The Polish Competition Authority has prepared an ambitious legislative initiative that may significantly change the regulatory landscape in the area of competition law in Poland. But while the draft legislation was regarded as the magnum opus of the ex-president of the PCA, Malgorzata Krasnodebska-Tomkiel, it is too soon to judge whether the new head of the authority, Adam Jasser, will endorse the initiative in its proposed form.
The debate in Poland surrounding the new law is concentrates mainly on one provision: The PCA’s right to impose fines on individuals for their involvement in anticompetitive agreements. Currently, such violations of competition law lead to fines on companies. Businesses under an umbrella of associations of companies and various interest groups, together with the community of legal counsel, have taken desperate actions to convince the PCA that the proposed instrument providing for fines on individuals lacks procedural safeguards and that its application jeopardizes the system of protecting individuals’ rights in administrative proceedings.
While the topic of fines for individuals has – not surprisingly – dominated public debate, the new law will also bring other important enforcement instruments to better equip the PCA to defend against violations of competition law.
First of all, individuals (including ex-employees) will be able to apply for leniency. Currently, that right is available to undertakings only. In addition, under the new law, companies will have the option to engage in settlement procedures with the PCA which may lead to a 10% reduction in fines. This provision is well-known to businesses which have had competition law-related troubles with the European Commission. It will be interesting to see whether participants in proceedings carried out by the Polish enforcement agency will consider a 10% reduction to be a satisfactory concession. In addition, among the most significantly anticipated changes under the new regime is the “leniency plus” proposal that will incentivise leniency applicants to confess violations of competition law involving products other than those already investigated in a given proceeding.
On the merger law front, the new regime will, among others, introduce a two-phase review, where non-problematic transactions will be cleared within one month and those raising competition law concerns will undergo an in-depth review within an additional four months. It should be clarified, however, that the one and four month review periods are to some extent illusionary, as under both phases each information request letter will stop the clock. Interestingly, in the second phase, the PCA felt that there is a need to issue a formal position to a notifying undertaking informing it about identified concerns. This is the first time that the regulator has indirectly agreed to a certain level of transparency in its dealings with notifying undertakings. Therefore, the proposed provision should itself increase predictability in the PCA’s decision-making process.
While the proposed changes vary in merits and will have a different impact on different companies, they will inevitably lead to market participants giving more thought to competition law compliance. Interestingly, that increased awareness is not only due to the risk of fines, but to the substantive complexity of the new rules. Despite the fact that the authority is considering issuing a set of guidelines that will clarify novel mechanisms and concepts, there is a concern that in the transition period all interested parties – including the PCA, undertakings, and their counsels – will find themselves in uncharted territory. There is also universal awareness that the test will then pass to courts.
For these reasons, a visible trend has been established of businesses taking internally preventive measures and modifying their dealings to the extent possible, training key individuals, and refreshing and testing procedures that are needed in the event of the PCA’s intervention. In practice it means a rush to implement rigid compliance programmes covering a wide range of internal initiatives. Mock-dawn raids are a very good example. They enable companies to test how their employees, from the reception desk to management board members, act upon unannounced inspections carried out by mock officials from … a law firm. The exercise is highly appreciated by heads of legal departments of undertakings, as it illustrates a company’s level of preparedness in advance of real situations when officials enter business premises “at dawn.”
Accordingly, the single most positive aspect of the competition law reform that may materialize in Poland may simply be a more mindful approach to compliance issues, which – not surprisingly – is also an obvious objective of the PCE.
By Marta Sendrowicz, Partner, Allen & Overy, Poland
This Article was originally published in Issue 2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
