• Tomasz Chróstny, President of UOKiK, has issued two decisions imposing over PLN 210 million in penalties on Allegro.
• The first decision concerns a breach of competition rules. The economic operator was unlawfully abusing its market position by favoring its own online store at the expense of its competitors operating on the allegro.pl platform.
• The second decision aims to protect consumers and is concerned with the company unlawfully granting itself a right to amend its rules and regulations, including those concerning the Smart service.

The President of UOKiK has investigated Allegro's practices to verify their compliance with both competition and consumer protection laws. The first of the decisions he has issued is concerned with abusing the dominant position vis-à-vis other traders, while the other is related to abusive clauses included in contracts with consumers.

Decision – protection of competition

Allegro – an entity owned by a listed company of Allegro.eu, and hence by a consortium of private equity funds (Cinven, Permira and Mid Europa) – has been operating Poland’s most popular online shopping platform for many years now. It enjoys a significant advantage over other online trading platforms. For some entrepreneurs, especially small ones, the ability to offer their products via the allegro.pl portal may be the only way of reaching a wide group of potential customers. In its relations with sellers operating on the allegro.pl platform, Allegro plays a double role. On the one hand, it acts in the capacity of an online trading platform, while on the other it competes, on the same platform, with other sellers, in particular via its own online store – Allegro Official Store (AOS). 

By selling products on the platform, in particular via the AOS, the Company enjoyed the status of the largest trader active on allegro.pl. Allegro managed to become the platform’s leading retailer despite its lack of any experience in this regard. The company reached this position back in 2016, accounting for approximately 1% of retail sales generated on the allegro.pl platform. The aim of the Company was to reach a significant scale of its own sales operations and to increase Allegro's overall revenues and profitability. According to Allegro's plans, the Official Allegro Store was also to become one of the largest online stores in Poland.

After receiving complaints from sellers competing with Allegro, as well as based on UOKiK's own observations and a search, anti-trust proceedings were initiated against the company. The said proceedings confirmed that Allegro had been unlawfully abusing its market position.

In the opinion of the president of UOKiK, Allegro was enjoying a dominant position not only in terms of the turnover generated thanks to the transactions concluded on the allegro.pl platform, but also in terms of its revenues from services rendered for the benefit of outside suppliers operating both on allegro.pl and on competitive platforms.

 - The Company favored its own online store (Official Allegro Store) on a platform operating at the allegro.pl domain, doing so at the expense of independent sellers offering identical or similar products. The outcomes of this practice could also be experienced by consumers, as their ability to search for the offer that suited them best was restricted. Instead of taking measures to optimize its own sales activities on an equally competitive basis, the Company launched its strategy of favoring its own sales operations - an approach made possible thanks to Allegro's "dual role” of operating the allegro.pl platform and conducting retail sales on the very same platform - says Tomasz Chróstny, President of UOKiK.

Allegro adopted its strategy of favoring its own sales operations back in May 2015, when its employees in charge of the Official Allegro Store noticed that goods offered through OSA on allegro.pl were not positioned favorably by the search matching algorithm (i.e. were positioned “at the very end”). Allegro took advantage of inside knowledge concerning the manner in which the sales platform was operating, not available to other traders (for instance related to the search matching algorithm used and information about buyer behaviors) to ensure better positioning of its offers and to display them in a more favorable manner in the search results.

Allegro also relied on a host of sales or promotional activities to boost its own sales on the allegro.pl platform. These included, inter alia: discount coupons, black bar, third dot, recommendation carousel, ability to change descriptions and parameters of offers after publishing, changing the prices of published offers, offering search phrase suggestions, cross-recommendations, return form, logotype – official store. Independent sellers were not able to use all these functionalities. Allegro's use of these functionalities had a positive impact on boosting the attractiveness of Allegro's offers at various stages of the purchase process, e.g. at the purchasing stage of at the stage of attracting interest in Allegro's offer. It also resulted in the Company’s offers being displayed and positioned in a more favorable manner compared to offers of independent traders.

Allegro's activities favoring its own store were detrimental to the position of independent sellers on allegro.pl, as they were competing with the official store of the platform owner. The products of independent sellers were less visible on the platform compared to Allegro's own offers and were therefore likely to be less frequently chosen by buyers.

The President of UOKiK ordered Allegro to refrain from using practices that favored its own sales activity on the allegro.pl platform, compared to sales activities of independent sellers. The decision issued is also of great importance in terms of further development of Allegro's sales operations and the takeover of the Czech Mall Group and WEDO CZ, i.e. retailers from the e-commerce sector.

The President of UOKiK imposed a fine of over PLN 206 million (PLN 206 169 786) on Allegro for abusing its dominant market position.

The decision does not mean that Allegro cannot operate a store on a platform it owns and that it cannot compete with other operators. Antitrust laws have not been violated by the very fact of creating sales algorithms or collecting information about consumer or seller behaviors. But the abuse of the economic operator’s dominant position is prohibited. In practice, this means that the rights of entrepreneurs enjoying such a position are restricted. Some of the behaviors that are acceptable when pursued by smaller operators, are considered unacceptable when taken advantage of by dominating market players. In the case of Allegro, such a behavior consisted in favoring its own store (compared to other sellers) on the platform.

Decision – protection of consumers

Second decision – rules and regulations

The other decision issued concerned the conditions of cooperation between Allegro and consumers. The President of UOKiK took a closer look at the rules and regulations that need to be accepted by those setting up their accounts in order to buy on the platform, and by those taking advantage of the “Allegro Smart!” service offering free shipping of the goods purchased.

In its rules and regulations, the platform stipulated that it would be able to amend the terms, for instance in the event of technological and functional changes, as well as in the event of changes to economic and market conditions. In the decision issued today, the President of UOKiK has stated that the amendment clauses used by Allegro are not acceptable, as they enable the company to unilaterally amend contracts without clearly specifying the reasons behind the introduction of such modifications. Furthermore, the provisions quoted above are of a highly general character, meaning the platform may introduce changes in an uncontrolled manner, thus rendering such changes unpredictable for consumers entering into the contract. This is all the more important in the case of contracts with a multi-month settlement period, paid for by the consumer in advance. In the opinion of the President of UOKiK, in such cases, the applicable terms and conditions should remain unchanged throughout the entire period that has been paid for.

- We have been saying, for years now, that rules and regulations should be formulated unambiguously and that they ought to provide for the obligations of the parties to the contract in an understandable manner. Consumers paying for their multi-month contract in advance have the right to believe that the specific conditions to which they consent will remain unchanged. The economic operator’s right to unilaterally amend the terms and conditions may provoke him to abuse his position by shifting the consequences of those changes to the consumers. This is especially the case when consumers cannot be entirely sure that they will be able to have the money they paid for the services refunded" says Tomasz Chróstny, President of UOKiK.

The President of UOKiK concluded that the company used prohibited clauses, for which it was fined with a financial sanction of nearly PLN 4 million (PLN 3,970,677).

On 22 December 2022, the company decided to no longer include the contested provisions in template contracts. As far as contracts already concluded with customers are concerned, it declared to waive its right to introduce any amendments pursuant to the contested provisions.

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