I INTRODUCTION

Polish merger control, in terms of substance and procedure, is becoming increasingly similar to that of the EU, and the Polish competition authority, the Office for Competition and Consumer Protection (OCCP), benefits from the decisional practice of the European Commission and the EU courts. However, in spite of the above tendency, there are still some important aspects where Polish merger control rules differ from those provided by EU law. Capturing the differences is particularly important considering the relatively low merger control thresholds triggering the merger filing obligation in Poland.

The previous year was impacted by the entry into force of the amendments to the Polish Act on Competition and Consumer Protection (ACCP),2 which introduced some important changes to the Polish merger control rules in terms of both procedure and substance. We have observed how the key amendments materialised in practice, including rationalisation of the notification obligations aimed at excluding concentrations not having an actual impact on competition within Poland, the introduction of two-phase proceedings or a statement of objections. As explained in detail below, merger control in Poland experienced the OCCP issuing several statements of objections followed by the parties’ withdrawal of the notification, most likely in anticipation of a prohibition decision. Another welcome feature was a significant shortening of the review period in simple cases. It was also interesting to note the impact of views presented by customers, competitors and suppliers, enquired after by the OCCP in relation to notified concentrations on the final outcome of the authority’s decisions.

i Jurisdiction

An analysis as to whether a prior merger clearance of the OCCP for a given transaction is necessary requires a short assessment and answers to the following questions:

  • a whether a transaction amounts to a concentration, i.e., whether it constitutes:
  • • a merger of two or more independent undertakings;
  • • the acquisition by one or more undertakings, whether by purchase or subscription of shares or securities; or through any other means of direct or indirect control over one or more other undertakings;
  • • the creation of a joint venture;
  • • the acquisition of part of a business of another undertaking (i.e., an asset sale of part of a business);3
  • b whether turnover thresholds are exceeded:
  • • the combined worldwide turnover of the undertakings involved in the concentration and their entire groups exceeds €1 billion for the year prior to notification; or
  • • the combined Polish turnover of the undertakings involved in the concentration and their entire groups exceeds €50 million for the year prior to notification;
  • c whether notification exemption applies:
  • de minimis exemption – no filing is triggered if the Polish turnover of the following does not exceed €10 million in any of the two financial years preceding the concentration:
  • • the target – in the case of the acquisition of control; or
  • • none of the undertakings participating in the concentration (their capital groups) – in the case of a merger or the creation of a joint venture; or
  • • the part of the business to be acquired.

In the case of an acquisition of control or an acquisition of part of the business between the same parties in a series of transactions executed over two years, the total turnover of the undertakings to be acquired and the acquired business is taken into account. The purpose of this provision is to prevent avoiding merger notification by slicing the transaction into parts each falling within the notification exemption; and

  • d specific concentrations outside merger control review:
  • • an acquisition or holding of securities by a financial institution with a view to reselling them, provided that the resale takes place within one year and the financial institution does not exercise the shareholder’s rights;
  • • an acquisition or holding of securities on a temporary basis, with a view to securing claims, provided that the undertaking does not exercise the shareholder’s rights;
  • • a concentration during bankruptcy proceedings, unless control is taken over or part of the business acquired by a competitor; or
  • • intra-group concentrations.
ii Joint ventures

In Poland, in contrast to the EU Merger Regulation, a joint venture does not have to provide on a lasting basis all the functions of an autonomous economic entity to be caught by the merger notification obligation. Thus, if the relevant thresholds are met, all joint ventures are notifiable to the OCCP, irrespective of whether they are ‘fully functional’ or not.

Furthermore, a joint venture is deemed to arise even if only one undertaking will exercise (sole) control while the remaining undertakings establishing the joint venture will have non-controlling stakes. Given that a joint venture can also be created from an existing company, this may lead to practical problems distinguishing between an acquisition of a minority shareholding in an existing company (which is not notifiable to the OCCP) and the acquisition of joint control, and the creation of a joint venture.4 This problem was noticed by the OCCP, which in its latest guidelines on the criteria and procedure for notifying the intention of concentration (the OCCP Procedural Guidelines)5 stated that a creation of a joint venture on the basis of an existing company takes place when the company, although existing, was not operational, or it is intended that post-acquisition an operational company will substantially change or expand its business profile. Otherwise, the transaction should be viewed as an acquisition of joint control (which may be notifiable to the OCCP) or as an acquisition of a minority shareholding that does not constitute a concentration.

A notification obligation may also arise if an existing joint venture, which could have been previously cleared by the OCCP, is to substantially change or expand its scope of operations.

iii Domestic effect

Foreign-to-foreign transactions meeting the jurisdictional thresholds are subject to notification in Poland unless they have no (even potential) effect in Poland. According to the OCCP Procedural Guidelines, a concentration has an effect in Poland if at least one of the capital groups taking part in the concentration achieves turnover on the territory of Poland.

