We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
25 January 2018
In a recent antitrust judgment, the Supreme Court provided an additional explanation of its approach to calculating fines in cases of collusion concerning resale prices (ie, resale price maintenance). Further, for the first time in its judicial practice, the Supreme Court provided general remarks concerning the privilege against self-incrimination (PASI) that alleged infringers may claim.
In decision DOK-107/2006, the Office of Competition and Consumer Protection (OCCP) found that a vertical price-fixing agreement had been concluded in the Polish paint and varnish market. As a result, the OCCP imposed significant fines on the parties concerned.(1) The Court of Competition and Consumer Protection (CCCP) later reduced some of these fines.(2) The Warsaw Court of Appeals upheld the CCCP's judgment and the parties to the resale price maintenance agreement lodged cassation complaints to the Supreme Court.
The Supreme Court dismissed all but Saint Gobain's cassation complaint. In Case III SK 43/16, the court provided valuable guidance on setting fines in resale price maintenance cases.
The court emphasised that under existing law, neither the OCCP nor the courts are obliged to estimate the revenues that the parties to a price fixing agreement achieved from the sale of the products affected by the infringement (ie, the products that were the subject of the agreement).
The court clarified that the OCCP had not been mistaken to acknowledge all the revenues that the infringer had generated as a basis for setting fines. The volume of revenues earned only from the sale of products affected by infringement is just one of many factors considered when calculating fines. A fine that equates to just a fraction of such revenues will generally be disproportionate and have failed to consider the infringer's real economic potential.
According to the Supreme Court, the volume of revenues generated from the sale of products affected by an infringement is a useful additional factor that can be taken into account when calculating a fine for a company with a broad range of business activities, where, in turn, the anti-competitive conduct concerns only one product area. In such cases, a fine that constitutes even a small fraction of the company's turnover may be excessive.
The Supreme Court also provided guidance for setting fines in cases in which it is possible for the OCCP or the courts to estimate profits earned through participation in an anti-competitive agreement. According to the Supreme Court, any penalties imposed should be at a level which would make participation in such an agreement unprofitable. In order to realise the preventive and repressive function of the fines imposed, it is fair to assume that, in principle, a fine which exceeds the estimated profits achieved through infringement tenfold is not disproportionate.
Referring to NOMI's arguments, the Supreme Court explained that in the case at hand, gross margins realised on the products affected by collusion should be acknowledged as benefits achieved through the participation in anti-competitive conduct. Further, in terms of proportionality, it was irrelevant which part of the gross margin was achieved due to a resale price maintenance agreement into which the parties had entered.
Further, for the first time, the Supreme Court recognised the PASI as being applicable in antitrust cases, thus confirming that its understanding of the PASI is in line with that of the European Court of Justice. As the Supreme Court explained, the fact that Polish competition law requires a party to an agreement to prove that an infringing practice has ceased does not constitute a limitation of the PASI. However, the evidence provided by the infringer to demonstrate that it has retreated from such an agreement may serve the OCCP to establish only the date of withdrawal from an illegal practice and not that the agreement took place at all.
The Supreme Court judgment provides helpful and practical guidance on the issue of setting fines, especially in antitrust cases in which it is possible to estimate the profits achieved from the sale of products affected by illegal conduct.
According to the Supreme Court, when the OCCP or the courts can estimate profits achieved from participation in an infringement, a fine which exceeds such profits tenfold is not disproportionate.
The court emphasised the need for harsh penalties in antitrust cases, arguing that revenues realised through the sale of affected products should not be the main point of reference for calculating fines. This is because, the fines imposed on infringers may be too low and not achieve their preventive function.
The court confirmed that privilege against self-incrimination should be applied in antitrust cases and provided brief yet valuable guidance in this respect.
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 (email@example.com or firstname.lastname@example.org). The Schoenherr Attorneys at Law website can be accessed at www.schoenherr.eu.
(1) Polifarb Cieszyn - Wrocław SA was fined €7.69 million, Praktiker was fined €4.06 million, OBI was fined €1.11 million, Leroy Merlin Polska was fined €7.83 million, NOMI was fined €3.35 million and Saint Gobain was fined €2.11 million.
(2) Polifarb Cieszyn - Wrocław SA's fine was reduced to €4.62 million, Praktiker's fine was reduced to €1.35 million, OBI's fine was reduced to €370,000, Leroy Merlin Polska's fine was reduced to €2.61 million, NOMI's fine was reduced to €560,000 and Saint Gobain's fine was reduced to €350,000.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.