Compliance encompasses a number of aspects of legal risk that every entrepreneur must consider. Increasing globalization, which intensifies economic competition between businesses, presents them with challenges in the broadest sense of competition law, regulated by both national and intra-Community law.
Under national legislation, competition law standards are regulated primarily in the Act of 16 February 2007 on Competition and Consumer Protection (hereinafter referred to as the UOKK).
Subject matter scope and functions of compliance
Compliance in the area under analysis essentially serves two functions. The first is to prevent competition law violations. The second, in the event of such non-compliance, helps minimize losses.
According to the Office of Competition and Consumer Protection, the scope of competition law is based on three pillars:
- prohibition of concluding anti-competitive agreements (Articles 6–8 of the Act on Competition and Consumer Protection and Article 101 of the TFEU),
- prohibition of abuse of a dominant position (Article 9 of the Competition and Consumer Protection Act and Article 102 of the TFEU),
- concentration control (Articles 13–17 of the Commercial Companies Code).
Each of these principles is important and should be reflected in the compliance policy, the effectiveness of which depends primarily on the development and subsequent implementation of an appropriate management system covering the following aspects:
- Creating a competition law policy applicable to a given organization;
- Establishing appropriate channels for reporting irregularities occurring in the company ("whistleblowing");
- Periodic training of employees whose duties may involve contact with control authorities or competition law in general;
- Preparation of instructions in the event of an inspection by antitrust authorities;
- Conducting antitrust audits, which involve testing the compliance system in place in the entity.
It's worth noting that in the event of a violation of competition law, a business should immediately report it to the President of the Office of Competition and Consumer Protection. Furthermore, it is obligated to take appropriate corrective measures to eliminate the risk of similar violations in the future.
Sanctions
For violating competition law provisions, the President of the Office of Competition and Consumer Protection may impose severe financial sanctions on an entrepreneur.
If practices – even if unintentionally employed – are deemed to restrict competition or constitute an abuse of a dominant position by a dominant entity, the President of the Office of Competition and Consumer Protection (UOKiK) may impose a fine in its decision, the amount of which cannot exceed 10% of the enterprise's turnover in the financial year preceding the year in which the decision is issued. Importantly, the percentage of the fine is calculated based on the enterprise's entire turnover, not just the turnover of the product or service affected by the infringement.
In turn, if an undertaking provides (even unintentionally) false data in the application concerning the concentration or hinders an inspection or search, a fine of up to the equivalent of EUR 50 million may be imposed.
Importantly, penalties may be imposed not only on the entrepreneur, but also on a natural person acting on his behalf (Articles 106a and 108 of the Act on Competition and Consumer Protection).
Summary
It should be emphasized that violation of competition law not only involves severe financial sanctions, but also exposes the entrepreneur to loss of reputation and a long-term image crisis.
These risks can be effectively mitigated by implementing appropriate compliance systems. However, it's important to remember that no system will fulfill its core functions without building awareness among all employees of their role and responsibility for complying with legal regulations.
Sources:
- O. Filipowski, Compliance management in competition law [in:] B. Makowicz (ed.), B. Jagura (ed.) et al., Compliance management systems in practice, Warsaw 2020, pp. 235-249.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of December 14, 2022
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