II YEAR IN REVIEW

i Fines

No fines were imposed by the OCCP during the past 12 months. At the same time, a few judgments of the Competition Courts are worth mentioning.

The first case related to the 2014 decision of the OCCP imposing a fine on BP Europe for closing before clearance.6 BP Europe was fined for failing to notify its intention to acquire assets comprising one petrol station together with a restaurant and a shop located on the same property. In this case, BP Europe in fact notified the transaction prior to its implementation, but the OCCP found that the acquisition of assets took place six months before the notification was made, namely when BP Europe concluded a tenancy agreement with the owner of the petrol station. In the OCCP’s view, by concluding a tenancy agreement, BP Europe effectively acquired control over said petrol station.

As a general rule under the ACCP, an acquisition of part of some assets constitutes a form of concentration different from an acquisition of control over an undertaking. And there was a controversy between BP Europe and the OCCP related to the issue of whether the acquisition of part of some assets should be considered as including the acquisition of the contractual rights. The court of competition and consumer protection (CCCP) agreed with the position of the OCCP that the acquisition of the contractual rights (here from the tenancy) represents the acquisition of part of some assets.7 This judgment is not final and awaits a second instance ruling from the Appeal Court.

The next case concerned the obligation of the market participants to provide the OCCP with market data required for assessment of a notified concentration. In May 2016, the Appeal Court8 handed down a final judgment9 on a fine imposed by the OCCP in 2013 on DeLonghi Polska Sp z.o.o. for failing to respond to the OCCP’s questionnaire sent out within the market survey conducted during merger control proceedings in the BSH/Zelmer case.10 DeLonghi was one of the merging parties’ competitors. The Appeal Court upheld the OCCP’s decision, but lowered the fine from €50,000 to €30,000. This was an exemplary case confirming the determination of the OCCP to make the merger control proceedings as effective as possible and to deter market participants from ignoring the requests for information issued in the context of such proceedings.

ii Phase II cases

Since the introduction of the 2015 amendments to the ACCP, the OCCP opened 10 Phase II proceedings. In the majority of cases, the reason for this was the need to conduct a market survey to assist in reading a decision on the relevant market definition. Out of the three cases in which the OCCP issued statements of objections, two notifying parties withdrew their notifications as they were unable to agree with the authorities on remedies. In one case, the OCCP issued a conditional decision. Four concentrations were cleared unconditionally, whereas the three cases are still pending.

The above statistics confirm the relatively high number of complex cases dealt with by the OCCP over the past 12 months.

iii Conditional decision

The decisional practice of the OCCP over the past 12 months in cases with competition concerns confirms the new approach of the OCCP to remedies observed since 2014.11 The OCCP is willing to accept conditions in the form of a carve-out (e.g., the exclusion from the scope of the transaction, before its completion, of part of a business to be acquired). Such a fix-it-first remedy was accepted in a 2015 case consisting of the acquisition by Górażdże Cement (GC), a Polish subsidiary of the international HeidelbergCement Group, of two Polish concrete and aggregates producers. The OCCP approved the transaction on condition that one of the mixing plants be excluded from the transaction.

III THE MERGER CONTROL REGIME

i Responsibility for filing

Once the jurisdictional test is met, the notification to the OCCP is mandatory and must be made prior to closing. A notification can be filed as early as the actual intention of the parties to concentrate can be shown. Filing can be made based on a conditional agreement, but also based on a memorandum of understanding, letter of intent, heads of terms or a similar document sufficiently expressing the intention of the parties to the transaction (press releases or a statement of one party are not sufficient).12 Pre-notification consultations with the authority are possible in problematic cases.

Which party (parties) is responsible for filing depends on the type of concentration:13 in the case of a merger or the creation of a joint venture, all parties to the transaction must notify; and if the concentration constitutes an acquisition of control or an acquisition of part of a business, the acquiring undertaking is responsible for filing.

In the event of the acquisition of joint control, all undertakings acquiring such control must notify (but not the undertaking already exercising joint control or changing its control from sole to joint control). The notification can be made jointly or separately by each of the undertakings acquiring joint control.

ii Review period

In line with the EU merger control rules, the amendment to the ACCP introduced two-phase proceedings.14

The Phase I review period is one calendar month. Phase II lasts an additional four calendar months. The OCCP may decide on Phase II by way of a procedural, non-appealable decision that requires justification. Such decision may be issued in the event of:

  • a particularly complex matters;
  • b matters where there is a reasonable likelihood that the concentration will result in a significant impediment to competition; or
  • c matters requiring a market survey.

Any additional questions from the authority15 stop the clock until answers are given by the notifying parties. Thus, the actual review period (both in Phase I and Phase II) may last longer than the statutory periods.16 In fact, in particularly problematic cases the proceeding may last six to nine months.

iii Suspension obligation

The parties are prohibited from closing a notifiable transaction without the OCCP’s clearance. A breach of this suspension obligation or a failure to notify at all may result in fines imposed on undertakings obliged to notify a transaction17 amounting to up to 10 per cent of their worldwide turnover. In practice, the fines imposed by the OCCP are lower than the maximum amount permitted by law, and to date have typically ranged from €2,000 to €20,000. There is no sanction of invalidity; however, if an implemented concentration results in a significant restriction of competition, the OCCP may, in addition to fines, impose remedial measures (divestment).

There is an exemption from the suspension obligation that relates to a public offer for the acquisition or exchange of shares notified to the OCCP, provided that the acquirer does not exercise the voting rights attached to those shares, or exercises those rights only with a view to maintaining the full value of its capital investment or to avoid serious harm to the undertakings involved in the concentration.

iv Third-party rights

Third parties (e.g., competitors), customers and suppliers of the parties to the concentration do not have a right to formally intervene (e.g., they do not have access to files or the right to lodge an appeal). However, they may submit unsolicited comments in relation to an intended concentration or have the opportunity to present their observations on the occasion of a market survey conducted by the OCCP in the course of the merger proceeding.

v Substantive assessment

The substantive test applied by the OCCP is whether the intended concentration would lead to a significant impediment to competition,18 in particular by creating or strengthening a dominant position on the market. There is a rebuttable presumption that an undertaking enjoys a dominant position if it has a share exceeding 40 per cent of the market. In principle, in relation to horizontal mergers, the OCCP does not identify a significant impediment to competition below a 40 per cent market share threshold.19 In its guidelines on assessing notified concentrations,20 the OCCP distinguishes between horizontal, vertical and conglomerate effects and, in relation to all three categories of effects, the OCCP may take into account both unilateral and coordinated effects.

vi Resolution of competition concerns

In matters where there is a reasonable likelihood that the concentration will result in a significant impediment to competition, the OCCP presents a statement of objections together with its justification. The OCCP may also propose conditions upon which it will clear the concentration. The conditions may also be proposed by the notifying party or parties. The OCCP gives preference to structural remedies, while behavioural ones play a secondary role.

During the subsequent 14 calendar days an undertaking may submit its position in relation to the statement of objections or conditions proposed by the OCCP. Upon an application of the notifying party or parties, the 14-day period may be extended by the OCCP by no more than an additional 14 days.

A statement of objections allows an undertaking to become acquainted with the OCCP’s view of the case in question, and therefore make it possible to propose modifications to the planned concentration so as to ensure its compatibility with competition law. When proposed solutions are not satisfactory to the OCCP, a notifying party can withdraw the notification. In recent practice, statements of objections resulted in such withdrawals to avoid the issuance of a prohibitive decision.

A lack of response from the notifying party or parties to the conditions proposed by the OCCP or the refusal of their acceptance, as well as the OCCP’s refusal to accept the conditions proposed by the undertaking, results in the issuance of a prohibitive decision.

vii Appeals and judicial review

A decision of the OCCP is appealable to the court of competition and consumer protection21 (via the OCCP) within one month from the date of that decision having been served. The appeal may be filed by the party or parties to the concentration, the public prosecutor or the Ombudsman.

Where the OCCP considers an appeal justified, it may revoke or change the decision in its entirety or in any part without sending the case files to the court, and it will immediately notify the party concerned by sending a new decision that may be appealed by that party.

Judgments of the court of competition and consumer protection are appealable to the Appeal Court, which verdicts are final.

Final rulings of the Appeal Court may be subject of cassation appeal to the Supreme Court.

IV OTHER STRATEGIC CONSIDERATIONS

i Joint ventures

As explained, the approach to joint ventures in the Polish merger control regime happens to create an obligation to notify a transaction that is actually not capable of impacting competition in Poland in a way that would justify intervention from the competition authority. As an example, the creation of a joint venture established and active in another part of the world by large capital groups may technically require notification to the OCCP. This is due to the broad notion of ‘joint venture’ (which includes both full function and non-full function joint ventures), the wide scope of the ‘domestic effect’ test in Poland and the relatively low turnover thresholds. The 2015 amendments to ACCP, particularly the introduction of the de minimis threshold for concentrations in the form of a joint venture,22 did not provide much support in this respect.

This issue is particularly important given that the definition of a joint venture is not related to the notion of joint control. For this reason, sometimes even the acquisition of a minority stake might lead to a notifiable concentration. Unfortunately, the OCCP is not willing to change its approach and interprets the ACCP provisions in this respect in a strict manner.

ii Process

The 2015 amendments to the ACCP in relation to introducing two-phase merger control proceedings were designed specifically to allow the OCCP to better allocate its resources and focus on cases with competition concerns. The practice during the past 12 months confirmed that the review period for simple, non-problematic concentrations reviewed in Phase I is relatively short, lasting one month on average. However, at the same time, proceedings in cases with competition concerns in which the OCCP issues statements of objections remained long, lasting 7–10 months. This is partially due to the absence of pre-notification in Poland.

In the merger control processes, the OCCP continues to rely heavily on third parties’ views on a given transaction. In complex cases, competitors, customers and suppliers are approached by the authority and their views, including justified criticism, if expressed, affect the authority’s perception of the market definition and the notified transaction’s impact on competition.

iii Substantive assessment

Although the greater involvement of the OCCP’s internal economists in merger control cases is observed, this does not result in an effects-based analysis of complex cases. Definition of the relevant market is the necessary and most important step in the analysis, and the market shares remain decisive in the assessment of the concentrations’ impact on competition.

V OUTLOOK and CONCLUSIONS

The implementation of the 2015 amendments to the ACCC led to greater efficiency, resulting in better allocation of the OCCP’s resources and more focus on complex transactions. For businesses, it means shorter review of simple cases but still lengthy processes for complex transactions. At the same time, the improved regime has not resulted in changes to the substantive assessment of concentrations, which still focuses on market shares analysis instead of effects-based analysis.

In addition, the amendments do not address all of the issues, and therefore do not give sufficient comfort of legal certainty to the parties. For example, Poland might still be one of those jurisdictions in which the obligation to notify a transaction is required, even though no impact on competition in the Polish market is involved.

Footnotes

1 Małgorzata Szwaj is a partner and Mariusz Łaszczyk is a managing associate at Linklaters LLP Warsaw.

2 The text of the ACCP as well as the secondary legislation and merger control guidelines issued by the OCCP are available in Polish on the authority’s website (see https://uokik.gov.pl/prawo.php).

3 Differently from the EU Merger Regulation, under the ACCP an acquisition of part of a business constitutes a form of concentration separate from the acquisition of control over an undertaking.

4 A distinction between an acquisition of joint control and an establishment of a joint venture may be relevant given different undertakings whose Polish turnover is taken into account for the purposes of an assessment of the de minimis exemption.

5 Polish version available at the OCCP’s website (see: https://uokik.gov.pl/wyjasnienia_i_wytyczne.php)'>https://uokik.gov.pl/wyjasnienia_i_wytyczne.php).

6 Decision of the OCCP No. DKK – 173/2014 of 31 December 2014.

7 Case No. XVII AmA 14/15 of 7 March 2016.

8 The Appeal Court is a second instance court hearing competition cases.

9 Case No. VI ACa 630/15 of 17 May 2016.

10 The fining decision of the OCCP No. DKK – 115/2013 of 9 September 2013.

11 In the 2014 case on the market for wholesale trade, the acquirer accepted a condition consisting of the exclusion of one of the wholesale depots from the scope of the transaction before its completion (decision of the OCCP No. DKK – 121/2014 of 18 September 2014).

12 Because the OCCP publishes in a Public Information Bulletin information that a filing was made, information about the transaction becomes publicly available. In certain situations (e.g., public tenders), this may have an impact on the decision of when to file.

13 If the concentration is conducted by a parent undertaking through at least two of its subsidiaries, the parent undertaking is responsible for filing the notification. Similarly, the parent undertaking may file if the concentration is conducted by a ‘corporate vehicle’.

14 Prior to the amendment to the ACCP the statutory review period was two calendar months.

15 The OCCP may ask additional questions even if the notification is formally complete, and it often benefits from this right.

16 In 2015, the average review period in Phase I was 34 days, while the average review period in Phase II was 162 days.

17 Fines are not imposed on vendors.

18 The equivalent of the ‘significant impediment to effective competition’ test applied at the EU level.

19 There was one exception where the OCCP prohibited a horizontal merger even though the combined market share of the undertakings concerned was below the 40 per cent threshold (Decision DKK-12/11, Empik/Merlin).

20 Polish version available at OCCP’s website (see: https://uokik.gov.pl/wyjasnienia_i_wytyczne.php)'>https://uokik.gov.pl/wyjasnienia_i_wytyczne.php).

21 Regional court in Warsaw.

22 Namely the exclusion from the notification obligation of transactions where none of the capital groups involved in the creation of the joint venture held more than €10 million in Poland in any of the two financial years preceding the concentration.