European Union: Application Of EU Soft Law By The Office Of Competition And Consumer Protection In An Example Of Agency Agreements

EU competition law consists not only of the relevant provisions of the Treaty on the Functioning of the European Union or numerous regulations of the EU Council, but also of the European Commission's communications, guidelines and notices. Thus, both generally applicable provisions (regulations) and non-binding legal acts, which include the last three of the above-mentioned sources of law, can be distinguished under competition law. The communications, guidelines and notices of the European Commission are defined as so-called soft law and serve to explain how the Commission will use its powers and how the Commission will understand the terms used in the generally applicable provisions (hard law).

In connection with the outlined division of the sources of EU law, the question arises: should soft law provisions be taken into consideration in judicial practice of national competition authorities and of Member States' courts?

EU and Polish law provisions concerning agency agreements

An answer to the above-mentioned question in relation to Poland can be provided on the basis of an approach to the Guidelines on Vertical Restraints1 ("the Guidelines") of the Appeal Court in Warsaw, presented in a judgement concerning an alleged infringement of a prohibition of agreements restricting competition by Polskie Składy Budowlane Group S.A. ("the PSB Group") and by Fabryka Farb i Lakierów Śnieżka S.A. ("Śnieżka")2.

The Guidelines, while regulating a complex issue of agreements of undertakings operating at different levels of a production or distribution chain, address inter alia the problem of an assessment of agency agreements in the light of the competition law. According to the Guidelines, agency agreements, in principle, do not fall under the scope of prohibition of anticompetitive agreements, and a decisive criterion for an entity being defined as an agent is lack of the risk borne by the agent (financial and commercial risk) in relation to the activities under the agreement with the principal.

Polish law neither regulates an assessment of the agency agreements in the context of the ban on anticompetitive agreements, nor was this subject raised in case law. Therefore, the above-mentioned judgement of the Court of Appeal in Warsaw should be of interest to entrepreneurs and competition law practitioners.

The PSB Group and Śnieżka agreement – facts of the case

Through decision no. RKT-43/2009, the OCCP found that the agreement concluded by Śnieżka and its 55 distributors, (the PSB Group included), fixed the minimum resale prices of the products manufactured and supplied by Śnieżka, and restricted competition.

Following the appeal brought by the PSB Group, the District Court in Warsaw – The Court of Competition and Consumer Protection – overturned the OCCP's decision in part concerning: (a) the conclusion by Śnieżka and PSB Group of an agreement restricting competition through fixing the minimum resale prices of the products manufactured and supplied by Śnieżka, and (b) the imposition of a financial penalty on the PSB Group3. Thereafter, the Court of Appeal in Warsaw4 dismissed the appeal of the OCCP setting aside the District Court's judgement.

The legal assessment of agency agreements by the Court of the Appeals

The Court of Appeal, in its justification, noted that the PSB Group is a purchasing group whose task was to negotiate purchase and sale conditions for goods, and then to sell these goods to members of the Group (shareholders of the PSB Group). The PSB Group had never carried out retail sale of Śnieżka's products – it sold them exclusively to its members (shareholders). They were fully independent in setting prices of Śnieżka's products offered at the retail level.

The Court pointed out that although Polish law does not cover the issue of an exclusion of agency agreements from the prohibition of anticompetitive agreements, the national provisions in this respect should not be more restrictive than the solutions adopted in EU law.

According to the Court, an assessment of whether the PSB Group acted as an agent should have been carried out on the basis of the Guidelines on vertical restraints published by the European Commission. The judgement emphasised that although the Guidelines are not-binding (they are a part of so-called EU soft law), they may have legal effect, and the President of the OCCP and the national courts should take the Guidelines into a consideration, especially when their provisions are intended to supplement binding provisions of EU law.

The Court of Appeal, after analysing the manner of functioning of the PSB Group, pointed out that the PSB Group does not incur "financial and commercial risks", in particular it does not incur the risk of financing the stock or investments necessary for its activity, but on the other hand the PSB Group bears the costs related to presentation of the products and advertising for the benefit of members of the Group.

Following the principles described in the Guidelines, the Court of Appeal found that the activity of the PSB Group "has a character similar to agency agreement" (the PSB Group acts for its members as a commercial agent), therefore the price agreement concluded by this entity with Śnieżka should be excluded from the prohibition of anticompetitive agreements set out in article 6 of the Act on competition and consumer protection5.

Conclusion

The Court of Appeal in this judgement unequivocally expressed its support for the possibility of applying the approach presented in the Guidelines to the assessment of agency agreements under Polish competition law. According to the Court, in the absence of national provisions concerning this issue, the OCCP and the national courts should take the Commission's interpretation included in the soft law into consideration when deciding on specific cases.

This means that undertakings, carrying out self-assessment of concluded agency agreements in terms of compliance with competition law, should also have regard to the Guidelines' approach. It also seems legitimate to use this approach to other issues not directly regulated in the national law but presented in the Guidelines, for which there is no well-establish judicial practice of the national courts. It should also be noted that the OCCP in its decisions concerning the practices restricting competition, regularly refers to various guidelines published by the Commission, thereby applying in practice the soft law instruments.

Footnotes

1  The European Commission Communication – the Guidelines on vertical restraints, EU Journal of Laws C 130/1 dated 16 May 2010.

2  The judgement of the Court of Appeal in Warsaw dated 24 September 2015, VI Aca 1096/14.

3 The judgement of the Court of CCP dated 29 January 2013, XVII Ama 121/10.

4  Mentioned judgement of the Court of Appeal in Warsaw dated 24 September 2015, VI Aca 1096/14.

5  The Act of 16 February 2007 on competition and consumer protection (Journal of Laws of 2015, item 184 as amended).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions