Analysis

Amendments to the Competition Law

New regulations introduce personal liability of management board members

Legal alert (8/2014)

On 18 January 2015 the most significant amendment to the Act on competition and consumer protection will come into effect. The new regulations, published on 17 July 2014, include a series of solutions that will improve the competition protection system in Poland.

On 18 January 2015 the most significant amendment to the Act on competition and consumer protection will come into effect. The new regulations, published on 17 July 2014, include a series of solutions that will improve the competition protection system in Poland.

From the business perspective, empowering the President of Office for Competition and Consumer Protection to impose high fines on corporate management members seems to be the most controversial amendment. Managers whose intentional actions or omissions have resulted in a breach of the ban on restrictive trade practices will be held liable. Following protests of business representatives, liability for unintentional actions and omissions has been eliminated, but the legal construction of the regulation still gives rise to a number of doubts. In 2012, Deloitte Legal analyzed similar solutions applied by 14 European states. Most of them have adopted penal liability for individuals, and only four preferred administrative liability instead. Under German and Dutch law, on which Polish solutions have been modeled, the liability is based on administrative law, but unlike in Poland, in both states principles applied during related proceedings are closer to penal liability. Further, in accordance with the new regulations, both the breach of the restrictive trade practice ban and company manager's liability will be analyzed within a single administrative procedure. This gives rise to a number of doubts, in particular regarding the implementation of the fundamental principle that no one is obliged to provide evidence against themselves, since representatives of entities controlled by anti-monopoly authorities are bound by law to closely cooperate with the authorities and therefore provide the evidence to their own detriment.

The institution of remedy consisting in empowering the President of the Office for Competition and Consumer Protection (OCCP) to indicate measures for entrepreneurs to be implemented in order to eliminate the effects of or discontinue a breach is another new solution introduced. The remedies may include the obligation to amend an agreement, grant a license, or provide other entities with goods or services on non-discriminating terms. There is no closed statutory list of such measures. Their purpose is to assist entrepreneurs in implementing decisions issued by the President of OCCP. At present, though, the concern that such remedies may seriously interfere with the freedom of business operations and thus add to the existing obstacles, as raised by business representatives, seems quite justified.

The leniency procedure will also be amended. A new leniency plus instance has been introduced. It consists in an opportunity to additionally reduce a penalty for an entrepreneur who has performed illegal practices and decided to disclose to OCCP information on another, so far undetected, illegal arrangement.

Other amendments regarding restrictive trade practices include an opportunity to voluntary submission to enforcement in exchange for a ten-percent fine reduction and extending the statute of limitations on such practices from one to five years.

Other amendments include changes in concentration control procedures. Following its effective date, the related proceedings will take in principle a month instead of two months. For complex cases, though, or if market research is needed, the President of OCCP may decide to extend the proceedings by four subsequent months.

Another new solution empowers the President of OCCP to notify an entrepreneur about qualifications raised with regard to the planned concentration in an earlier stage than the final decision closing the proceedings. This solution seems positive since it accelerates information flow and allows entrepreneurs taking a position with regard to such qualifications.

Further, the lawmakers have decided to institute controversial public warnings by President of OCCP if information collected by the authorities in the course of proceedings regarding breach of collective interests of consumers provides evidence that an entrepreneur breaches consumer protection regulations by its behavior and may cause substantial damage to or adversely affect a large group of consumers. Such a warning will be published in the form of a decision of the President of OCCP. Although such a decision may be appealed against at court, entrepreneurs are concerned that in such cases, courts will limit their procedures to checking whether a “particularly strong suspicion” has occurred, ignoring actual existence of a potential threat to the interests of consumers or possible effects of such public warning on a firm. Further, if the authorities fail to prove the rightness of their suspicion in further stages of the proceedings, new regulations do not provide any tools for entrepreneurs to allow for prompt compensation for potentially substantial resultant damages.

The amendments may improve the efficiency of OCCP with regard to competition protection, but the practical use of the new tools, especially those that may cause potential problems for businesses, will be tested over time. Therefore, entrepreneurs must analyze possibilities to implement relevant procedures that would minimize their risk of breaching competition protection regulations and the related intervention of the authorities. 

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