Poland: Recent competition developments in merger control field

Recent notable developments in this regard include:

• a case concerning the Nord Stream 2 project; and
• the unconditional approval of Cyfrowy Polsat's takeover of Netia.

Nord Stream 2

The OCCP recently announced that proceedings had been initiated against Gazprom and its five partners (ie, Engie, Uniper, OMV, Shell and Wintershall) involved in the financing and construction of the Nord Stream 2 gas pipeline. The OCCP had previously examined this initiative when the parties notified it of the creation of their joint venture project in December 2015. After conducting a detailed market study, the OCCP had presented concentration-related objections, finding that:

• Gazprom was a dominant company in the gas supply market to Poland; and
• the concentration would further strengthen its bargaining power with Polish clients.

As a result, the parties withdrew their merger application in August 2016.

Despite not receiving clearance, the OCCP found that the parties had implemented the transaction and continued their activities in order to achieve their initial aim (ie, the financing and construction of the Nord Stream 2 gas pipeline running from Russia to Germany via the Baltic Sea).

Such gun jumping behaviour may result in fines of up to 10% of the turnover of the undertakings which perform a concentration without OCCP consent. Further, if the transaction has already been implemented and restoration of competition is otherwise impossible, the authority may order:

• the disposal of all or a portion of the undertaking's assets;
• the disposal of stocks or shares ensuring control over the undertaking; or
• the dissolution of the company over which the undertakings have joint control.

The proceedings are in their initial stage and the parties will now present their arguments and explanations concerning the OCCP's charges. The OCCP has called the case unprecedented and it is hard to disagree with this statement. Not only is the final decision unpredictable, the question has also arisen of whether the authority will be able to enforce potential penalties on companies located abroad. In addition to competition law concerns, the OCCP will also have Poland's energy security in mind when handling this case.

Clearance of Netia takeover

The OCCP also recently closed one of its Phase II cases by issuing unconditional clearance of Cyfrowy Polsat's acquisition of Netia.

There were horizontal overlaps between the parties regarding mobile phone services, mobile internet domestic markets and 145 local pay-TV markets. As the parties' joint market shares were as high as 20% to 30% for the mobile phone market, 30% to 40% for the mobile internet market and over 40% for many local pay-TV markets, Phase II proceedings were initiated.

After conducting a market test during which mobile phone operators, cable TV companies and the Polish telecom regulator provided their opinions, the OCCP concluded that the transaction would not restrict competition. The OCCP explained that:

• the parties' high joint market shares were primarily the result of Cyfrowy Polsat's market potential; and
• the scale of addition is not significant, as Netia is not a major player in the abovementioned product markets.

This article was first published on www.internationallawoffice.com