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More economic approach to exclusivity agreements: how does it work in practice?

  • Poland
  • Competition, EU and Trade

01-02-2012

More economic approach to exclusivity agreements: how does it work in practice? Case comment to the judgment of the Court of Appeals in Warsaw of 25 February 2010 – Lesaffre Polska (Ref. No. VI ACa 61/09)

Introduction

No other topic draws as much attention in competition law as the need for an economic approach and yet, it is still a ‘deficit’ approach. Authorities enforcing competition protection rules are still very attached to the formalistic approach and this is an affliction not only of the Polish but also of the EU authorities and courts. The judgments delivered in 2010 by the Polish first and second instance courts responsible for competition matters in the Lesaffre case3 appears here as an exception.

Facts and overall assessment of the decisions

Lessafre Bio Corporation S.A. with a seat in Wołczyn is a Polish manufacturer of yeast and improvers with a strong position in the national market – its share in both the production market and wholesale sales exceeds 30%5. In a decision dated 29 December 2007 (DOK-164/2007), the Polish Competition Authority – the President of the Polish Office of Competition and Consumer Protection (in Polish: Urząd Ochrony Konkurencji i Konsumenta; hereafter, UOKiK) established that Lesaffre and its 45 distributors engaged in an anti-competitive practice, as set forth in the applicable at that time Article 5(1)(6) of the Act on Competition and Consumer Protection6 of 15 December 2000 (hereafter, Competition Act 2000).

According to the Competition Authority, the banned practice took place in connection with the execution by Lesaffre of its distribution agreements which contained an exclusivity clause concerning the purchase of baking yeast by its distributors. In the conclusions of the decision, the UOKiK President stated that ‘the purpose and effect [of the contested contractual provision] was to restrict access to the market of baking yeast sales to undertakings not covered by the agreement’.

The Polish Court of Competition and Consumer Protection (in Polish: Sąd Ochrony Konkurencji i Konsumenta; hereafter, SOKiK) and later the Court of Appeal in Warsaw (in Polish: Sąd Apelacyjny: SA) both disagreed with the approach of the Competition Authority and indentified a number of errors in its analysis of the notion ‘object and effect of restricting competition’. These errors can be divided into three groups, those associated with:

  1. the standard of the analysis performed in the case,
  2. evidence deficiencies, and
  3. burden of proof.

As a result, SOKiK performed, subsequently confirmed by the Court of Appeal, a constructive analysis of the case by indicating which factors need to be evaluated before the Competition Authority (and in the business practice – an undertaking) qualifies an exclusive purchase clause (non-compete clause) as restricting competition on the relevant market.

As a result of the evaluation performed by SOKiK and confirmed by the Court of Appeal, the original administrative decision issued by the UOKiK President was changed. The judgments denied therefore that Lesaffre had actually engaged in the alleged competition restricting practice.

Click here to view the full publication.

Source: Małgarzata Modzelewska de Raad, Yearbook of Antitrust and Regulatory Studies, February 2012

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