In early August, the Polish Competition Authority (“UOKiK”) announced the initiation of antitrust proceedings against one of the key manufactures of IT infrastructure products (the “Company”). The proceedings were preceded by so-called explanatory proceedings during which UOKiK conducted dawn raids on the Company’s premises in 2019. UOKiK suspects that the Company may have concluded a competition-restricting agreement with its authorised dealers and distributors (“Distributors”) related to the sale of its products to professional customers.
The Company’s distribution system is based on a network of Distributors, in which the Company does not sell its products directly to the customers. According to UOKiK’s press release, a Distributor may report a potential transaction with a customer in the internal registration system. Subsequently, the Company may block other Distributors from submitting their price offers to the same customer, even if the offer request comes from this customer (passive sales).
UOKiK noted that as a result of the established distribution system, potential customers such as companies and institutions, could have been deprived of the possibility of choosing a Distributor from which they wanted to purchase IT infrastructure products, even if another Distributor could offer these products at a better price.
Subsequently, UOKiK is investigating if there may have been some form of market sharing. Further, they are also investigating whether the conduct may be restricting potential passive sales to those customers with whom a potential transaction has been entered into the internal registration system by one of the Distributors, but who wish to obtain an offer from another Distributor as well.
The Company may face a penalty for engaging in an agreement which restricts competition in the amount of up to 10% of their annual turnover, while its managers may be fined up to PLN 2 million (approx. EUR 425 000).
This case is particularly interesting as the European Court of Justice (case C-306/20) has dealt with a similar distribution system in which, a distributor who has registered a potential transaction enjoyed a six-month priority to conclude the notified transaction. The ECJ stated then that an agreement setting up such a distribution system should not be prohibited “by object” unless its content, purpose and context demonstrates a sufficient degree of competition breach.
Therefore, the ECJ concluded that such an agreement should be examined in the light of the economic and legal context of the undertakings concerned, the nature of the goods and services provided, actual operating conditions, and the structure of the market concerned in order to determine if the agreement restricts competition in terms of its potential or actual effects.
In other words, according to the ECJ, those distribution systems, in which distributors may “reserve” or enjoy priority over other distributors to conclude particular transaction, should be analysed in terms of their anti-competitive effects.
UOKiK’s press release can be found here (available in English).
For further information, please contact:
Szymon Golebiowski, Bird & Bird
szymon.golebiowski@twobirds.com
