TerraLex Cross-Border Guide to Pre-Merger Notification Guide

Yes.

No.

The mandatory notification system catches concentrations that excess certain turnover thresholds (see point 4). Concentrations are defined as follows: - merger of two or more independent undertakings;

• taking over by acquiring or taking up stocks, other securities or shares, or in any other way, direct or indirect control over one or more undertakings by one or more undertakings;
• creation by undertakings of one joint venture; and
• acquisition by the undertaking, of a part of another undertaking’s property (the entirety or part of the undertaking), if the turnover achieved by the property in any of the two financial years preceding the notification exceeded in the territory of the Republic of Poland, the equivalent of €10 million.

The intention of concentration is subject to a notification to the President of the Office of Competition and Consumer Protection (hereinafter referred to as “the President of the Office”) in the case where:

• the combined worldwide turnover of undertakings participating in the concentration in the financial year preceding the year of the notification exceeds the equivalent of €1 billion, or
• the combined turnover of undertakings participating in the concentration in the territory of the Republic of Poland in the financial year preceding the year of the notification exceeds the equivalent of €50 million.

However, even if the above thresholds are met, the obligation to notify the intention of concentration shall not apply where:

• the turnover of the undertaking over which the control is to be taken in accordance with point 3 (2) above, did not exceed in the territory of the Republic of Poland in any of the two financial years preceding the notification, the equivalent of €10 million,
• in case of merger of two or more independent undertakings or creation of a joint venture, the turnover of any of the undertakings did not exceed in the territory of the Republic of Poland in any of the two financial years preceding the notification, the equivalent of €10 million,
• the control is taken over the undertaking or undertakings belonging to the same capital group and at the same time the acquisition of a part of the property of undertaking or undertakings belonging to that capital group when the turnover of the undertaking or undertakings over which control is to be taken and the turnover generated by the acquired part of the property did not exceed in total in the territory of the Republic of Poland in any of the two financial years preceding the notification the equivalent of €10 million,
• the financial institution, the normal activities of which include investing in stocks and shares of the undertakings, for its own account or for the account of others, acquires or takes over, on a temporary basis, stocks and shares with a view to reselling them provided that such resale takes place within one year from the date of the acquisition or taking over, and that:
• this institution does not exercise the rights arising from these stocks or shares, except from the right to dividend, or
• exercises these rights solely in order to prepare the resale of the entirety or part of the undertaking, its assets, or these stocks and shares,
• the undertaking acquires or takes over, on a temporary basis, stocks and shares with view to securing debts, provided that such undertaking does not exercise the rights arising from these stocks or shares, except from the right to sell,
• the concentration arises as an effect of insolvency proceedings, excluding the cases where the control is to be taken over by a competitor or a participant of the capital group to which the competitors of the to-be-taken undertaking belong or of which the part of the property is acquired,
• the concentration applies to undertakings in the same capital group.

Any other concentrations, which do not fulfill the thresholds set forth above do not require a notification to the President of the Office.

Concentrations falling within the jurisdiction of the European Commission are not subject to Polish concentration control either.

The Polish Act on competition and consumer protection does not differ between full function and not full function joint ventures. In particular, the aforementioned Act does not provide for joint ventures requirement in respect of performance on a lasting basis all the functions of an autonomous economic entity, such as provided for in EU Merger Regulation (Council Regulation (EC) No 139/2004 of 20 January 2004).

Likewise, there is no distinction between various types of joint ventures to be created. Typically, creation of joint ventures may be subject to notification system under incorporation by undertakings:

• type of a commercial partnership (spółka jawna, spółka komandytowa, spółka komandytowo-akcyjna),
• type of a company (spółka z ograniczoną odpowiedzialnością, spółka akcyjna, prosta spółka akcyjna).

The notification shall be submitted regardless of whether the joint venture is to be created by means of an undertaking existed prior to the concentration or by means of incorporation of new undertaking.

Nevertheless, it should be noted that control of concentrations does not apply to creation by undertakings a civil law partnership because it is not deemed to be an undertaking within the meaning of the Polish Act on competition and consumer protection. However, transformation of the civil law partnership into registered partnership or other commercial partnership or a company may be subject to notification requirement, provided that it fulfills conditions of notification.

Where the joint venture is to be created by undertakings and an entity not being an undertaking within the meaning of applicable laws of the Republic of Poland, such entity is realised from the obligation to notify of concentration for reasons referred to above.

There are no special rules that apply to joint ventures in order to determine whether a notification is mandatory otherwise than as referred to above.

As noted in question 4 above, the specified turnover thresholds must be met, the concentration does not fall under the European Commission Jurisdiction and no exemption listed in question 4 above apply.

