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 Act on Competition and Consumer Protection 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 directly participating in the concentration, and their capital groups, 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.
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.
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 is a competitor or belongs to a capital group that includes competitors of the target).
Proceeding before the President of UOKiK-issuance of consent to the concentration
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. two 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. 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.
It should also be added that in the case of international transactions, that is, those involving or affecting a large number of entities from various countries, it may be necessary to notify the European Commission.