UOKiK has fined Sfinks Polska for imposing fixed resale prices on its franchisees.

Sfinks Polska operates the ‘Sphinx’ restaurant chain, most of which are franchises, and is one of the biggest operators in the casual dining sector in Poland.

This is the first decision UOKiK has made on pricing provisions in franchise agreements and one of very few issued to date by any European competition authority.

UOKiK decided that Sfinks Polska used certain provisions in its agreements to impose menu prices arbitrarily on Sphinx restaurant franchisees.

UOKiK ruled that Sphinx franchisees were independent entrepreneurs and therefore that it was one of the most serious infringements of competition law for the franchisor to impose on them fixed or minimum resale prices.

UOKiK also ruled as unlawful the provisions used by Sfinks Polska to require franchisees to participate in price promotions, lasting from two weeks to several months, during which Sfinks Polska imposed the prices at which courses had to be offered. Under the European Commission's guidelines, to which UOKiK referred, franchisors may fix prices for the entire chain only in promotional campaigns consisting in lowering prices lasting for up to six weeks.

Sfinks Polska has been fined PLN 464,228 (c. €107,460) by UOKiK and ordered to cease all prohibited price fixing activities. The franchisees were not fined as UOKiK decided that Sfinks Polska initiated the prohibited activities (by imposing its own standard contracts and then monitoring franchisees’ compliance).

UOKiK also announced that it is currently conducting a dozen or so proceedings to establish whether other franchise-based restaurant chains are also infringing competition law.

The decision is not final as Sfinks Polska has the right of appeal to the Court of Competition and Consumer Protection.