Amendment of the Act on Competition and Consumer Protection
On 20 May 2023, legislation amending the Competition and Consumer Protection Act (the “Act”) entered into force. The Act implements into Polish law the ECN+ Directive (Directive of the European Parliament and of the Council (EU) 2019/1 of 11 December 2018 aimed at empowering the competition authorities of the Member States to enforce the law more effectively and ensure the proper functioning of the internal market).
The amendments are rather extensive, but the main ones include expanding liability for restrictive practices to parent companies, creating new rules on the imposition and amount of penalties, and changing the procedure for conducting inspections and searches of undertakings.
1. Liability of parent companies for anti-competitive practices
Until now, entrepreneurs who directly violated the Act’s prohibitions could be given a fine of up to 10 per cent of their turnover in the financial year preceding that in which the fine was imposed. Additionally, penalties of up to PLN 2,000,000 could be imposed on managers who intentionally allowed an entrepreneur to violate such prohibitions.
The new provisions allow punishments to be imposed on an entrepreneur which exercised a decisive influence over the infringing entrepreneur and its managers.
The amendments state that a decisive influence exists where economic, legal or organisational relations exist between entrepreneurs which lead one entrepreneur to execute or adapt instructions given by the other entrepreneur (i.e. that which exerts the decisive influence) in a manner which limits or prevents the former from behaving independently on the market. An entrepreneur owning more than 90% of the share capital of another entrepreneur is presumed to have a decisive influence.
2. Other amendments concerning penalties
The amendments introduce periodic fines to induce entrepreneurs to fulfil their obligations. These may be up to 5% of the entrepreneur’s average daily turnover in the financial year preceding the year in which the penalty is imposed, for each day of delay.
To combat anti-competitive practices, the new rules enable the President of UOKiK to adopt so-called structural measures which interfere with the structure of the relevant entrepreneur[s]. The President of UOKiK is empowered, in exceptional situations, to interfere in an entrepreneur’s organisational, capital, or personnel structure.
The President of UOKiK acquires new competences to impose financial penalties on individuals who fail to provide information requested by the President of UOKiK or who provide false or misleading information.
The amendments include a number of provisions outlining the principles and manner of enforcing fines imposed on associations of entrepreneurs.
The previous method for calculating certain fines is changed by replacing maximum specified amounts with a cap specified as a percentage of turnover. For procedural violations, such as providing false data, failing to provide requested information or providing false or misleading information, preventing or obstructing the commencement or conduct of inspections or searches, failure to comply with certain decisions, the previous maximum amount (EUR 50,000,000) is replaced by reference to an amount representing 3% of the entrepreneur’s turnover in the previous financial year.
3. Inspections and searches
A new procedure is introduced for conducting inspections and searches at an entrepreneur’s premises upon the request of the President of UOKiK, primarily as follows:
a) the deadline to hear a motion for the court to authorise a search is extended from 48 to 72 hours;
b) the court is obliged to provide concise reasons for its decision to grant or refuse authorisation to conduct a search;
c) the inspected entity is entitled to lodge a complaint against a court’s decision to authorise a search – if the complaint is upheld, any evidence obtained as a result of the search may not be used by the President of UOKiK or in proceedings conducted pursuant to other regulations.
The amendments also affect legal professional privilege.
If, during an inspection, the inspected entity declares that:
- letters or documents disclosed during the inspection contain written communications between the inspected entity and an independent legal counsel or attorney at law from Poland or other EU country which relate to the inspected entity’s right to obtain legal advice on the proceedings, conducted by the President of UOKiK, during which the inspection takes place; and/or
- such letters or documents were drawn up exclusively to enable the inspected entity to obtain legal advice from an aforementioned lawyer on the proceedings conducted by the President of UOKiK, during which the inspection takes place.
the inspectors will be obliged to leave such letters or documents at the inspection location. The inspectors will merely be entitled to “cursorily examine” such documents in order to determine the author, addressee, title and subject matter of the letter or document and its preparation date.
Any disputes regarding the application of these rules will be resolved by the Competition and Consumer Protection Court.
Numerous changes are made to procedural issues regarding inspections and searches conducted at an entrepreneur’s business premises (e.g. regarding the possibility to conduct activities outside regular working hours and to continue search activities at UOKiK’s registered office or other delegated location) and regarding the police’s participation in inspections.
4. Other major changes
Other major changes include:
a) leniency programme – in particular, ensuring that successful leniency applicants do not incur any criminal liability;
b) introducing a 5-year term of office for the President of UOKiK, limited to a maximum of 2 terms;
c) defining the principles of cooperation between the President of UOKiK and competition and consumer protection authorities from other EU Member States, particularly as regards the mutual enforcement of fines.
5. Transitional provisions
The Act’s current provisions will continue to apply to applications to waive or reduce fines submitted before the amending Act’s entry into force and to restrictive practices abandoned before its entry into force.
The SSW Pragmatic Solutions team continuously monitors legislative reforms and draft laws that may affect your company. We will continue to keep you informed of further significant changes in the law.
Should you have any questions, we encourage you to contact us.