Ms Krasnodębska-Tomkiel says UOKiK still has much to do when it comes to identifying cartels Courtesy of UOKiK

Ewa Boniecka: In what areas do prohibited practices usually occur in Poland?

Małgorzata Krasnodębska-Tomkiel: It is worth emphasizing that competition-restricting practices are at the forefront of UOKiK’s activity. I have in mind not only activities in the broader domestic market, but also in local ones. In 2011, the Office conducted 509 explanatory proceedings and 128 antimonopoly proceedings concerning competition-restricting practices, issuing 72 decisions concerning the abuse of a dominant position.

However, on the domestic level, the abuse of a dominant market position occurs in highly concentrated sectors, i.e. gas or energy, yet the domination does not have to lead directly to abuse. This appears when a company undertakes specific actions in order to eliminate the competition. It happened for instance when the Polish Oil and Gas Company (PGNiG) refused to enter into an agreement that would have allowed NowyGaz to deliver gas, which resulted in a restriction of competition and in consumers being deprived of the possibility of choosing a gas provider. Having received notifications that the dominant market player impeded the sale of gas, I instituted legal proceedings against PGNiG and consequently punished it with a zł.60 million fine.

On the other hand, in its daily work UOKiK tackles many cases concerning the abuse of market power by communes or communal undertakings operating mainly in small local markets. The most common irregularities include the following: onerous contract terms set by the local water supply monopolist, the abuse of a dominant position in the waste disposal market, discrimination of private companies, and even the hindrance of undertakings in the funeral services sector.

Due to the fact that irregularities in local markets can be difficult to spot from the perspective of the country as a whole, UOKiK puts an emphasis on the elimination of infringements on smaller markets. ... Competition on local markets influences not only local entrepreneurs, but also the national economy.

Another type of competition-restricting practice that my agency deals with are cartels – [including] agreements such as price-fixing ... Recently we have detected these practices in the mobile phone, food, and taxi services sectors, among others. The latest one was identified within the furniture industry.

To what extent do actions taken by your agency lead to the elimination of prohibited practices?

One of my agency’s priorities is to deal with the abuse of a dominant market position, and our actions in this respect are quick and effective, which enables so-called commitment decisions to come into force. This means that commitments made by a company, whose fulfillment results in the elimination of practices which restrict competition, are accepted.

Moreover, under such circumstances UOKiK rescinds any financial sanctions. Last year every third decision issued in antimonopoly cases and in cases relating to the violation of collective consumer interests represented this type of measure.

As an example, one of this year’s decisions, issued following my decision to rescind a fine, concerned PGNiG. Contracting parties had complained that notice periods for withdrawing from contracts with PGNiG were too long – lasting as they did for up to 15 months. As a result of our decision, the notice period was shortened to one month. The entity itself committed to changing its practices.

Are there any limits to the financial sanctions you impose on wrongdoers?

If the entity disobeys competition or consumer law, the Office may initiate proceedings and, consequently, order the entity to change its practices and impose a fine of up to 10 percent of the entity’s income from the previous year. The total value of financial sanctions imposed last year by the Office exceeded zł.397 million.

It must be stressed that every company can appeal against our decisions to a court, which makes the execution of fines (which ultimately are paid to the state budget) last longer. I am pleased that the agency wins most of the cases before the courts. ... In my opinion this confirms the fact that my decisions have a strong basis.

However, I am aware of the fact that we still have a lot to do, especially in the field of cartel detection. The problem is that very often prohibited agreements concluded by undertakings are kept secret and for this reason detection is sometimes not as effective as I would expect. Cartel participants may decide to enter into prohibited price-fixing, market division or bid rigging. Furthermore, due to prohibited agreements consumers lose the opportunity to buy products at lower prices, or enjoy a wide range of products and services. For this reason, cartels constitute the most serious anti-competitive [phenomena] and therefore they entail harsh punishment.

In your opinion, do any changes need introducing – legal or otherwise?

As far as I am concerned, the situation with regards to respecting the law must be improved. In my opinion, new legal instruments would help us fight cartels and other infringements of competition law more effectively. That’s why we recently prepared an amendment to the antimonopoly law. The essential change is aimed at raising interest among undertakings with regards to the leniency program, based on the US system. This will contribute to a better detection of prohibited agreements. The [amendment] will enable entities to obtain even more significant reductions in fines for participating in anti-competitive agreements, as long as they provide us with information on other undetected agreements.

Does your agency enjoy the right to conduct inspections concerning anti-competitive practices by foreign companies operating in Poland, even when the headquarters of those firms are located in other countries?

We do not differentiate between the undertakings of foreign, public or private entities. The rules applying to law-infringing practices are the same for all entities operating in the Polish market. All our procedures are harmonized with the EU and other international standards, but we issue more decisions than other European authorities, since we also deal with abuses on local markets throughout Poland. According to different surveys, in Western Europe the majority of cases regard anti-competitive agreements, while in Poland nearly 70 percent of cases concern the abuse of a dominant position both on national and local markets.

