The Polish Competition Authority to control foreign investments until 24 July 2025

On May 2022, the President of the Republic of Poland signed an amending act, pursuant to which the provisions of the Act of 24 July 2015 on the control of certain investments (“Act”)[1], granting the Polish Competition Authority (“PCA”) the competence to control acquisitions of Polish companies relevant to the public order, security or health, were extended.

The provisions of the Act, empowering the PCA to control investments by investors from non-EEA and OECD countries, came into force on 24 July 2020 and were the Polish government’s response to the economic situation related to the SARS-CoV-2 virus pandemic. The new procedure was initially envisaged to be in force for 24 months, i.e. until 24 July 2022. With the entry into force of the amending act, the duration of the provisions on foreign investment control by the PCA was extended for another 36 months, i.e. until 24 July 2025. As indicated in the amending act, the extension of the above provisions is related to the current international situation that may cause market or competition distortions.

Since the amended provisions of the Act came into force, the PCA has not blocked a single acquisition of a Polish company by foreign investors under the Act. In 2021, the PCA conducted nine proceedings related to the control of foreign investments (of which eight were initiated in 2021 and one in 2020). The PCA issued a total of three decisions, of which in two cases the PCA did not object to the transaction and did not initiate control proceedings, and in one case the PCA discontinued the proceedings. In the remaining cases, the PCA issued decisions refusing to initiate preliminary investigations on the grounds that the transactions were not subject to notification.

Under the provisions of the Act, the PCA is entitled to control investments made by investors from countries outside the EEA and OECD. The mechanism of additional control applies to transactions involving: (i) the acquisition or lease of an enterprise or an organised part thereof, (ii) the acquisition or achievement of a substantial participation (defined as at least 20% of the voting rights, capital or profits) or (iii) the acquisition of the status of a dominant entity within the meaning of the Act (manifested by the ability to decide on the lines of business) in a Polish entity.

The powers of the PCA to control investments concern acquisitions of entities whose revenues from the sale of goods and services exceeded the equivalent of EUR 10 million in the territory of Poland in any of the two financial years preceding the notification, and which meet one of the following conditions: (i) is a public company, (ii) has property that has been disclosed in the uniform list of facilities, installations, equipment and services constituting the critical infrastructure, or develop or modify software to the extent indicated in the Act, (iii) conduct business activities in one of the areas specified in the Act (e.g. telecommunications activities, production of electricity, production of chemicals, fertilizers and chemical products or the processing of meat, milk, cereal, fruit and vegetables).

A failure to comply with the above regulations may result in severe sanctions, including high fines or imprisonment.

[1] The Act of 12 May 2022 amending the Act on Goods and Services Tax and certain other acts (Journal of Laws, item 1137).