monopolistic practices consisting in a refusal to deal and discrimination. GOR refused to supply a product called BS (a base component used in the production of fuels) to the complaining company, at the same time supplying other companies. GOR is the only producer of BS in Poland, the product has no substitutes and imports are economically not viable.

A dispute between Onken, a German yogurt producer, and Bakoma, a Polish company operating on the yogurt market, was temporarily ruled by the Antimonopoly Court in favor of Onken. The two companies signed a license agreement several years ago concerning a transfer of Onken’s know-how and trademark to Bakoma, and planned to establish a joint venture which, however, was never materialized. On the other hand, pursuant to the license agreement, Bakoma was prohibited from producing competitive products and was obligated to use Onken’s trademark on its products. The Antimonopoly Court questioned the market definition applied by the OCCP, which ruled that the fact that different colonies of bacteria are used in the production of yogurt determines the existence of many relevant, narrow markets. The case was sent back to the OCCP for futher examination of the relevant market.

The Polish Post was accused of applying exorbitant prices for rental of P.O. Boxes. The rent rates have risen overnight by 100-200% and in some cases even by 500%. The prohibiting decision of the OCCP imposed an obligation to apply equal prices throughout the country and to refrain from charging excessively high prices. The Polish Post did not file an appeal from OCCP’s decision, which thus became final.

J. Sroczyński, Wirtschaft und Wettbewerb. Developments in national competition law, No. 9/1998.