BACKGROUND
1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
The relevant legislation containing the leniency policy is the Act on the Protection of Competition and Consumers of 16 February 2007 (the Act). The Act entered into force on 21 April 2007. The Chairman of the Office for the Protection of Competition and Consumers (the OPCC) is responsible for the enforcement of the Act including the investigation of cartels. The OPCC is made up of a central office in Warsaw and nine regional offices.
A procedural description of what must be included in a leniency application is set out in the Council of Ministers Regulation of 17 July 2007, which replaced the Council of Ministers Regulation of 18 May 2004 on leniency.
2. What are the basis tenets of a leniency/immunity programme?
Similarly to competition law enforcers in other jurisdictions, the OPCC is committed to the detection and punishment of cartel conduct. The maximum fine that can be imposed under the Act for cartel conduct is an amount not in excess of ten per cent of the revenue earned in the accounting year preceding the year in which the fine is imposed. The leniency programme in Poland is based upon the principle that it is in the public interest to grant favourable treatment to undertakings who provide cooperation in the detection and proof of a cartel. The earlier a leniency applicant approaches the OPCC, the greater the chance of receiving a waiver or a reduction of a fine. An undertaking that initiated a cartel or coerced others to participate in it, cannot be a candidate for a full waiver of a fine under the Act, but may be a candidate for a reduced fine. The leniency programme in Poland is not limited to horizontal agreements among competitors, but also applies to vertical agreements.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
The leniency programme was introduced to the Polish legal system by an amendment to the former competition law, the Act on the Protection of Competition and Consumers of 15 December 2000. The amendment to the Act was effective as of 1 May 2004.
According to unofficial public information, from May 2004 to the end of 2006, approximately ten applications for leniency were submitted to the OPCC. As of the date of this publication going to press, the Chairman of the OPCC issued one decision in which one of the parties received a reduction in the imposed fine as a result of leniency.
4. What is needed to be successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
A leniency applicant who wishes to obtain a full waiver from a fine must provide the Chairman of the OPCC with sufficient information to enable the Chairman to institute antimonopoly proceedings, or, if the investigatory proceedings already have been instituted, with proof enabling the Chairman to issue a decision finding an infringement of Article 6 of the Act or of Article 81 of the Treaty. An undertaking applying for a full waiver of a fine must confirm that it was not the initiator of the illegal agreement and has not induced others to participate in the agreement. A leniency applicant must fully cooperate with the OPCC in the course of the proceedings by continuing to provide evidence relating to the case on a voluntary basis or upon the demand of the Chairman of the OPCC.
In order to obtain a fine reduction, a leniency applicant must present to the Chairman of the OPCC proof which significantly contributes to issuing a decision finding an infringement of Article 6 of the Act or of 81 of the Treaty.
Every leniency applicant must terminate its participation in the illegal agreement not later than the time when the leniency application is filed.
The Act does not specify what kind of evidence is to be presented by an applicant. There are no formal obstacles to providing documentary evidence and in offering supporting testimonial evidence. In practice, the OPCC accepts documentary evidence supported by written statements executed by an applicant’s representatives.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
Only a cartel member who is the first to file a leniency application with the OPCC and fulfils all additional conditions provided in the Act (see question 8) can obtain a full waiver from a financial penalty.
Even if the first leniency applicant does not fulfils all of the conditions for a full waiver (being the first to provide the OPCC with evidence to initiate antitrust proceedings or to issue a decision finding an infringement of Article 6 of the Act or of 81 of the Treaty, cooperating with the OPCC, ceasing participation in a cartel and not being its initiator), it can still obtain a reduction of the maximum fine.
The entrepreneur who is the first to apply for a full waiver but does not meet all of the above-summarised conditions that are contained in Article 109(1) of the Act, because, for instance, it was the ringleader in the cartel or prohibited agreement, can still receive beneficial treatment as the first leniency applicant to fulfils the ‘fine reduction’ conditions provided under Article 109(2), which are: (1) to present upon its own initiative to the Chairman of the OPCC proof which to an essential extent will contribute to issuing a decision finding an anticompetitive practice; and (2) to have ceased participating in the anticompetitive agreement at the latest by the time of applying for leniency. The fine imposed upon the first applicant to fulfils the fine reduction requirements can be in an amount not in excess of five per cent of the revenue earned in the accounting year preceding the year when the penalty is imposed. (Again, the maximum fine that can be imposed under the Act for cartel conduct is an amount not in excess of ten per cent of the revenue earned in the accounting year preceding the year in which the fine is imposed.)
