On November 28, 2022, Tomasz Chróstny, President of the Office of Competition and Consumer Protection, imposed a fine of PLN 700,000 on Dahua Technology Poland, the exclusive importer and wholesale distributor of internationally renowned Dahua electronic surveillance equipment. The decision was based on obstructing a court-ordered search of the company's headquarters in connection with an investigation. This is another installment in a case ongoing since 2021 concerning potential price fixing, which the company allegedly engaged in with distributors.
According to a press release issued by the Office, Dahua Technology Poland may have engaged in price-fixing since the beginning of its operations on the Polish market in 2016. This unlawful act, although not explicitly defined, is classified as an agreement restricting competition within the meaning of Article 6 of the Act of February 16, 2007, on Competition and Consumer Protection. According to the UOKiK release, the evidence collected indicates that the company influenced distributors' pricing policies by obliging them to apply specific prices, as indicated in the price list sent to them. According to the Office, the maximum discount levels and promotional terms that the company's trading partners could apply were also intended to maintain control over trade. According to the Office, the evidence suggests that this effort extended downstream, as Dahua Technology Poland allegedly instructed even retailers to comply with the terms it imposed and monitored compliance. According to the Office's announcement of November 28, 2022, equipment distributors were to contact the company to intervene if any of them failed to adhere to the established prices, as well as to discipline each other. Attempting to sell devices at lower prices could result in consequences, such as the withdrawal of discounts. The company also used these promotional opportunities to reward the most effective entrepreneurs. Distributors whose sales value of Dahua products exceeded thresholds set by the importer received a higher discount on the purchase of these products, as well as, as stated in the press release, design protection. This protection was to consist of actions by the company preventing other customers from offering the recipient an offer for the same transaction that was competitive with the protected distributor. According to the Office of Competition and Consumer Protection, this constituted grounds for filing another charge against the company: market division.
The Office's Press Office announced the search, which allowed the Office of Competition and Consumer Protection to obtain evidence in its proceedings, in a press release on October 11, 2021. The search was conducted with police assistance and, in addition to Dahua Technology Poland itself, also involved three of its trading partners: DTS System sp. z o.o. in Lublin, "MKJ" spółka z ograniczoną odpowiedzialnością sp. k. in Gdańsk, and E–commerce Partners sp. z o.o. in Częstochowa. At the time, there was no indication that its implementation would be hindered in any way, and this was only revealed in the Office's press release on November 28, 2022, imposing a financial penalty on the company. At the initial stage of the proceedings, i.e., during the delivery of documents authorizing the search, explanation of its purpose and scope, and selection of the resources subject to it, company representatives were ordered not to inform their colleagues about it. Despite this, one of the managers warned them about the search via instant messaging on his phone. This eliminated the necessary surprise effect and could have led to the employees covering their tracks, which, according to UOKiK President Tomasz Chróst, justified the imposition of a fine.
After a search, which, despite its disruption, allowed for the acquisition of essential evidence and the filing of specific charges, the resolution of which remains pending. For participating in an agreement restricting competition, the company faces a fine of up to 10% of the company's turnover, and the parties responsible for concluding such an agreement face personal fines of up to PLN 2 million. Interestingly, this is not the only high-profile case of price fixing and market division between an exclusive importer and distributors in 2022. The Office of Competition and Consumer Protection also brought similar charges in September of this year against KIA Polska, a company involved in the sale of Korean KIA cars.
This alert is for informational purposes only and does not constitute legal advice.
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