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Polish Supreme Court Comments on Anti-Competitive Vertical Agreements

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Poland
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The Supreme Court recently explained that the Office for Competition and Consumer Protection (OCCP) does not have to identify all of the parties to anti-competitive vertical agreements in decisions issued in such cases.

Facts

The case started with the OCCP's decision regarding an anti-competitive agreement concluded on the wholesale watches market. The OCCP stated that wholesaler Anyro & Co and cooperating retail distributors fixed minimal resale prices, which were applied by the latter to watches sold online and in bricks-and-mortar stores. The parties to this resale price maintenance practice had agreed (among other things) that the distributors could not grant clients rebates on the recommended price that were higher than 15%. Further, the retailers had to discuss details of their promotional campaigns with Anyro, which in practice did not allow the retailers to use price cuts as a marketing tool. Disobedient distributors were offered fewer advantages in terms of purchases (ie, lower rebates) by the suppliers as a consequence of not participating in the collusion.

As Anyro was the organiser of the distribution system and the instigator behind the agreement, it received a fine of approximately Zl332,000 (€77,210).

In subsequent judgments which overruled this decision, the first and second-instance courts found that the OCCP had failed to establish any parties to the resale price maintenance agreement other than Anyro. The courts stated that the OCCP should have identified all of the undertakings which were involved in the vertical price fixing.

Supreme Court decision

The Supreme Court disagreed with the first and second-instance courts and explained that in order to establish that Anyro was a party to the anti-competitive agreement and an instigator of illegal behaviour, it was not necessary to identify all of the distributors involved in the practice and examine their behaviour in detail. The individualised analysis of Anyro's behaviour was sufficient in this context. If the aim of competition law is to eliminate anti-competitive practices, the instigator of the practice must cease its behaviour.

The Supreme Court held that, contrary to Anyro's claims, the fact that the other parties to the agreement were not identified in the decision did not violate Anyro's right to a defence.

The judgment also considered market definition. The court declared that in a case concerning an agreement which is evidently restrictive by object and where de minimis exemption cannot be applied, there is no requirement to perform a detailed analysis of the relevant market. In this somewhat vague assertion, the court addressed Anyro's arguments that the relevant market definition presented by the OCCP was incorrect. Further, the OCCP did not assess the shares of the other parties to the agreement on such market.

Comment

The Supreme Court judgment demonstrates that in cases regarding agreements between an organiser of a distribution system and numerous distributors it is sufficient for the organiser (which is usually the instigator) to be the sole party to the proceedings, in which case the other colluding entities will not be identified in the OCCP's decision. This issue has been the subject of debate in Poland for some time, with some commentators viewing it as a possible violation of an organiser's right to a defence. It is evident from this judgment that such arguments will be unsuccessful in the courts.

It is also clear from this verdict that in cases were the application of de minimis exemption is excluded (so-called 'hardcore restrictions'), the OCCP is not obliged to assess the market shares of entities involved in such practice.

By Pawel Kulak, Attorney at Law, Schoenherr

Poland Knowledge Partner

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