In order to be able to take advantage of the leniency programme, the business community must be aware that a cartel agreement or certain vertical agreements are forbidden and that there is a way to avoid being penalised or penalised fully for such conduct. Unfortunately, according to a survey made for the OPCC in 2007, 13 per cent of small companies (according to the survey, companies hiring up to nine employees) in Poland consider vertical price fixing to be legal and 43 per cent think that it is legal in certain conditions. In large companies (that is, companies hiring more than 250 employees), these percentages are respectfully: six per cent and 27 per cent. Only four per cent of small companies and 21 per cent of large companies had heard of the leniency programme. The OPCC intends to launch a public information campaign on its leniency programme.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
The second leniency applicant can only receive a reduction of a fine and not a full waiver.
If an applicant was not the first to ‘come in’ but still is the first leniency applicant to meet the two ‘reduction’ conditions provided for in Article 109(2) of the Act (to present to the Chairman of the OPCC proof which to an essential extent will contribute to the issuance of a final decision finding anticompetitive practice, and, to have ceased participating in the cartel agreement by the time it presented to the OPCC this evidence), the fine imposed cannot exceed five per cent of the revenue earned in the accounting year preceding the year when the fine is imposed.
If an entrepreneur is the second to meet the two reduction conditions, the Chairman of the OPCC shall impose on it a penalty not exceeding seven per cent of its revenue. For the third and subsequent leniency applicants, the maximum penalty shall not exceed eight per cent of their revenue for the last accounting year.
The abovementioned two ‘reduction’ conditions are the same as in the case of the first leniency applicant that does not meet the prerequisites for a full waiver and in the case of subsequent leniency applicants. The decisive factor whether a fine cannot exceed certain levels of the maximum fine is the sequence of meeting the Act’s conditions for a fine reduction.
There is no ‘leniency plus’ option.
The Chairman of the OPCC will issue a written notification and will inform an applicant who has met the requirements of the Act of the order of its leniency application in a given case (the OPCC marks each leniency motion with date and hour of filing). In order to protect leniency applicants, the fact of filing a motion, the identity of the applicant, as well as all submissions made in the course of leniency proceedings are maintained in secrecy from other parties to the proceedings before the OPCC. All such information is revealed, however, at the close of the antitrust proceedings. Each of the parties to the proceedings has the right to inspect the entire case files. The OPCC will not include in the case files any material designated by a party and agreed to by the Office as being a business secret.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution’ How are ‘useful contributions’ defined?
If an applicant is a subsequent undertaking to apply to the Chairman of the OPCC with proof which to an essential extent will contribute to the issuance of a final decision finding anticompetitive conduct the Chairman of the OPCC shall grant a reduced penalty.
If, however, upon an analysis of the motion and evidence attached to it, the Chairman of the OPCC deems that the leniency applicant did not present proof that will contribute to an essential extent to the issuance of a final decision or to the institution of antitrust proceedings, the Chairman will reject the motion and will immediately notify the entrepreneur.
To date, the Act and the OPCC’s decisions have not defined the term ‘useful contributions.’
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
As mentioned in response to question 5 above, only a company who is the first to file a leniency application with the OPCC can obtain a full waiver from a financial penalty if it is able to fulfils each of the following conditions set out in Article 109(1) of the Act.
It is the Chairman of the OPCC who will decide whether each of the conditions are met. If he decides that the conditions are met, the Chairman of the OPCC is obliged to refrain from imposing a penalty for participation in an illegal agreement. If the Chairman of the OPCC finds that not all of the conditions specified above were met by an applicant, he can still reduce the fine if the prerequisites described under question 6 above are met
9. How many companies have received full immunity from fines to date?
The leniency programme was introduced by an amendment to the previously-binding Act on the Protection of Competition and Consumers of 15 December 2000, which was effective as of 1 May 2004.
