UOKiK’s employees and the police have searched offices and other premises belonging to eight cement producers, and three other entrepreneurs, who could be supporting the cartel, suspected of concluding a prohibited agreement. As a result of the largest operation in the history of the Polish antimonopoly office, organised in co-operation with the Polish National Police, an immense amount of evidence has been gathered.

In April this year the Office of Competition and Consumer Protection initiated explanatory proceedings of the cement market. The reason were numerous inflowing signals indicating the possibility of a mechanism being in place - at least since the late 1990s - which major Polish cement producers used to fixing prices, sharing market and limiting supplies. Such a practice is an infringement of antimonopoly laws. In order to confirm the collected information, offices and other premises belonging to entrepreneurs have been searched and controlled.

On 31st May this year, at 10.30 tens of UOKiK’s employees simultaneously entered the offices of 8 cement producers and 3 entrepreneurs suspected of supporting the cartel, in 13 locations all over Poland (Nowa Huta Cement Mill in Cracow, Nowiny Cement Mill in Sitkówka-Nowiny, Odra Cement Mill in Opole, Warta Cement Mill in Trębaczów, Cemex Polska in Warsaw, Górażdże Cement in Chorula, Ożarów Group in Karsy, Lafarge Cement in Małogoszcz, Industrial Property Lawyer’s Office „Optimas” in Cracow, Polish Cement, Association of Cement Producers). They were accompanied by about 100 policemen, including highly qualified criminology technicians. The searches were conducted by a combined force of about 150 persons. It was the first operation in history organised on such a large scale and performed in co-operation with the Polish National Police.

In general opinion of both UOKiK and the police, the searches lasting a few days completed successfully. A substantial amount of evidence was gathered. More importantly, the operation met with a vivid response from the market - further entities report to UOKiK wishing to provide information in the case.

The agreements which have as their object or effect elimination, restriction or any other infringement of competition shall be prohibited. They may result in severe financial sanctions, amounting to as much as ten percent of the last year’s revenue. This penalty may be waived or lowered, if an entrepreneur reports to UOKiK and provides evidence of the existence of a cartel. This possibility is provided by the leniency program, which has been introduced into the Polish legislation by the most recent amendment to the antimonopoly law.

Infringement of competition on the cement market is relatively frequent. In Poland, already in 1934, as a result of the compulsory dissolution of the cement cartel, the price of this building material dropped from around 70 to approx. 20 zlotys per tonne. Cement conspiracies often encompass many countries. A pan-European cartel was destroyed in November 1994. The European Commission penalized 42 companies from 16 countries for participating in a prohibited agreement aiming at dividing the market. It was concluded that the first meeting of the entrepreneurs took place in 1983. The total amount of penalties was 250 million Euros (eventually, the First Instance Court lowered them to 110 million Euros).

Record breaking penalties for an illegal agreement on the cement market were imposed in April 2003 by the German Federal Antimonopoly Office. Bundeskartellamt penalised six biggest German producers with financial sanctions totalling 660 million Euros. The companies concluded an agreement on the basis of which, they set prices and divided the market. The Federal Antimonopoly Offices decided that the cement producers had co-operated since 1970's. The evidence for the existence of the cartel was provided mainly by unannounced control visits to 30 entrepreneurs.

This was not the first decision relating to a prohibited agreement on the German cement market. In 1999 Bundeskartellamt imposed penalties amounting to 190 million Euros on 33 producers for agreeing to restrict sales in Berlin, Chemnitz, in the south- western part of Lower Saxony and Saxony- Anhalt.

Cement producers have been penalized for prohibited agreements in Romania (in June 2005 the penalty of 27 million Euros was imposed on three entrepreneurs), Argentina (in August 2005 six companies were subject to fines totalling over 100 million USD) and in Taiwan (in December 2005 three companies paid the total of 6,3 million USD). In each of the above mentioned countries the fines imposed on cement producers reached record amounts.

Prohibited agreements between producers - for example, the ones aiming at the market division or setting minimum prices of goods and services - are among the gravest infringements of competition. Such practices are also the most difficult to detect as they are secret by nature. This is the reason why the antimonopoly law foresees a possibility for the employees of UOKiK to conduct an inspection on the entrepreneur’s premises. During such an inspection, the authorised UOKiK’s employees may demand submitting documents and data carriers as well as making statements. Uncooperativeness on the part of the entrepreneur may result in a fine amounting to 50 million Euros. The employees of the controlled entity who refuse to co-opearate with UOKiK may be subject to financial sanctions of up to 50 times of their average salary (currently around 125.ooo zlotys).

In case of suspicion of a serious infringement of competition- especially if there is a threat of the evidence being destroyed -UOKiK’s employees may, independently or in co-operation with the police, search the entrepreneur’s premises, or even their cars and private homes. The search can be conducted before any antimonopoly proceedings are initiated. To perform such a search, it is enough to have the consent of the Court of Competition and Consumer Protection, which takes a decision within 48 hours of receiving the notification.

Inspections and searches may also be conducted at the request and with the participation of the European Commission employees and antimonopoly offices of other Member States.

Additional information:
Elżbieta Anders, Spokesperson of UOKiK
Powstańców Warszawy 1, 00-950 Warszawa
Phone 22 827 28 92, 55 60 106, 55 60 314
faks 22 826 11 86

E-mail [SCODE]ZWFuZGVyc0B1b2tpay5nb3YucGw=[ECODE]