UOKiK‘s 2020 report shows a stricter approach to competition breaches

Highest fine in UOKiK’s history

UOKiK imposed the highest fine in its history on Gazprom. This unprecedented decision was issued as the result of an investigation carried out against Gazprom and five other companies involved in the financing of Nord Stream 2. UOKiK concluded that Gazprom and the other companies involved created a joint venture without its prior consent for concentration.

In effect, Gazprom was fined PLN 29 billion (approx. EUR 6.3 billion), and the other companies involved received fines amounting to up to a total of PLN 234 million (approx. EUR 51 million).

These fines are unprecedented as equal 10% of each of the companies’ annual turnover, whereas UOKiK’s previous fines for gun-jumping were set at a lower level and did not exceed PLN 600,000 (EUR 133,000).

First fines for individuals

Although the possibility of fining individuals has existed in Polish law since 2018, it was only in 2020 that UOKiK imposed the first fines on individuals personally liable for anticompetitive practices, namely, market sharing.

This precedent shows that UOKiK is determined to also carry out investigations against individuals that are involved in illegal anticompetitive agreements.

Payment backlogs

In 2020 UOKiK gained new powers in counteracting payment backlogs by conducting proceedings and imposing fines on some of the largest debtors on the Polish market.

In effect, UOKiK initiated over 100 proceedings (and verified over 3 million commercial invoices) against companies from various sectors, such as FMCG, white goods, automotive, chemical, and construction, which did not pay on time and had certain payment delays.

UOKiK has created two dedicated departments to effectively combat payment backlogs.

Unfair exploitation of contractual advantage

UOKiK was very active in enforcing the Act on Combating Unfair Use of Contractual Advantage in Trading of Agricultural and Food Products.

To protect food suppliers that may be exploited by retail chains, UOKiK initiated over 35 proceedings and issued 5 decisions regarding unfair exploitation of contractual advantage, including the record-breaking fine imposed on Jeronimo Martins Polska (the owner of Biedronka) amounting to PLN 725 million (EUR 157.6 million).

Furthermore, UOKiK has carried out an in-depth investigation involving the 19 biggest retail chains (including, Kaufland, Eurocash and Intermache chains) applying additional discounts, which in UOKiK’s view may be considered unfair.

UOKiK focuses on situations in which retail chains apply additional discounts that do not arise from the contract, and that prevent agri-food suppliers from knowing the final price for delivered goods.

Given UOKiK’s enforcement activity, certain changes in the law are expected by the end of this year. In particular, the list of prohibited practices is to be expanded.

Key takeaways

In the course of 2020, UOKiK was more active and its enforcement actions were stricter towards identified violations of competition law. It also focused more on certain sectors of the Polish economy.

All in all, the increased level of law enforcement should be applauded, but its real effects will be seen once UOKiK’s decisions are upheld by the courts.

For UOKiK’s report (in Polish) please see the link here.

For more information, please contact Piotr Dynowski and Marcin Alberski.