Poland issues new guidelines on penalties for competition law infringements for capital groups

The Polish Office of Competition and Consumer Protection (UOKiK) passed guidelines in April, which makes important changes to how penalties are calculated for companies in Poland. The guidelines are especially important for companies that are part of capital operating internationally.

Based on these guidelines, which will apply to all anti-trust cases initiated place after 1 January 2024, penalties could reach in practice the maximum level of up to 10% of worldwide turnover and could be considerably higher and more severe than in the past.

Background

In May 2023, an amendment to the Competition and Consumer Protection Act came into force. Among other things, this amendment introduced into Polish law the basis for holding a parent company liable for infringements of competition law committed by its subsidiaries.

Under the current provisions of the Polish Act, in cases where an economic entity (i.e. a direct infringer) infringes on the prohibition on competition-restricting practices, an infringement is also considered committed by an economic entity that exercises a decisive influence on that economic entity. A decisive influence is deemed to be exercised if the economic entity that exercises the decisive influence holds more than 90% of the share capital of that economic entity.

The legislation, however, does not provide detailed rules for calculating penalties imposed on more than one company within the same group where the liability of the parent company is based only on the fact that it exercised a decisive influence. This is as opposed to direct, independent participation in the infringement. The UOKiK’s previous guidelines on penalties for competition law infringements also did not provide guidance on how the office would calculate penalties in such a situation.

With the April publication of new guidelines on penalties for competition law infringements, the UOKiK responded to the question of how it will take into account the turnover achieved by the entire capital group (including outside Poland) when calculating penalties. 

In publishing the new guidelines, the UOKiK also made a number of other changes to the penalty calculation process that all companies should carefully note.

The UOKiK declares that it will apply the new guidelines to all cases in which antitrust proceedings are initiated against specific entities on or after 1 January 2024.

How will UOKiK impose a penalty on a capital group?

Regarding the question of how many penalties the UOKiK will impose if it brings charges against more than one company from the same capital group as part of a single competition-infringement case, the UOKiK states that:

• The principle will be to impose a single combined fine in proceedings against an economic entity that has directly infringed competition law and an economic entity that has exercised a decisive influence over it.
• This does not mean, however, that the UOKiK rules out the possibility of imposing more than one penalty. The authority has stated that “if the context of a particular case gives rise to the imposition of two or more fines rather than a combined fine, the President of the Office will inform the parties of this before issuing the decision”. There is no clarity as to what this situation might be. It is conceivable that the UOKiK would consider imposing more than one penalty in a situation where two group companies have an independent stand-alone role in a competition law infringement.

An equally important question concerning penalty amounts is the turnover to be taken as the basis for calculating the penalty.

The main issue in this question is whether the turnover of the entire capital group (i.e. all the economic entities that influence the direct infringer of competition law) or the economic entity or entities held liable for the infringement should be taken into account for the calculation of the penalty at the first stage (i.e. before taking into account other influencing factors). In this regard, the UOKiK stated:  

• When calculating the amount of the penalty, it will take into account the “relevant turnover” (i.e. the turnover of the economic entity or entities directly involved in the infringement in the last calendar year of the infringement period).
• The turnover of the entire group, however, will be taken into account when calculating the maximum penalty that can be imposed (i.e. 10% of the turnover achieved in the financial year preceding the year when the fine is imposed).

Other significant changes

The new guidelines also contain the following significant changes:

• When calculating the amount of the penalty, the UOKiK takes into account factors such as the characteristics of the product and its customers, the characteristics of the market, the impact of the infringement on the market, and the irreversibility or difficultly in reversing the effects of the infringement. In this regard, the guidelines have not changed significantly. An important novelty, however, is the inclusion of a “significant degree of organised infringement”. According to the UOKiK, the penalty for an infringement should be higher if, for example, participants monitored their arrangements or destroyed evidence of the infringement to reduce the risk of detection.
• The above trend (i.e. imposing higher penalties for more “organised” infringements) also includes the possibility of an additional increase in the penalty in the event that the UOKiK detects a secret cartel (i.e. an agreement between two or more competitors whose existence is partially or fully concealed).
• Regarding the impact of market characteristics on the amount of the penalty, an interesting new inclusion is the importance of the product for the “protection of the environment”. In addition, the UOKiK cites the importance of the product for Poland’s security (i.e. economic security, protection of privacy and freedom of speech, among others) as a factor affecting the amount of the penalty. This is part of a broader trend of competition law instruments promoting and protecting the principles of sustainable development (ESG).
• In addition, the UOKiK attaches particular importance to the significance of a prior infringement of the Act by an economic operator. The statutory aggravating circumstance is “having previously committed a similar infringement”, which is understood as “having previously committed a restrictive practice of a similar nature” (e.g. re-entry into a competition-restricting agreement). The UOKiK, however, goes further by allowing an increase in the penalty due to an infringement of the Act other than having previously committed a similar infringement.

What do the new guidelines mean in practice?

For many years now, a visible trend in the UOKiK’s decisions has been to increase the amount of fines imposed on economic operators. The new guidelines are undoubtedly part of this trend.

The new guidelines are particularly relevant for capital groups whose liability for an infringement often arises from their control over a company infringing competition law rather than from direct participation in the infringement through more than one company in the group. The maximum penalty that can be imposed under the Competition and Consumer Protection Act is up to 10% of the group’s worldwide turnover.

Under the guidelines, the penalties imposed by the UOKiK could be extremely severe, particularly in the case of long-standing serious competition law infringements (e.g. organised, secret cartels).

For more information on these guidelines, the penalties it recommends and competition law in Poland, contact your CMS client partner or these CMS experts.