J. Sroczyński for WuW No. 6/2014 – Approval by the President of the OCCP for the takeover of Real hypermarkets by Auchan Polska

The President of the Office of Competition and Consumer Protection (the “OCCP”) approved an acquisition of Real hypermarkets by rival Auchan Polska. Real, a member of Metro Group, owns 57 hypermarkets in Poland, while Auchan Polska owns 27. The transaction involved also hypermarkets in Romania, Russia and Ukraine. For this reason, the European Commission was competent to review the merger but referred it to the local competition authorities, in accordance with the pertinent referral procedures. The OCCP conducted its proceedings for 10 months and finally decided to clear the transaction upon the condition imposed on Auchan Polska to divest 8 hypermarkets. Auchan must make the divestment within 18 months to an independent buyer approved by the OCCP.

The OCCP researched the retail sales of FMCG products in various types of shops and established that supermarkets and discount shops are not directly competitive with hypermarkets. In smaller shops, customers make frequent but smaller purchases. In hypermarkets, average customers purchase more products but come for shopping only several times per month. The OCCP defined the geographical market as the distance of 20-25 minutes’ drive by car from a given hypermarket. This was confirmed by an examination of postal codes in the areas in which sales networks conduct marketing activities. The geographical market can thus be broader or narrower than the area of a given town.

The OCCP cleared an acquisition by Henkel of the household detergent business of PZ Cussons, subject to the divestment of rights to the Rex brand, used for washing powders and gels. Henkel sells its product under brand names Persil, Rex, Silan and Pur. The transaction concerns the PZ Cussons’ brands E, Kokosal and IXI, used for washing and dishwashing detergent products. An analysis of the relevant market by the OCCP has shown that Henkel would significantly increase its market power after the transaction, which could lead to a limitation of competition. In result, the OCCP imposed on Henkel the condition to divest its current brand Rex, competing with IXI and E. The divestment should follow within 12 months from the OCCP’s decision, to the buyer approved by the OCCP. Until the time of divestment, Henkel must also maintain sales of Rex products at the level of at least 80% as compared to the sales in 2013 and the relation of advertising costs to the value of sales at the level no lower than that in 2013.

Royal Canine Polska and its distributors concluded an agreement excluding Internet sales of veterinary diets. In addition, the agreement introduced restrictions in the sales of these diets to non-veterinarians. The OCCP rejected the argument that the reasons for both restrictions were medically grounded and prohibited the agreement as restrictive of competition. The fines imposed by the OCCP totaled to 0.7 million euro.

The OCCP issued a commitment decision to Polskie Górnictwo Naftowe i Gazownictwo (PGNiG), an incumbent with 98% share of the Polish market for retail sales of gas. PGNiG admitted to have abused its monopoly position, preventing distributors to decrease the annual contracted quotas of gas and restricting the freedom to resell the purchased gas. PGNiG committed to abandon these practices and modify the distribution contracts, which allowed PGNiG to avoid a fine. For the first time, the OCCP performed the market test, inviting all interested parties to provide comments on the commitments offered by PGNiG.

J. Sroczyński, Wirtschaft und Wettbewerb. Developments in national competition law, No. 6/2014.