Required information is as follows: - details identifying the notifying undertakings, in particular business name, registered office, legal form of conducting business, actual activity, persons filing the functions of management board members,

• form of concentration and its short characteristics, the reasons for concentration, its economic objective, financing method, expected consequences for its participants, competition and consumers, description of the impact to the relevant market, production costs as well as product prices, planned structure of ownership and control after concentration,
• turnover of undertakings participating in the concentration,
• information about ownership and control within the capital group,
• information about earlier concentrations,
• identification of relevant product and geographic markets on which the undertaking taking part in the concentration operate as well as identification of all the relevant markets impacted by the concentration in both the horizontal and vertical configuration,
• basic information about the relevant markets impacted by the horizontal or vertical concentration, in particular the size of the market expressed in value and quantity, the size of sales and share in the market of undertakings participating in the concentration, main competitors, main recipients and suppliers,
• detailed characteristics of the relevant markets impacted by the horizontal or vertical concentration, in particular description of distribution channels and systems existing on the market, estimating value of total production capacities, market growth stages, changes in the preferences of recipients in the scope of product brands, level of concentration or scattering of recipients, significant entries on any of the relevant markets impacted by the concentration, estimate costs of entry, legal barriers, limitations resulting from patents, know-how or other exclusive rights in the scope of intellectual and industrial property on those markets, cooperation arrangements, associations of undertakings operating in the Republic of Poland, of which the undertakings participating in the concentration are members,
• information on relevant markets impacted by the conglomerate concentration.

The time necessary to compile the aforementioned information depends on the size of the transaction, undertakings involved and in particular whether and how many relevant markets the planned concentration impact on. Considering that the notification shall include very detailed information it takes usually between two weeks and one month to prepare it. However, it might happen that preparing a notification requires more time.

Basically, no. Generally undertaking(s) notifying the intention of concentration are obliged to provide the President of the Office with a full list of information and documents in accordance with the Regulation of the Council of Ministers dated 18 January 2015 concerning the notification of the intention of concentration of undertakings.

Yes. The filing fee is PLN 15,000 (equivalent of approximately €3,750 assuming that €1 = PLN 4). According to Article 5 of the Polish Act on competition and consumer protection conversion of Euro and other foreign currencies into Polish zlotys, as well as conversion of Polish zlotys into Euro, shall be performed according to the average rates of foreign currencies published by the National Bank of Poland on the last day of the calendar year preceding the year in which the intent to concentrate is notified or a fine imposed.

There shall be paid one filing fee regardless of the number of applicants.

In case of returning the motion for antitrust concentration proceedings or discontinuance of the proceedings the fees are not refundable.

There is no deadline outside of the requirement that the transaction may not be closed until the consent to implement a concentration has been issued or the applicable waiting period set forth in question 12 below has expired.

The Polish Act on competition and consumer protection does not specify the earliest time when a filing may be effected. Notification may however take place as soon as the parties are capable of submitting sufficient evidence for the proposed transaction, in particular conditional agreement, preliminary agreement, letter of intent, etc.

Parties are required to wait. According to Article 97 of the Polish Act on competition and consumer protection the undertakings whose intention of concentration is subject to a notification shall be under obligation to refrain from implementing the concentration until the issuance of the decision by the President of the Office or the elapse of the time limit in which such decision should be issued. Typically, the decision shall be issued within one month from the notification. However, the time shall be extended to four months in given circumstances as described in question 12 below.

The undertakings may however enter into a conditional transaction, subject to issuing consent by the President of the Office or elapse of the respective one month’s or four months’ time limit from the date of a notification.

The antimonopoly proceedings in concentration cases should be completed within one month from their institution. The time limit as established above may be prolonged in particular due to waiting for a notification from other participants of the concentration or time periods necessary to eliminate errors or supplement necessary information. The time limit may also be subject to prolongation, if the President of the Office considers that the merger will be possible under certain conditions imposed on the participants.

The deadline for completion of the proceedings shall be extended for 4 months in the matters:

• which are particularly complex,
• in which it follows from the information contained in the notification or other information, including those obtained by the President of the Office in the course of proceedings, that there is a reasonable likelihood of substantial restriction of competition in the market as a result of the concentration, or
• in which there is a need to undertake market research.

In cases where there is a reasonable likelihood of substantial restriction of competition in the market as a result of the concentration, the President of the Office presents to the undertaking or undertakings participating in the concentration the objections to the merger. The objections must be justified. An undertaking can respond to the objections within 14 days of their receipt. The President of the Office on a reasoned request of the undertaking, will extend the period for not more than another 14 days.

The transactions are currently cleared within one to one and a half months on average.

When the intention to concentrate has not been notified to the President of the Office, the President of the Office may, by way of a decision, order in particular: - sequestration of the merged undertaking under conditions defined in the decision,

• disposal of the entirety or part of the undertaking’s assets,
• disposal of stocks or shares ensuring the control over the undertaking or undertakings, or dissolution of the company over which the undertakings have joint control.

