Kompania Węglowa may take over Huta Łabędy and Nadwiślańska Spółka Energetyczna. In the case of the first transaction the President of the Office of Competition and Consumer Protection issued a conditional consent

Control over concentrations of enterprises, carried out by the President of UOKiK, is aimed at counteracting consolidation which might cause disturbance of competition on the market and, in extreme cases, even its total elimination. A transaction must be notified to the Office if the transaction participants' combined turnover in the year preceding the notification exceeded EUR 1 billion worldwide or EUR 50 million in Poland. The President of UOKiK may allow or prohibit the merger. In cases raising doubts concerning the influence on the competition, the law provides for a possibility of granting a conditional consent to carry out the transaction, provided that specific conditions are imposed on its participants – it might be e.g. the sale of property or its part or disposal of control over a specific enterprise. Conditional decisions are issued very rarely – this year only two times for over 100 issued consents.

Kompania Węglowa submitted the application for taking over of Huta Łabędy to UOKiK in May 2010. Kompania Węglowa is a company owned by the State Treasury, operating mainly in the sector of coal extraction and sale. It is part of a capital group which comprises 28 companies. Huta Łabędy is, above all, a producer of mine roadway supports used for securing mine shafts and of mining accessories. The owner of the company is also the State Treasury. The transaction is a result of the decision of the Minister of Treasury and will consist in Kompania Węglowa taking over 93.33% of Huta Łabędy shares. It will constitute a partial implementation of the “Strategy for the coal mining activity in Poland in 2007-2015”, prepared by the Government, which assumes co-financing of KW. Thanks to this concentration, Kompania Węglowa will be able to sell Huta Łabędy shares in the future, thus improving company's financial situation. It is, therefore, a form of State aid granted to the Polish coal mining sector.

As a result of conducted antitrust proceeding, the President of UOKiK has decided that the concentration may lead to a significant restriction of competition on the domestic markets of mine roadway supports and mining accessories production and purchase . Huta Łabędy is the main seller of such products in Poland and Kompania Węglowa is their largest buyer. After the transaction KW will not have to accept offers from other suppliers of supports and accessories, therefore there is a risk of closing the market. It will be felt by both the competitors of Huta Łabędy, who may encounter problems with selling their products, and mines, because the transaction may lead to an increase in prices and even to a lack of possibility of purchasing some types of mine roadway supports and accessories. The risk of restricting competition is especially important due to the fact that there are no prospects for new entities entering the market – it results from an unprofitable import and high costs of launching production.

However, the President of UOKiK decided that it is possible to issue a consent, provided that the enterprise fulfils specified conditions which will mitigate the antitrust effects of the transaction. According to the decision, Kompania Węglowa will have to sell in two years time the shares of Huta Łabędy, in an amount causing KW to lose its control over the company. Shares can be sold only to an independent investor which does not belong to the capital group of Kompania Węglowa and is not controlled by any entity from this group. Moreover, KW will not be allowed to limit Huta Łabędy’s production capacity in relation to mine roadway supports and mining accessories below the level of 80% of the present state. Kompania Węglowa will have to submit to UOKiK information on the way of performing the imposed condition within 30 days from the date of its completion. In the case of failure to discharge the above-mentioned obligations, the President of UOKiK may impose on the enterprise a fine amounting to EUR 10,000 for each day in default.

In her second decision, the President of UOKiK stated that the fact of taking over of Nadwiślańska Spółka Energetyczna by Kompania Węglowa will not result in restricting competition on the territory of Poland. This transaction is also an element of implementing the “Strategy for the coal mining activity in Poland in 2007-2015”. Nadwiślańska Spółka Energetyczna belongs entirely to the State Treasury. It is engaged in heat production and distribution, as well as water supply and waste management on the territory of several cities in Silesia. The concentration results from the implementation of the Regulation of the Council of Ministers of August 2010. The transaction will consist in Kompania Węglowa taking over 100% of shares of Nadwiślańska Spółka Energetyczna.

Information on all antitrust proceedings related to concentrations conducted by UOKiK is available at Office’s website.

Additional information for the media:
Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Tel.:(+48 22) 827 28 92, 55 60 106, 55 60 430
faks (+48 22) 826 11 86
E-mail: [SCODE]bWFsZ29yemF0YS5jaWVsb2NoQHVva2lrLmdvdi5wbA==[ECODE]