Competition authority’s rules for calculating fines not binding courts

When ruling on the amount of a fine, courts should be guided by the principle of proportionality, meaning that the fine should be tied to the revenue generated on sales of products affected by unlawful practices by the seller, not the seller’s overall revenue.

In 2009 the Polish competition authority, the Office of Competition and Consumer Protection, published an influential set of guidelines entitled “Explanation of Assessment of Fines for Violations of Anti-Monopoly Law.” The guidelines, which set forth detailed rules for the office when setting a fine to be imposed on a participant in a prohibited anti-competitive practice, were designed to summarise the precedent established through decisions by the competition authority and courts considering appeals from decisions imposing fines for violation of anti-monopoly regulations. When the guidelines were published, commentators wondered how they might be reflected in judicial practice. Now it is clear that the guidelines will not have a direct impact on judicial rulings in this area.

In a judgment dated 19 August 2009 (Case No. III SK 5/09, Lex No. 548862), the Polish Supreme Court held that a party to an appeal may not draw favourable inferences from the rules for calculating fines set forth in the guidelines, which are intended primarily to assist the anti-monopoly office in enforcing the Act on Competition and Consumer Protection dated 16 February 2007. The court further found that there was no legal basis for issuance of guidelines of this type, and thus they are not binding in any manner on courts considering appeals from decisions by the Office of Competition and Consumer Protection imposing fines on businesses. The court stressed that when ruling on the amount of a fine, the courts should take into account the principle of proportionality, which suggests that a fine should be based not on the overall revenue of a business, but on the revenue generated from sale of products connected to the anti-competitive practice in question.

The holding serves as an instruction for courts considering appeals from administrative decisions at the first and second instance on the criteria of culpability they should consider when ruling on fines. The fundamental regulation is Art. 111 of the Act on Competition and Consumer Protection, under which the fine must reflect the duration, severity and circumstances surrounding the violation of law, and whether the business is a repeat offender. The court should always bear in mind the principle of proportionality, under which the penalty must always be proportionate to the nature, harmfulness and effects of the anti-competitive practice.