According to unofficial public information, from May 2004 to the end of 2006, ten applications for leniency were submitted to the OPCC. As of mid-2007, there is one decision publicly available in which a company received a reduced fine in connection with its grant of leniency.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
The formal procedure set out in Article 109 of the Act consists of submitting to the Chairman of the OPCC a motion for a waiver or a reduction of a fine for being a party to a forbidden competition-restricting agreement, which, in Poland, includes illegal vertical agreements as well as cartels. The motion must include:
The above prerequisites are necessary for an application for full leniency. For leniency limited to a reduction of a fine, the formal requirements are the submission of a leniency motion together with evidence essential for rendering a decision, accompanied by a confirmation of the applicant’s cessation of participation in the forbidden agreement.
Leniency motions are filed at a confidential office in the OPCC’s Warsaw headquarters. The address and telephone number can be found in the OPCC’s unofficial Leniency Guidelines (available at www.uokik.gov.pl). The Chairman of the OPCC will examine the motion for its completeness. If there are any formal omissions, he will call upon the applicant to complete the application (under pain of rejecting the application).
The applicant has the right to ask for confirmation by the Chairman of the OPCC whether any other undertaking has submitted a leniency motion in the same matter. The Chairman of the OPCC is obliged to issue a notification confirming the fact of submitting the application and of the applicant being the ‘first in’ (if this is the case, of course; if not, the notification would include information on the applicant’s position in order of submitting its leniency application). The confirmation contains a preliminary assessment by the OPCC whether the leniency applicant meets conditions for a full waiver or for a reduction of a fine. Please note that the OPCC’s notification is of a preliminary character and a final waiver or reduction of a fine by the Chairman of the OPCC depends on verification of the information contained in the leniency application during the proceedings. The leniency applicant is obliged to cooperate fully with the Chairman of the OPCC during the entire proceedings instituted on the basis of its motion and to provide the Chairman with any and all evidence that is at its disposal related to the case.
11. Is there an optimal time to approach the regulatory authority?
Similar to other leniency regimes, the sooner an applicant approaches the OPCC, the greater are its chances for favourable treatment.
12. What guarantees of leniency exist if a party cooperates?
There are no formal guarantees of leniency.
As mentioned in question 10 above, the Chairman of the OPCC will notify an applicant if its motion is incomplete and will call upon the applicant to supplement it. The Chairman will issue a notification confirming the fact of filing an application, its acceptance, and whether the applicant is the ‘first in’ or the applicant’s place in the order of submitting leniency applications. The OPCC’s notification on the acceptance of a leniency motion is of a preliminary nature, and subject to confirmation of the facts during the proceedings.
A leniency applicant is obliged to cooperate with the Chairman of the OPCC. Cooperation constitutes a separate and essential condition of granting leniency. However, as mentioned above, the facts and evidence contained in a leniency motion are subject to verification by the Chairman in the course of the antimonopoly proceedings. The Chairman has discretion in deciding upon the fulfilment of the leniency requirements.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
Article 70 of the Act provides for leniency motions and materials to be treated as being confidential. All information and evidence gathered in the course of leniency proceedings are confidential. Such documents and material will, however, be made accessible to the parties of the proceedings prior to the issuance of a final decision.
Some of the decisions of the Chairman of the OPCC are published in the OPCC’s official journal or available via its website. Non-confidential versions of decisions, not including the parties’ business secrets, are available to the public upon request. Thus, any leniency applicant must be aware that eventually, its participation in an illegal agreement and its status as a leniency applicant likely will be made public.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
A grant of leniency often affects the entire corporate structure of a company. In order to obtain leniency, a company usually collects various evidence, conducts interviews and internal commercial analyses in which the assistance of a company’s employees is necessary. A company may also decide to initiate a competition compliance programme or training for its employees after seeking leniency.
Leniency granted to a corporate defendant does not cause any direct consequences to an applicant’s employees.
