Under the Competition Act, when an undertaking is fined for being a party to a restrictive agreement, the Office for Competition and Consumer Protection (UOKiK) can impose financial penalties on the undertaking's managers. Respective executives are liable to receive a fine of up to Zl2 million (approximately €450,000) if they intentionally allowed their undertaking to infringe Article 6 of the Competition Act or Article 101 of the Treaty on the Functioning of the European Union.
The UOKiK recently published a soft law document which provides detailed rules for determining such penalties.
Rules for calculating fines
According to the new guidelines, fine calculations are a multi-stage process in which an array of objective and subjective criteria are taken into account.
First, the UOKiK decides on the nature of the infringement. For instance, based on its gravity and market impact, an infringement is qualified as:
- 'very serious' (eg, collusion between competitors or the facilitation of such collusion);
- 'serious' (eg, vertical restraints relating to resale price maintenance or restrictions of passive sales); or
At this stage, the UOKiK sets the base amount of the fine.
Next, the respective manager's influence on the infringement is assessed (ie, 'high', 'medium' or 'moderate'), which can result in the base amount being reduced or increased accordingly.
When determining fine amounts, aggravating and mitigating circumstances are also considered. The former includes whether the manager:
- is the organiser (or instigator) behind the illegal practice;
- obtains significant benefits from the illegal practice;
- exerts pressure on other persons to breach the law; or
- has committed a similar infringement in the past.
Mitigating circumstances include acting under duress or cooperating with the UOKiK during the proceedings.
The UOKiK then considers the duration of the infringement and any previous violations of the Competition Act by the manager.
Finally, the authority examines whether the penalty is adequate in relation to the manager's income and will have a deterrent effect. The UOKiK also ensures that the fine does not exceed the maximum amount (ie, Zl2 million).
Although the possibility of fining managers for their participation in competition-restricting agreements was introduced into the relevant legislation in 2015, no such penalties have been imposed thus far. When publishing the abovementioned guidelines, the UOKiK stated that it is currently conducting four proceedings which examine the behaviour of 19 managers and the first decisions – with fines for managers – are expected before the end of 2020.
Notably, the guidelines confirm that fines may also be imposed on managers for vertical agreements. Although the guidelines provide valuable clarifications on how such penalties will be calculated, it will be even more interesting to review the first decisions in which the criteria and abovementioned steps are applied in practice.
This article was first published in International Law Office.