The Polish Competition Authority’s new powers during dawn raids

Key changes to UOKiK’s inspecting powers

UOKiK can now carry out two types of inspections, i.e., controls (requiring active actions from the company being inspected, but no prior court consent needed) and searches (no active actions from the company required, UOKiK may undertake numerous actions independently, however, the court’s prior consent is needed). UOKiK can conduct searches in private premises (home raids).

Key changes to UOKiK inspections

• UOKiK officials can now request explanations from every employee of an undertaking during an inspection, regardless of the form of their legal relationship (employment contract, B2B, etc.), but within the scope of the subject of the inspection. Previously, the Act specified certain categories of persons that UOKiK could ask for explanations. This will make it significantly easier for UOKiK officials to carry out inspections and gather evidence during ongoing proceedings, in particular, if employees are not familiar with up-to-date dawn raid procedures.
• The amendment impacts the confidentiality of correspondence between a company and a lawyer (legal professional privilege / LPP). Under new LLP rules, correspondence between the company and a Polish or foreign attorney independent of that company is protected under LPP. This means that the correspondence between the company and its in-house counsel or other legal advisors, such as tax advisors, may potentially fall outside this scope. Previously, the Act did not regulate the matter of LPP.
• UOKiK officials now have the right to “cursory look” at a letter or document, which the entrepreneur has indicated as protected under LPP. There is no guarantee that UOKiK officials will not read the substantive part of a letter or document when cursory looking at it, which may provide UOKiK with information as to the further course of the proceedings. Therefore, although formally the protection of LPP is maintained (i.e. a company may challenge UOKiK’s inspection actions), there are questions about how the protection of LPP will look in practice. Companies should thus be aware of the scope of LPP and how to raise to UOKiK officials that certain documents are protected under LLP.
• Companies can appeal against a decision of the Competition and Consumer Protection Court (SOKiK) on granting consent to carry out a search. Filing a complaint does not prevent UOKiK officials from conducting the search. However, if the appeal is successful, UOKiK will not be allowed to use any evidence collected during the search.
• UOKiK officials can now continue their search actions – in the scope of preparing, viewing, or analyzing copies from materials and correspondence – at UOKiK’s seat or its branch office (also after the company’s working hours). Previously, all such actions had to be carried out at the company’s premises.
• Police officers can now be more involved in assisting UOKiK during inspections and searches. The police can be used to enable a search or inspection to be carried out, to keep order at the inspection site, and to protect the safety of those participating.

Further changes introduced on 20 May 2023

The amendment also introduces some other changes that may have a significant impact on companies:

• A parent company is jointly and severally liable for an infringement of competition law by a company over which it has a decisive influence, which also means that the turnovers of all companies belonging to its capital group are added up as the basis for calculating the amount of the fine imposed.
• The maximum fine for procedural violations, for example, obstructing an inspection or search carried out by the President of UOKiK is now up to 3% of annual turnover – previously the maximum fine was EUR 50 million.
• The maximum fine for failing to comply with a binding decision of the President of UOKiK is up to 5% of the daily turnover of the undertaking – previously, that amount was up to EUR 10,000.
• The liability of managers of a company exerting a decisive influence on another company who violates the prohibition of concluding anti-competitive agreements has been increased.
• The liability of members of an association of entrepreneurs has been increased. The President of UOKiK can order an entrepreneur to pay a fine imposed on an association of entrepreneurs to which it belongs if the association is unable to pay it on its own (provided that several additional conditions are also met) – in such a case, the liability of a given entrepreneur is limited to 10% of the global turnover achieved by that entrepreneur in the year proceeding the year in which the fine is imposed.
• There is a new method for calculating fines imposed on associations of entrepreneurs, where the potential amount of a fine is now drastically higher than before. The basis for calculating the fine is now the total turnover of all members of the association who operate on the market where the infringement occurred (not, as before, only the turnover generated by the association itself).

Given the intensive activities of the President of UOKiK in the field of competition law enforcement and the stricter policy of imposing fines, we believe that the changes introduced are far-reaching and may have significant business and financial consequences.

All companies and their associations should train their employees and update their internal compliance policies, particularly those concerning inspections and searches (‘dawn raid’ procedures).

All members of company decision-making bodies, as well as members of the decision-making bodies of associations of entrepreneurs, should know how to conduct themselves during a dawn raid.

If you would like to obtain some more detailed information on the above, please contact us.