Penalties amounting to almost PLN 110 million in total have been imposed by the President of UOKiK on the participants of a prohibited agreement: Polifarb Cieszyn-Wrocław and the owners of seven building materials outlets. Cezary Banasiński said that the entrepreneurs jointly established the prices for their products

In 2005 the President of UOKiK initiated antitrust proceedings in connection with the suspected conclusion of an illegal agreement between the paint producer Polifarb Cieszyn-Wrocław and the owners of seven mega stores offering DIY and home improvement products: Bricomarche, Castorama, Leroy Merlin, Nomi, Obi, Platforma and Praktiker.

The documentation collected by the Office, i.a. during the inspections and searches at the entrepreneurs’ premises, shows that the stores received a special discount for maintaining the paints and varnishes prices at the level established by the supplier (or higher). The withdrawal from the agreement resulted in the loss of the discount by the seller and also, in many cases, the supplies were witheld by Polifarb.

During the proceedings, UOKiK established that Polifarb was the party which initiated the conclusion of the agreement (in a special letter to the abovementioned entrepreneurs it assured that the introduced solution will be beneficial for both sides) and that it set forth the time of its validity and became its main beneficiary. According to UOKiK, the aim of those practices was to end the “price war” among the stores and to introduce uniform prices for paints and varnishes produced by the company.

Participation in an agreement, whose purpose or result is restriction of competition, is subject to severe financial sanctions, amounting to as much as ten percent of the previous year’s revenue. The entrepreneur who decides to cooperate with the antitrust authority (i.a. provides the evidence for the existence of a cartel) may avoid the penalty or be penalised less severely. Such a possibility is provided by the leniency program, which was introduced to Polish legislation by the most recent amendment to the antitrust legislation. The issued decision was the first one which used those regulations.

During the proceedings one of the parties to the agreement supplied the President of UOKiK with a number of documents which significantly contributed to the clarification of the matter. It also actively cooperated during the proceedings in that it immediately provided all required information. In view of the above the President of UOKiK decided to reduce the fine imposed on this entrepreneur to PLN 50 000.

The President of the Office imposed a fine of PLN 32 860 000 on Polifarb, which initiated the agreement and was its main beneficiary. Such a financial sanction is to fulfil a preventive and repressive function since the challenged practices belong to the most serious violations of the antitrust legislation, which are always detrimental both for the competition and the consumer interests.

While differentiating the amount of the penalties for the remaining participants of the agreement, the President of UOKiK took into account the revenues of the entrepreneurs:
• Leroy Merlin - PLN 32 646 000;
• Praktiker - PLN 16 930 000;
• Nomi - PLN 13 992 000;
• Saint-Gobain - pln 8 794 000;
• Obi - PLN 4 644 000;
• Bricomarche - PLN 342 000.

The decision is not binding. The parties are entitled to appeal against it to the Court of Competition and Consumer Protection.

During the antitrust proceedings the President of UOKiK imposed a penalty of PLN 80 000 on Leroy Merlin for the failure to provide information and to observe the deadlines for providing the required replies.

Additional information:
Elżbieta Anders, Spokesperson of UOKiK
Department of International Relations and Communication
Office of Competition and Consumer Protection (UOKiK)
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 314
E-mail: eanders@uokik.gov.pl