EU competition law consists not only of the relevant provisions of the Treaty on the Functioning of the European Union or numerous regulations of the EU Council, but also of the European Commission's communications, guidelines and notices. Thus, both generally applicable provisions (regulations) and non-binding legal acts, which include the last three of the above-mentioned sources of law, can be distinguished under competition law. The communications, guidelines and notices of the European Commission are defined as so-called soft law and serve to explain how the Commission will use its powers and how the Commission will understand the terms used in the generally applicable provisions (hard law).
In connection with the outlined division of the sources of EU law, the question arises: should soft law provisions be taken into consideration in judicial practice of national competition authorities and of Member States' courts?
EU and Polish law provisions concerning agency agreements
An answer to the above-mentioned question in relation to Poland can be provided on the basis of an approach to the Guidelines on Vertical Restraints1 ("the Guidelines") of the Appeal Court in Warsaw, presented in a judgement concerning an alleged infringement of a prohibition of agreements restricting competition by Polskie Składy Budowlane Group S.A. ("the PSB Group") and by Fabryka Farb i Lakierów Śnieżka S.A. ("Śnieżka")2.
The Guidelines, while regulating a complex issue of agreements of undertakings operating at different levels of a production or distribution chain, address inter alia the problem of an assessment of agency agreements in the light of the competition law. According to the Guidelines, agency agreements, in principle, do not fall under the scope of prohibition of anticompetitive agreements, and a decisive criterion for an entity being defined as an agent is lack of the risk borne by the agent (financial and commercial risk) in relation to the activities under the agreement with the principal.
Polish law neither regulates an assessment of the agency agreements in the context of the ban on anticompetitive agreements, nor was this subject raised in case law. Therefore, the above-mentioned judgement of the Court of Appeal in Warsaw should be of interest to entrepreneurs and competition law practitioners.
The PSB Group and Śnieżka agreement – facts of the case
Through decision no. RKT-43/2009, the OCCP found that the agreement concluded by Śnieżka and its 55 distributors, (the PSB Group included), fixed the minimum resale prices of the products manufactured and supplied by Śnieżka, and restricted competition.
Following the appeal brought by the PSB Group, the District Court in Warsaw – The Court of Competition and Consumer Protection – overturned the OCCP's decision in part concerning: (a) the conclusion by Śnieżka and PSB Group of an agreement restricting competition through fixing the minimum resale prices of the products manufactured and supplied by Śnieżka, and (b) the imposition of a financial penalty on the PSB Group3. Thereafter, the Court of Appeal in Warsaw4 dismissed the appeal of the OCCP setting aside the District Court's judgement.
The legal assessment of agency agreements by the Court of the Appeals
The Court of Appeal, in its justification, noted that the PSB Group is a purchasing group whose task was to negotiate purchase and sale conditions for goods, and then to sell these goods to members of the Group (shareholders of the PSB Group). The PSB Group had never carried out retail sale of Śnieżka's products – it sold them exclusively to its members (shareholders). They were fully independent in setting prices of Śnieżka's products offered at the retail level.
The Court pointed out that although Polish law does not cover the issue of an exclusion of agency agreements from the prohibition of anticompetitive agreements, the national provisions in this respect should not be more restrictive than the solutions adopted in EU law.
According to the Court, an assessment of whether the PSB Group acted as an agent should have been carried out on the basis of the Guidelines on vertical restraints published by the European Commission. The judgement emphasised that although the Guidelines are not-binding (they are a part of so-called EU soft law), they may have legal effect, and the President of the OCCP and the national courts should take the Guidelines into a consideration, especially when their provisions are intended to supplement binding provisions of EU law.
The Court of Appeal, after analysing the manner of functioning of the PSB Group, pointed out that the PSB Group does not incur "financial and commercial risks", in particular it does not incur the risk of financing the stock or investments necessary for its activity, but on the other hand the PSB Group bears the costs related to presentation of the products and advertising for the benefit of members of the Group.
Following the principles described in the Guidelines, the Court of Appeal found that the activity of the PSB Group "has a character similar to agency agreement" (the PSB Group acts for its members as a commercial agent), therefore the price agreement concluded by this entity with Śnieżka should be excluded from the prohibition of anticompetitive agreements set out in article 6 of the Act on competition and consumer protection5.
The Court of Appeal in this judgement unequivocally expressed its support for the possibility of applying the approach presented in the Guidelines to the assessment of agency agreements under Polish competition law. According to the Court, in the absence of national provisions concerning this issue, the OCCP and the national courts should take the Commission's interpretation included in the soft law into consideration when deciding on specific cases.
This means that undertakings, carrying out self-assessment of concluded agency agreements in terms of compliance with competition law, should also have regard to the Guidelines' approach. It also seems legitimate to use this approach to other issues not directly regulated in the national law but presented in the Guidelines, for which there is no well-establish judicial practice of the national courts. It should also be noted that the OCCP in its decisions concerning the practices restricting competition, regularly refers to various guidelines published by the Commission, thereby applying in practice the soft law instruments.
1 The European Commission Communication – the Guidelines on vertical restraints, EU Journal of Laws C 130/1 dated 16 May 2010.
2 The judgement of the Court of Appeal in Warsaw dated 24 September 2015, VI Aca 1096/14.
3 The judgement of the Court of CCP dated 29 January 2013, XVII Ama 121/10.
4 Mentioned judgement of the Court of Appeal in Warsaw dated 24 September 2015, VI Aca 1096/14.
5 The Act of 16 February 2007 on competition and consumer protection (Journal of Laws of 2015, item 184 as amended).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.