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14 April 2016
A year has passed since major amendments to the Competition and Consumer Protection Act came into force on January 18 2015. The reform introduced significant changes, not only to the merger control regime, but also in the area of anti-monopoly practices (ie, anti-competitive agreements and abuse of dominant position). This update summarises the effects of the amendment's application by the Office for Competition and Consumer Protection (OCCP).
The amendment introduced a two-stage procedure to merger control cases. Concentrations that do not raise competition concerns should now be cleared within a month from submission of the complete notification, in a Phase I procedure.
More complex transactions are dealt with in Phase II. In Phase II cases, the OCCP has an additional four months (ie, five months in total) to decide whether to clear a concentration (with or without conditions) or prohibit it.
According to statistics recently published by the OCCP, the duration of merger control proceedings was shortened to an average of 34 days in 2015, as compared to 56 days in 2014. This was as a result of the vast majority of concentrations being cleared in Phase I.
To date the OCCP has extended the timeframe for concluding proceedings by four months in 10 cases (of which seven extensions took place during the first 12 months of the amendment being in force). In all of these cases, commencement of Phase II proceedings was justified by a need to conduct a market study. In some cases this was because verification of the data provided by the parties was necessary; in others there was no reliable third-party data regarding the relevant market or additional information to define the scope of the affected markets.
Phase II can also be commenced in particularly complicated cases and concentrations that are expected to impede competition significantly.
In four out of 10 Phase II cases, decisions have already been issued. The overall duration of the proceedings in those four cases (both Phase I and Phase II) was:
Further, one Phase II case was discontinued by the OCCP due to the withdrawal of the notification by the notifying party.
Another vital change in the merger control procedures is the introduction of the 'statement of objections'. In cases where there is a reasonable probability that a concentration will lead to a significant restriction of competition in the market, the OCCP presents its justified objections regarding the concentration to the notifying parties. In practice, the statement of objections is issued during Phase II after the OCCP completes the market study.
An undertaking may comment on the objections within 14 days of the date of receipt. This term may be extended by up to 14 additional days, on a justified request from an undertaking. The OCCP has presented a statement of objections in merger cases twice so far. In one case, an undertaking decided to withdraw its notification after receiving the OCCP's objections, in another the OCCP issued a clearance in spite of earlier objections.
The OCCP recently announced that in 2015, following the amendment, it issued 212 concentration decisions, of which only one was a conditional clearance. No prohibition decisions were taken in 2015.
Some essential changes were also introduced to anti-monopoly practices.
The most controversial change granted the OCCP the power to impose financial penalties on managers of up to PLN2 million (approximately €500,000). Another vital amendment concerned the extension of the time bar for investigating practices that restrict competition from one year to five years. The amendment also introduced a settlement procedure which essentially provides for a 10% reduction in fines where an undertaking voluntarily accepts a penalty. The possibility of imposing remedies in decisions recognising the practices as restricting competition is another new tool for the OCCP. In OCCP decisions, the president now sets behavioural or structural remedies if a prohibited practice is ascertained. Behavioural remedies might include the obligation to grant a licence to IP rights or enable access to specified infrastructure on non-discriminatory terms. Structural remedies might include the obligation to perform a specified business activity by a separate entity in a capital group.
Certain benefits can be expected from the new tools. The settlement should lead to a reduction in the duration and complexity of anti-monopoly proceedings. Remedies imposed by the OCCP should give an indication to undertakings as to how to implement decisions that order anti-competitive practices to be discontinued.
On the other hand, the extension of the time bar for investigating practices that restrict competition to five years and the power to impose fines for managers should enhance the efficiency of OCCP detection efforts in the long term. The previous one-year time bar for investigating cartels and abusive practices was extremely short in comparison to other European jurisdictions.
The OCCP recently announced that in 2015, since the amendment came into force, it commenced 32 anti-monopoly proceedings and 179 explanatory proceedings. The effects of the reform in the domain of anti-monopoly practices are yet to be seen.
In practice, the effects of the amendments are mainly visible in the merger control domain. A substantial reduction in the duration of merger proceedings (22 days fewer on average) can be seen as a success for the OCCP.
An increase in transparency in Phase II proceedings should also be noted. A decision extending proceedings by four months must be reasoned, so the notifying party knows why Phase II proceedings are launched and may try to anticipate additional data that the authority will require. Further, the introduction of the statement of objections enables undertakings to address the authority's concerns more accurately and consider presenting some solutions to address them.
The positive effects of the reform as regards combatting restrictive practices need more time before becoming noticeable.
For further information on this topic please contact Katarzyna Terlecka or Pawel Kulak at Schönherr by telephone (+48 22 223 09 00) or email (email@example.com or firstname.lastname@example.org). The Schönherr website can be accessed at www.schoenherr.eu.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
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