In the EU there is a debate about how the free market should function, and about the role of the state in the economy. How do you see this from the perspective of your agency?

I am not a policy maker, but rather the executor of existing laws dealing with competition and consumer protection in the framework of economic realities. I absolutely support the free market and effective competition which, in my opinion, are the best ways to ensure economic growth and improve consumer welfare.

I believe that the free market and fair competition are the basis of our economy. However, generally speaking, there are certain regulatory mechanisms for the better functioning of the free market and in my opinion the activity of my agency ensures this as well. Therefore, as I said before, our aim is to improve the effectiveness of combating prohibited practices for the benefit of all market participants – consumers and those who undertake fair competition and stick to the rules. When I try to think about the economic crisis from my standpoint – the president of the antimonopoly office – I am totally against any forms of protectionism which could be detrimental to combating the economic slowdown in the EU.

The Polish, and to some extent the EU’s gas sector is dependent on deliveries from Russian supplier Gazprom, which has been accused of using monopolistic practices when setting prices. What can be done to open up that market?

Actually, efforts to liberalize the Polish gas sector are being made. As far as I am concerned, the Polish Ministry of Economy has been undertaking actions in order to liberalize the gas market and my agency has been participating actively in that process. As regards competition on the gas market, the agency has examined the market and consequently drawn up a report concerning directions for the development of competition and consumer protection on the gas market in Poland in September 2012.

The thing is that the Polish gas market, in respect of exploitation, storing and sales, is void of competition. According to UOKiK, it is necessary to separate the retail and wholesale divisions within PGNiG, activate the wholesale trading of gas via an exchange, protect vulnerable recipients and diversify supply sources in the future.

Now let’s move on to the problem of consumer protection. Generally, consumer rights are not seen as being sufficiently protected in Poland. How would you respond to that claim?

I absolutely disagree with that view. I believe deeply that consumer protection has undergone a profound change in our country. In Poland there already exists a highly developed institutional system for protecting consumers. My office is one of the institutions responsible for protecting weaker market participants and is the main state authority that deals with that task. Last year UOKiK conducted 372 proceedings concerning the infringement of collective consumer interests and issued 294 decisions as regards the application of prohibited practices by entities.

Apart from UOKiK, many other institutions operate in Poland, supporting consumers in their individual problems. These include the Trade Inspectorate, the municipal and district consumer ombudsman and several non-governmental org-anizations. All of these provide free legal assistance to the consumer.

The awareness of consumer law in Poland is growing, people are more and more willing to turn to the consumer ombudsman for its free-of-charge assistance, and I am very pleased with that.

The statistics confirm the following: last year the consumer ombudsman provided nearly 416,000 pieces of advice. The advice usually covers fields where consumers are not aware of the details and character of the offered services, i.e. financial and telecommunications services. Still in many branches of services consumers have no possibility of negotiating the terms of agreement, thus there is the risk they may be forced to accept contract conditions which are in fact not beneficial to them.

As far as the case of Amber Gold is concerned, it was a massive fraud against the company’s clients. How can you put a stop to such malpractice?

Consumers should be aware that every decision should be made cautiously and deliberately because the consequences of such lack of caution may be very severe. I would like to emphasize that UOKiK operates under specific laws and that is why we are not able to combat all negative practices in the market. When it comes to Amber Gold, I am convinced that on the basis of all the legal instruments that are strictly linked with the powers of the agency, we did everything possible. UOKiK acts within the scope of its competence. At present the Office is conducting almost 60 proceedings related to the shadow-banking sector.

And what does your agency do to combat the abusive contract clauses issued by some travel agents?

We regularly monitor the tourism market. In relation to the activity of travel agencies, in the previous year, we analyzed the contract terms applied by tour operators. The inspection revealed that fewer and fewer travel agents violated consumer rights. It was our fifth inspection since 2003. Unlawful practices were applied by 63 percent of the examined undertakings. According to the results of the previous inspection in 2008, irregularities were found in up to 96 percent of undertakings.

UOKiK usually examines the standard contract terms, regulations, advertising mat-erials – brochures, folders, leaflets – and the agreements concluded with consumers. However, the agency does not have the remit to go beyond its scope of competence by, for example, examining the business model or financial credibility of a company. The point is, these issues that exceed our competence are considered by institutions relevant in the case. As I said before, everybody should pay attention to the details of every contract, read it carefully and understand what they are entering into before signing.

What do you consider to be your priority as the president of UOKiK?

Generally speaking, reducing the number of anti-competitive practices, especially in local markets, is my number-one in the field of market competition. But, on the other hand, I do not forget about weaker market participants.

And in the domain of protecting consumers, my priority is to keep educating people on their rights. I strongly believe that the more aware of the law we are, the better choices we make and the more we can benefit from the market. Needless to say, we are all consumers.