• The President of UOKiK, Tomasz Chróstny, has issued further decisions regarding payment gridlocks.
• He imposed a fine of more than PLN 313 thousand on Exide Technologies and waived imposing financial penalties on three entrepreneurs.
• The efforts to amend the law to ensure a more effective fight against payment gridlocks are currently underway.

Tomasz Chróstny, President of UOKiK, issued further decisions against entrepreneurs who generated payment gridlocks. The first one concerns battery and storage battery manufacturer. The company in question is Exide Technologies of Poznań. On top of that, the entrepreneur also violated the regulations on maximum payment terms by applying excessive deadlines of more than 60 days to suppliers - micro, small and medium-sized companies.

- Exide failed to pay on time to a number of Polish suppliers including producers of batteries, lead, battery recyclers and electronics manufacturers. In three months of 2020 alone, it failed to pay in due time over 3 thousand invoices to 441 contractors for the total amount of over PLN 111 million. In turn, the receivables it did not receive at all or received late amounted to slightly more than PLN 13 million, which means that it also fell victim to gridlock to a small extent ," says Tomasz Chróstny, President of UOKiK .

According to the regulations, the amount of the administrative penalty is calculated according to a formula and depends on the amount of the cash benefit not paid on time, the statutory interest and the length of the delay. In the case of Exide Technologies, after applying the statutory formula, the sanction amounted to more than PLN 313 thousand.

Three waivers of penalties

The gridlock regulations provide that the President of the UOKiK must waive the penalty if, during the period under review, the sum of the receivables that the entrepreneur did not receive or received late exceeded the sum of the liabilities that the entrepreneur did not pay or paid late.

This was the case for three entrepreneurs: an organic chemicals manufacturer called Silekol, E003B7 - a company involved in the construction of a power unit; and Procam Polska, which operates in the wholesale chemicals market.

The President of the Office for Competition and Consumer Protection found that in the reviewed period Silekol failed to make timely payments of over PLN 54.1 million, while at the same time it did not receive over PLN 56.5 million on time. The total liabilities not paid on time by E003B7 amounted to over PLN 64.2 million in the period under review, and the total delayed receivables amounted to over PLN 69.1 million. In the case of Procam Polska , delays in payment to its counterparties amounted to PLN 57.9 million, while receivables received after the deadline amounted to PLN 58.8 million.

- According to the conducted proceedings, the victims of payment gridlocks are, in particular, micro, small and medium entrepreneurs upon whom the stronger contractors first impose extended payment deadlines and then fail to pay on time. This is particularly disadvantageous for companies in the SME sector, for which the cost of raising working capital is incomparably higher than in the case of large enterprises; moreover, smaller entities have far more limited opportunities for employing solutions that improve liquidity, such as factoring or cashpooling - says Tomasz Chróstny, President of UOKiK.

The analysis of the cash flow of fraudulent traders, as well as the initiated proceedings, came at a very special time, i.e. during the COVID-19 pandemic. The magnitude of the threat of payment gridlocks at the macro level is strongly linked to the economic situation and sentiment of market participants. However, regardless of the above, payment gridlocks always have a negative impact on business liquidity and development, increasing the cost of running the business, and in the most difficult moments, may lead to bankruptcy or liquidation of the affected entrepreneurs. The task of the Office is, therefore, to combat this undesirable phenomenon and gradually improve payment discipline of entrepreneurs. 

Amending of regulations

In nearly two years since the Anti-Gridlock Act was enacted, the UOKiK has analyzed more than 100 million business-to-business commercial transactions. Based on the Office's experience it is clear that the current regulations do not effectively address the primary objective of effectively eliminating late payment. The Act, among other things, defines the framework for the President's actions in an extremely rigid manner and does not allow for considering special economic conditions or specific circumstances of entrepreneurs. The current regulations and the resulting procedures are extremely time-consuming and require a substantial amount of resources of the businesses under investigation and their counterparties, as well as the experts of the Office.  

At the moment, there are ongoing interdepartmental discussions about amending the law. The Office believes that it is necessary, first of all, to make the existing regulations more flexible, including the possibility to take into account both mitigating and aggravating circumstances of the infringement and of the entrepreneur when calculating the penalty. This would ensure that the penalty is appropriate to the gravity of the violation, the situation of the entrepreneur, or the main objective of the Act, which is to reduce payment gridlocks.

- We are in discussion with the Ministry of Economic Development and Technology. We would like to convince the Ministry to equip the Office with instruments that would help to combat payment gridlock more effectively, as well as to streamline the proceedings in this regard. Improvement of payment discipline and financial liquidity of Polish enterprises is crucial for the stability of the economy - says Tomasz Chróstny, President of UOKiK.

Visit the website dedicated to payment gridlocks

Examples of penalty calculation concerning specific amounts of payment gridlocks and the most important information about the powers of the President of UOKiK in the area of payment gridlocks can be found on a dedicated website. What is a gridlock, when can the President of the Office address it, how to report that an entrepreneur is not paying due remuneration, and who can do it?

These, as well as many other questions and answers can be found on zatoryplatnicze.uokik.gov.pl.

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL