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21 June 2018
Nord Stream 2
Clearance of Netia takeover
Merger control is one of the Polish Office for Competition and Consumer Protection's (OCCP's) main areas of activity, as it deals with 170 to 220 filings annually. Recent notable developments in this regard include:
The OCCP recently announced that proceedings had been initiated against Gazprom and its five partners (ie, Engie, Uniper, OMV, Shell and Wintershall) involved in the financing and construction of the Nord Stream 2 gas pipeline. The OCCP had previously examined this initiative when the parties notified it of the creation of their joint venture project in December 2015. After conducting a detailed market study, the OCCP had presented concentration-related objections, finding that:
As a result, the parties withdrew their merger application in August 2016.
Despite not receiving clearance, the OCCP found that the parties had implemented the transaction and continued their activities in order to achieve their initial aim (ie, the financing and construction of the Nord Stream 2 gas pipeline running from Russia to Germany via the Baltic Sea).
Such gun jumping behaviour may result in fines of up to 10% of the turnover of the undertakings which perform a concentration without OCCP consent. Further, if the transaction has already been implemented and restoration of competition is otherwise impossible, the authority may order:
The proceedings are in their initial stage and the parties will now present their arguments and explanations concerning the OCCP's charges. The OCCP has called the case unprecedented and it is hard to disagree with this statement. Not only is the final decision unpredictable, the question has also arisen of whether the authority will be able to enforce potential penalties on companies located abroad. In addition to competition law concerns, the OCCP will also have Poland's energy security in mind when handling this case.
The OCCP also recently closed one of its Phase II cases by issuing unconditional clearance of Cyfrowy Polsat's acquisition of Netia.
There were horizontal overlaps between the parties regarding mobile phone services, mobile internet domestic markets and 145 local pay-TV markets. As the parties' joint market shares were as high as 20% to 30% for the mobile phone market, 30% to 40% for the mobile internet market and over 40% for many local pay-TV markets, Phase II proceedings were initiated.
After conducting a market test during which mobile phone operators, cable TV companies and the Polish telecom regulator provided their opinions, the OCCP concluded that the transaction would not restrict competition. The OCCP explained that:
For further information on this topic please contact Katarzyna Terlecka or Pawel Kulak at Schoenherr Attorneys at Law by telephone (+48 22 223 09 00) or email (firstname.lastname@example.org or email@example.com). The Schoenherr Attorneys at Law website can be accessed at www.schoenherr.eu.
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