Notification of concentration to the President of the Office of Competition and Consumer Protection


 
 

The rules for oversight of concentrations in Poland are set forth in the Competition and Consumer Protection Act of 16 February 2007. The competent authority under the act is the president of the Office of Competition and Consumer Protection (UOKiK).

When is notification required?

Under the act, a concentration is defined as:

  • The acquisition by one or more undertakings, by purchase of shares or other securities, or by any other means, of direct or indirect control of one or more other undertakings
  • Creation by undertakings of a joint undertaking
  • Merger of two or more undertakings
  • Acquisition by an undertaking of part of the assets of another undertaking, if the turnover achieved through the assets acquired in Poland in any of the two financial years preceding the notification exceeded the equivalent of EUR 10 million.

An intended concentration is subject to notification of the president of UOKiK if the combined turnover achieved by all of the undertakings participating in the concentration in the financial year preceding the notification:

  • Exceeded the equivalent of EUR 1 billion worldwide, or
  • Exceeded the equivalent of EUR 50 million in Poland

The turnover relevant to determination of whether the basic criteria requiring notification have been met includes:

  • In the case of a merger of two or more undertakings or creation of a joint undertaking by existing undertakings, the turnover of the capital groups of the undertakings participating in the concentration
  • In the case of acquisition of control, the turnover of the capital group of the acquirer (the undertaking assuming control) and the turnover of the acquired undertaking and its subsidiaries (excluding the turnover of the seller’s capital group)
  • In the case of acquisition of a portion of the property of an undertaking (asset acquisition), the turnover of the acquirer’s capital group and the turnover generated by the acquired assets.

Exceptions and exclusions from notification requirement

An intended concentration involving transfer of control is not subject to notification if the turnover in Poland of the undertaking (or undertakings) over which control will be taken (i.e. the target) did not exceed the equivalent of EUR 10 million in either of the two financial years preceding the planned transaction.

If the concentration involves acquisition of control over an undertaking or undertakings belonging to one capital group and simultaneous acquisition of a portion of the property of an undertaking or undertakings belonging to the same capital group, the concentration will be excluded from the notification requirement if the combined turnover of the undertaking (or undertakings) over which control is being acquired, as well as the turnover generated by the acquired assets, did not exceed the equivalent of EUR 10 million in Poland in either of the two financial years preceding the notification.

The intended concentration is excluded from the notification requirement in the case of:

  • Intra-group transactions (within the same capital group)
  • Temporary acquisition or taking up of shares in another undertaking by a financial institution with a view to reselling them within one year, provided it does not exercise the share rights (except concerning the right to dividends or in order to prepare for resale of the shares)
  • Temporary acquisition or taking up of shares in another undertaking in order to secure debts (provided that share rights are not exercised during such time, except for rights enabling sale of the shares)
  • A concentration occurring within a bankruptcy proceeding (except where the undertaking intending to acquire control or acquiring a portion of the assets) is a competitor or belongs to a capital group that includes competitors of the enterprise which is being acquired or whose assets are being acquired.

Cross-border transactions and notification obligation in Poland

Foreign transactions are subject to merger review in Poland if they will exert or could exert consequences in Poland. Under the official guidelines issued by UOKiK, a transaction may exert consequences in Poland if at least one of the participants in the concentration (or the capital group which it belongs to) generates revenue in Poland.

It should also be added that in the case of international transactions, particularly those involving or affecting a large number of entities from various countries, with significant turnover in EU countries, it may be necessary to notify the European Commission.

Proceeding before the president of UOKiK — issuance of consent to the concentration

The Competition and Consumer Protection Act provides for a two-stage proceeding in merger control cases. When the concentration is not particularly complicated, does not raise a reasonable probability of a significant limitation on market competition and does not require a study of the market, the proceeding should be completed within
1 month after filing of the notification with UOKiK (first stage). But if the concentration is particularly complicated or shows a probability of significantly limiting competition, or if UOKiK finds that it is necessary to study the market, the president of UOKiK will issue an order extending the proceeding by another 4 months together with a justification (second stage). Such an order is unappealable.

If the applicant is summoned by UOKiK to cure defects in the notification or supplement the information (which happens relatively often), the statutory period for issuance of a decision in the first or second instance is extended by the time UOKiK spends waiting for the response to such additional questions.

The parties to a transaction that is subject to the notification procedure must refrain from carrying out the transaction until issuance of a decision by the president of UOKiK, or until the deadline for a ruling on the matter (i.e. five months plus any extra time the authority provides for submission of additional information or documents).

As part of the proceeding leading up to issuance of a decision permitting the concentration, the president of UOKiK will examine whether the concentration will significantly limit competition on the market. In cases where it is found that there is a reasonable probability of a significant limitation of market competition if the concentration is carried out, the president of UOKiK will present reservations with respect to the transaction to the undertaking(s) participating in the concentration. The reservations must be justified, and the undertaking(s) may respond to the reservations asserted within the established time. The authority may issue a decision prohibiting the concentration only if the concentration would significantly limit competition, meaning more specifically the creation or strengthening of a dominant position on the market. If the planned transaction raises serious concerns under competition law, the authority may establish conditions that must be fulfilled by the parties in order to obtain consent to the concentration.

Issues related to the interim period

When the intended concentration requires notification, the transaction is typically divided into two stages. The first is the signing, in which the parties enter into a preliminary or conditional agreement. The second stage, the closing, occurs after successful completion of the proceeding before the competition authority.

Regardless of the construction adopted for the transaction, separating it into stages means that there will be an interim period between the signing, after the parties have negotiated the terms of the deal, and the closing, when the target will pass to the acquirer. During the interim period, the acquirer formally has no influence over the target (and cannot, for example, conduct the affairs of the target or otherwise manage it), but on the other hand the acquirer wants to be sure that when the target is delivered its condition is no worse than it was at the signing.

In consequence, in order to secure the interests of the acquirer, it is crucial to include appropriate provisions in the transaction documents governing the operations of the target during the interim period, in compliance with competition regulations.