The Chairman of the OPCC may impose additional fines of an administrative nature upon a company’s representative for lack of cooperation with the OPCC during the course of the proceedings, such as failure to provide documents requested by the Chairman of the OPCC (or providing them with a delay), providing misleading or unreliable information to the OPCC, or failure to cooperate during a dawn raid conducted by the OPCC. Full immunity or a fine reduction granted to a leniency applicant does not prevent the OPCC from imposing a fine upon a company representative of an applicant for any of the above-described infringements.
15. Does leniency bar further criminal or private enforcement?
A violation of the competition law does not lead to criminal liability, except for bid rigging in a public tender which may violate Article 305 of the Polish Criminal Code. Participation in an anticompetitive agreement may result also in private damages actions.
Leniency does not bar further criminal enforcement such as bid rigging on a public tender or private enforcement damage actions.
RELATIONSHIP WITH THE EUROPEAN COMMISSION’S LENIENCY NOTICE AND LENIENCY POLICY IN OTHER EU MEMBER STATES
16. Does the policy address the interaction with applications under the Commission Leniency Notice? If so, how?
The Polish leniency policy does not address the interaction with applications under the Commission Leniency Notice. The rule is that if an entrepreneur fulfils conditions for leniency pursuant to the Act it only renders him immune from a fine or a full fine which could be imposed by the OPCC. There is no one-stop-shop rule in the system of leniency applications. Therefore, to obtain immunity from a fine which the Commission could impose, an entrepreneur has to contact the Commission’s Directorate-General and fulfils conditions of the Commission Leniency Notice. Thus, there are two regimes for granting leniency – national, applicable in the case of cartels affecting only national markets, and the EC regime applicable when Article 81 is breached in connection with an alleged cartel affecting the Community. These two regimes apply simultaneously but separately. Generally, provisions of the Polish Act on leniency conform to the Commission’s Leniency Notice. However, there are two differences between the leniency regimes. Firstly, contrary to the EC regime, the Polish leniency programme applies not only to horizontal but to vertical agreements as well. Secondly, in the Polish leniency programme, full immunity from a fine is not available to a company that initiated a cartel or coerced others to participate in it.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
The OPCC is a member of the European Competition Network which works in close cooperation by exchanging information and coordinating actions. However, the Act does not address the interaction with applications for leniency in other EU member states. An application for granting leniency in other member states does not constitute an application for leniency in Poland. To obtain a waiver under the Act, an entrepreneur must also apply to the Chairman of the OPCC and fulfil the conditions of the Act and the procedures set out in the Regulation of the Council of Ministers of 17 July 2007.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
As mentioned in question 1, on 21 April 2007, the new Competition Act came into force. It has not changed the general provisions concerning leniency set out in the Act of 15 December 2000. The requirements for obtaining leniency and the leniency procedure are the same. However, there are slight changes in the scope of security guarantees for entrepreneurs participating in the leniency programme. According to Article 70(1) of the Act, information and evidence obtained by the OPCC as a result of a leniency application shall not be rendered accessible. There are two exceptions to this rule. Firstly, the Chairman of the Office will provide the parties to the proceedings with access to such information before the issuance of the final decision in the investigation. Secondly, the OPCC may render the above-described information accessible if the undertaking requesting leniency agrees in writing that the Office may make the evidence public.
As noted under question 1, on 17 July 2007, the Polish Council of Ministers issued a new regulation on leniency procedures. This regulation replaced the previous leniency regulation that had been issued by the Council of Ministers on 18 May 2004. The major difference between the two leniency regulations concerns the treatment of a leniency motion that has been rejected by the Chairman of the OPCC because it either did not meet the requirements of the Act or because it contained formal defects that were not remedied by the applicant within a designated period despite the Chairman’s communication to the applicant of such defects. In each of the two cases leading to the rejection of a leniency application, the Regulation of 17 July 2007 provides that the leniency motion and the accompanying evidence will be maintained in the official files of the OPCC, and thus, available to other parties in the case, and to the public, if the Chairman of the OPCC were to refer in his final decision in the proceedings to the leniency material that he rejected. In contrast, under the previously binding leniency regulation, the Chairman of the OPCC returned a leniency motion that was incomplete to the applicant, and in the cases in which a leniency application did not meet the requirements of the Act, the Chairman of the OPCC was obliged to return the leniency material to the unsuccessful applicant upon the applicant’s written request.
