J. Sroczyński for WuW No. 9/2011 – The President of the OCCP’s successes before the Court of Competition and Consumer Protection

The second quarter of 2011 has been particularly successful for the Polish regulator. The President of the Office of Competition and Consumer Protection (“OCCP”) won three important cases in the first instance Court of Competition and Consumer Protection (“the Court”) and one case in the Court of Appeals.

In October 2009, the OCCP prohibited a “three-to-two” merger on the market of railroad junction devices. Cogifer intended to acquire its competitor Koltram, following which only the new entity and VAE would remain meaningful market players. In its analysis, the OCCP applied the SIEC test, evidencing that competition would be significantly constrained in result of the planned transaction. Cogifer appealed against the prohibiting decision to the Court. In a confirming ruling, the Court reiterated the OCCP’s reasons for the prohibition, emphasizing the importance of market entry barriers. Among those, high entry costs and legal barriers particularly preclude potential competitors from entering the relevant market.

Orzeł Biały, a duopoly market leader specialized in the processing of lead-acid battery scrap, intended to take over its only competitor Baterpol. The merger was prohibited by the OCCP in March 2009, on the grounds that it would entirely eliminate competition on the relevant market. The Court dismissed an appeal from the prohibition decision submitted by Orzeł Biały, stating that even a new market entry by potential competitor, planned for 2011, would not eliminate serious impediments for competition. The Court also confirmed the geographic market definition, which was limited by the OCCP to the Polish national market. The Court indicated that in the years 2007-2011 no Polish undertaking ever received a consent to export abroad the services of lead-acid battery processing.

The Court confirmed a decision of the OCCP, stating that PKP CARGO, a railway freight operator, abused its dominant market position through discrimination of competitors. PKP CARGO denied to offer to a competing cargo operator the same, favorable trading conditions as those offered to its non-competing clients. The OCCP imposed on PKP CARGO a fine of about 15 million euro. The Court upheld also the amount of the fine.

All above judgments of the Court can be further appealed to the Court of Appeals in Warsaw.

In 2006, the OCCP prohibited an agreement between Canal+ and the Polish Football Association, pursuant to which Canal+ obtained the exclusive television broadcasting rights for matches of the Polish football league. The OCCP did not deny the legality of granting broadcasting exclusive rights by sport events operators. However, the agreement with Canal+ was evaluated as overly long, thus having an anticompetitive effect for other television broadcasters. The OCCP imposed a fine of about 2 million euro on Canal+ and about 110 thousand euro on the Polish Football Association. The OCCP’s decision was upheld by the first instance Court but the fine imposed on the Polish Football Association was decreased by 50%. The OCCP partly contested the Court’s judgment. The Court of Appeals ruled that the fine must be paid in full, since no grounds existed for the decrease. The Court of Appeals also re-confirmed the OCCP’s decision as to its substance.  

The OCCP initiated formal proceedings against PGNiG, an incumbent on the retail market of natural gas. PGNiG allegedly abuses its dominant position, impeding the possibility to terminate natural gas supply agreements, which violates the Polish and EU competition laws. The OCCP pointed out to overly long termination periods in contracts concluded by PGNiG with large industrial customers, in some cases extending to 15 months. This, in turn, has a discouraging effect on potential change of the natural gas supplier. In the proceedings, the OCCP will verify the scale of the alleged anticompetitive effects of PGNiG’s agreements, including their impact as entry barriers for some EU competitors.

J. Sroczyński, Wirtschaft und Wettbewerb. Developments in national competition law, No. 9/2011.