Furthermore, if the undertaking has had implemented a concentration without a consent from the President of the Office, the President of the Office may impose upon the undertaking, by way of a decision, a maximum fine of 10% of the turnover earned in the financial year preceding the year within which the fine is imposed. In case when the undertaking in the financial year preceding the year of the imposition of the penalty did not have the turnover or had a turnover which did not exceed the equivalent of €100,000, the President of the Office imposing a pecuniary penalty takes into account the average turnover achieved by the undertaking for three consecutive financial years preceding the year of the imposition of penalties. If the undertaking has not reached the turnover in the three-year period, or if the turnover of the undertaking does not exceed the equivalent of 100 000 euros the President of the Office may impose on an undertaking a fine in amount not exceeding the equivalent of €10,000.

Moreover, the President of the Office may impose, by way of a decision, a fine up to the amount of 50 times average monthly remuneration in the national economy, on a person performing managerial function or being a member of the management board of the undertaking, if such person did not notify the intention of a concentration to the President of the Office.

In Poland, a post-closing challenge by the competition authority (i.e., the Office of Competition and Consumer Protection - UOKiK) is still possible even if the statutory waiting period expires without objection.

Generally, transactions subject to merger control must be notified to the UOKiK. The parties must await clearance, and if UOKiK does not raise objections within the statutory period (typically one month), the transaction is usually considered cleared. However, UOKiK retains the authority to intervene post-closing under specific circumstances, particularly when:

• the transaction was implemented without prior notification, or in breach of a prohibition decision;
• the notification was based on false or misleading information;
• the parties fail to comply with the conditions set out in UOKiK’s clearance decision.

In such cases, UOKiK may revoke the merger clearance.

If the transaction has already been completed, UOKiK may order one or more of the following:

• division of the merged company;
• sale of part or all of the assets;
• divestiture of shares or control rights;
• dissolution of a jointly controlled company.

An order may be issued within 5 years from the date the merger took place.

There are no special ways to protect the transaction other than compliance with the requirements set forth in above points.

The President of the Office is the central government administration body competent for the protection of competition and consumers. The scope of activities of the President of the Office includes in particular controlling undertakings’ compliance with the Act on competition and consumer protection, issuing decisions in cases concerning counteracting competition-restricting practices, concentrations of undertakings, infringements of collective consumer rights, as well as other decisions stipulated in the aforementioned Act.

In respect of concentrations the President of the Office has the authority to investigate and permit or prohibit them or permit them upon certain conditions. Furthermore the President of the Office may impose various administrative fines as well as structural measures, including sequestration of the merged undertaking in case the intention to concentrate has been completed without prior notification or the undertaking did not comply with the conditions arising of the issued decision.

Although the merger procedure does not provide for any public announcements, the President of the Office is of the opinion that pursuant to the legal regulations on revealing public information by governmental bodies it is obliged to inform the public about all procedures instituted before the President of the Office and about all decisions issued by the President of the Office. Therefore, the President of the Office publishes the information about all notifications of intention of concentration, specifying the business names of undertakings involved and the form of concentration.

The contents of the notification itself is accessible only to the Parties.

The President of the Office also publishes the decisions issued as a result of anti-monopoly proceedings on the Office’s website.

The President of the Office acting on its initiative or upon the request of the parties to the proceedings may due to the confidential character of the information limit third party access to the information concerning the procedure. In such case only the parties (i.e. merger participants and the President of the Office have access to such confidential information). If such information is included in the decision, it is left blank in the version made available to the public.

The employees of Office of Competition and Consumer Protection are obliged by the Act on competition and consumer protection to keep the confidentiality of all confidential information obtained in the course of performing their duties.

The mergers are likely to be challenged if the intended concentration may adversely impact (limit) the effective competition structure on the market, in particular a dominant market position is created or strengthened. Therefore, intended concentration shall not be prohibited if it does not create or strengthen dominant position on the relevant market.

It is generally advisable to contact the Office during pending proceedings. Although, in the proceedings before the President of the Office applies the principle of written form, where there are reasonable grounds to clarify particularly complex issues, it is allowed to orally present such issues by the applicant at special meeting with authorized representatives of the President of the Office. In addition, prior the initiation of the proceedings the undertakings and interested parties may, in justified circumstances, request the Office for interpretation of provisions of the aforementioned Act and explanations by phone, via e-mail or in writing. The policies regarding contacts between the employees of the Office and undertakings are set in guidance issued by the President of the Office.

Following activities require licenses (where the issue of national security may be the reason for refusal): - mining (including research) and underground storage;

• arms and ammunition production, distribution, storage;
• energy production, distribution, storage;
• security services;
• electronic media (radio, TV, internet);
• airline services;
• operating casinos.

There are also activities, which require permissions (where issues of financial stability and fulfillment of professional requirements are considered), notably banks, insurance, stock market and brokerage activities.