Polish Briefing 8 November, 2019 9:00 am   
Editorial staff

Polish Briefing: UOKiK to announce “the biggest fine in office’s history” on Nord Stream 2

What goes on in Poland on the 8th of November.

A historic moment for UOKiK

In May last year, the Office of Competition and Consumer Protection (UOKiK) started proceedings regarding possible collusion around Nord Stream 2. Now it announces the decision and the highest penalty in the office’s history.

In an invitation to journalists, the Office announces that it will present “the latest decision of the President of UOKiK regarding the construction of the Nord Stream 2 gas pipeline” and “the highest penalty for the company in the history of UOKiK”.

Collusion on Nord Stream 2?

In May 2018, the Office of Competition and Consumer Protection initiated proceedings against Gazprom and five international entities responsible for financing the Nord Stream 2 gas pipeline.

– The construction of Nord Stream 2 was analyzed by UOKiK in August 2016. At that time, the President of UOKiK decided that the planned concentration between Gazprom and five international companies could lead to a restriction of competition. Their joint company was to design, finance, build and operate the Nord Stream 2 gas pipeline, which runs from the Russian Baltic Sea coast to the exit point near Greifswald in Germany. At that time, the Office recognized that Gazprom had a dominant position in gas supplies to Poland, and the transaction could lead to further strengthening of the company’s negotiating power towards customers in our country. Consortium participants withdrew the application, which in practice meant a ban on making the merger – the office informed in May 2018.

– In April 2017, the office looked again at the case and opened an investigation. At that time, the media reported that the would-be transaction participants, despite UOKiK’s objection, signed a contract to finance the construction of the gas pipeline – we read in the office’s information. – The President of UOKiK brought charges against six companies that are suspected of finalizing the transaction despite their disagreement. These are entrepreneurs belonging to international groups: Gazprom from the Russian Federation, Engie from Switzerland, as well as four from the Netherlands: Uniper, OMV, Shell and Wintershall.

– According to the office, the actions of the would-be consortium members of the gas pipeline may be an attempt to circumvent the disagreement with the creation of a company financing the construction of the gas pipeline. Both the creation of a joint venture that UOKiK did not agree to and the conclusion of subsequent contracts – had the same purpose: financing the construction of Nord Stream 2 – can be found in the announcement. – For violating the prohibition of concentration without obtaining the consent of the President of UOKiK, there is a penalty of up to 10 percent of trading. In addition, if the concentration has been made and competition cannot be restored on the market, the president of the office may order, e.g. the sale of all or part of the entrepreneur’s assets, shares, shares ensuring control over the entrepreneur, as well as the dissolution of the company over which the undertakings have joint control.