UOKiK publishes new guidelines on fines

According to the New Guidelines, to determine the amount of the fine, UOKiK should take into account, in particular, the nature of the violation, the nature of the market and the effects of the violation, as well as the duration of the violation.

However, UOKiK reserves its right to determine whether the sanction is adequate under the circumstances of the case being subject to UOKiK’s proceedings. UOKiK may therefore impose lesser or higher sanctions than those resulting from the application of the New Guidelines’ formulas.

Although the New Guidelines provide for increased transparency of the fining policy, the fact that UOKiK will still be able to adjust the fines in a discretionary manner may distract from the intended aim of transparency.

However, UOKiK’s ability to adjust fines allows companies under investigation to argue that UOKiK should deviate from the guidelines in their individual case.

Nature of violation

UOKiK recognises three types of competition law infringements:

• ·very severe infringements - anticompetitive horizontal agreements and practices of dominant position abuse aimed or leading to the elimination of the competition.
• severe infringements – anticompetitive vertical agreements, e.g., resale price maintenance or limitation of passive sales, as well as abusing a dominant position aimed or leading to restriction of competition or severe exploitation of counterparties or customers.
• ·other infringements – other anticompetitive agreements and other practices of dominant position abuse.

Nevertheless, UOKiK reserves its rights (based on its own assessment of the case circumstances) to classify infringement differently than based on the above rules. Depending on the nature of the violation, the following base amounts will be applied to determine the amount of the fine.

• ·very severe infringements - 1% to 3% of the company’s turnover,
• severe infringements – 0.2% to 1% of the company’s turnover,
• ·other infringements – 0.01% to 0.2% of the company’s turnover.

Nature of the market and the effects of the violation

The extent of the sanction depends on the potential effect of the infringement on the market. The more potential negative consequences related to the infringement or higher benefits arising from an infringement, the higher the sanction that may be imposed.

UOKiK analyses the below circumstances:

• if a product is vital for certain sensitive customers (e.g., certain medications),
• structure and characteristic of the market (the more concentrated or higher market entry barriers the higher the likelihood that the infringement has a negative impact on the market participants),
• minor share of turnover generated through sales of products involved in the infringements,
• consequences of the infringement for market participants,
• irreversibility or difficult reversibility of the consequences of the infringement (e.g., permanent and negative change of the market structure).

Duration of the violation

Under the New Guidelines, the duration of the violation will be better reflected in the amount of the potential fine. In particular, the base amount will be multiplied by the number of years of the duration of the violation. However, if in the last year the infringement lasted longer than six months the multiplier is increased by a further 0.5.

For example, if a very severe infringement lasted for three years, the multiplier amounts to 3. In that case, the base amount would be between 1% to 3% multiplied by 3 (thus, between 3% to 9% of the company’s turnover).

Aggravating and attenuating circumstances

UOKiK considers the below circumstances as attenuating (non-exhaustive list):

• ·voluntary elimination of the effects of the infringement,
• discontinuation of the infringing practice before antimonopoly proceedings is initiated,
• initiative to cease or eliminate the effects of the infringing,
• cooperation with UOKiK during the proceedings,
• passive role in the anticompetitive practices,
• acting under duress.

Aggravating circumstances include the following (exhaustive list):

• leading role in the anticompetitive practices or convincing others to participate in them,
• exerting pressure or use of retaliatory measures against other companies to introduce or continue anticompetitive practices,
• having previously committed a similar infringement,
• wilfulness of the infringement.

Taking into account all aggravating and attenuating circumstances, UOKiK may increase or decrease the base amount by up to 50%.

Adequacy of sanction

Independently of the above formulas and rules, UOKiK reserves its right to impose a lesser sanction if there are other extraordinary circumstances of the case that should be considered. UOKiK may also impose a higher sanction if in its opinion the calculated fine based on the above formulas and rules will not fulfil its aims. For example, to ensure better proportionality of the fine (e.g., due to the product’s role in the infringer’s overall business activity).

For the full text of the New Guidelines (in Polish) please click here.

For more information, contact Piotr Dynowski and Marcin Alberski.