Last week, the Polish competition authority ("OCCP") published extensive proposed amendments to Polish competition law.
These amendments, which concern merger control, liability for individuals for breach of competition law, and privilege, will have a very significant impact on companies with interests or potential interests in Poland.
Key elements of the reform include the following.
Merger control - Shortened review periods
The proposals introduce a two stage procedure for merger control review. Currently, transactions have to be reviewed within a statutory deadline of 2 months, but in practice complex cases can take up to 9 months as the OCCP can "stop the clock" (i.e. suspend the review time period on the ground that information requested by the OCCP from the parties is outstanding). The proposals establish a commitment to review transactions not raising competition issues within 30 days (Phase I), and more complex mergers within an additional 4 months (Phase II).
These new timeframes are a welcome development for business, especially as about 80% of all merger cases are likely to be reviewed in Phase I. However, it will still be open for the OCCP to "stop the clock", so in practice parties entering into transactions which raise competition issues may have to face a review period which is longer than 5 months. If the OCCP opens a Phase II investigation, it will issue a statement of objections, setting out its competitions concerns and allowing the parties to respond. This contrasts with other competition cases (eg cartels or abuse of dominance cases) where the OCCP will not issue a statement of objections unless in the context of a settlement procedure.
Extension of merger control exemption
Currently, transactions which involve the acquisition of control are exempted from notification if the target's turnover does not exceed 10 million euro in Poland in any of the two financial years preceding the transaction. The OCCP proposes to extend this exemption to joint ventures and full legal mergers.
Confidentiality of remedy deadlines
The proposals allow the OCCP to keep confidential any deadline given for the divestment of a business which is required as part of a remedy package. The Polish Court of Appeal recently dealt with a case in which the OCCP imposed a fine on a company for not implementing the sale of assets within the deadline prescribed by the remedy package agreed with the OCCP. The company claimed that it had not been able to achieve the deadline, as potential buyers had offered very low prices for the assets since they were aware of the divestment deadline prescribed in the remedy package.
The proposals introduce new rules for the calculation of the turnover of jointly controlled companies for the purposes of assessing whether a transaction falls within the merger control thresholds and requires notification. They also introduce new anti-avoidance provisions, which aim to avoid the circumvention of merger control law by dividing transactions into small parts.
Fines on individuals involved in management
The proposals allow for individuals to be fined up to 500 000 euro for competition law breaches. This applies to people serving "management" functions as well as to members of a management board who even unintentionally by their actions or omissions (in terms of supervision) allow a company to participate in anticompetitive practices. Former employees can also be subject to liability if the infringement took place at the time they were employed. The OCCP claims that when establishing the amount of penalty it will take into consideration the value of remuneration of the individuals concerned. The proposals introduce a mechanism under which individuals may gain immunity or reduction from individual fines if they fulfil certain conditions imposed under a leniency regime.
Legal Professional Privilege ("LPP")
The proposals introduce legal privilege for all lawyers, whether in-house or external counsel. However, privilege is only extended to communications that take place after proceedings have been initiated.
In return for admitting liability, accepting a particular amount of fine, and not questioning any of the facts in court proceedings, a procedure has been proposed under which companies can receive a 10% reduction. Whilst this new procedure is to be welcomed, it must be noted that a 10% reduction is unlikely to be sufficient to incentivise participation in the new settlement procedure.
The OCCP has proposed the introduction of a "Leniency Plus" programme. This will allow companies to receive a reduction of 30% in pending anti-monopoly proceedings if they disclose information about anti-competitive arrangements in other markets.
The proposals are open to consultation until 5 June 2012. Before the rules come into force, they will need to be written into a draft bill and that bill will require approval from the Polish parliament. We will be monitoring developments closely, so please do not hesitate to contact us should you require any further information concerning the proposed amendments.