How to assess 'market' under Polish merger control rules
The law sets forth certain exemptions from the obligation to notify the antitrust authorities of a merger. For example, a notification is not required if the turnover of the target company (and its capital group) did not exceed €10 million ($8.9 million) in Poland in any of the two years preceding the notification, or if the aggregate "market share" of the merging entities does not exceed 20%. However, the law does not offer any guidelines as to which "market" (be it a product or a geographical market) should be taken into account when applying the above-mentioned market-share test. Should one then look only at the overlapping product market, that is, the product market where both merging entities are active? Or, perhaps, one should look at any product market in which either merging entity is active rather than only the overlapping market? Furthermore, what is a "market" in geographical terms? Does it refer only to the national, in this case Polish, market? The issue of market assessment is obviously very important since, if the market is wrongly determined and, as a result, a notification is not made even though it was required, the antitrust authorities can levy a stiff fine against the entity that was obligated to file the notification.
How to determine the market To our knowledge, the Polish Antimonopoly Court has not so far examined the issue of assessing "market" for the purpose of applying the 20% market share exemption. Several opinions issued by the Polish antitrust authorities, however, offer guidelines regarding this issue. According to the antitrust authorities' opinions, one should take into consideration not only overlapping markets but any market on which each of the merging entities (and other entities belonging to their capital groups) is active. For example, if one of the merging entities trades in cars and vans while the other one trades in cars and trucks, the car, van and truck markets should each be looked at separately. If in any such markets the share of the merging entities exceeds 20%, then the antitrust authorities should be notified of the merger. In terms of a geographic market, the antitrust authorities require one to consider the whole region in which similar competition conditions exist, provided that Poland (or a part of Poland) belongs to such a market. Therefore, depending on the nature of a product, in one case, the market may be limited to a part of Poland, while in other cases it may include the entire territory of Poland or extend beyond Poland and include, for instance, the whole of Europe. This position does not, however, seem to be in line with the purpose of providing for the 20% market share exemption.
A merger where there is no overlap in markets should not normally raise any significant antitrust concerns, except for those cases in which the parties, although not connected in the same product market, are connected in a market that is upstream or downstream (for example: the car production market and the car sale market), and their shares in such upstream or downstream markets are significant. In these exceptional cases, even though the parties are not active in an overlapping market, their activity in separate upstream/downstream markets may raise competition concerns. However, where the parties are not active in the same market or in separate but connected markets (upstream/downstream as described above), the merger should not require a notification. Consequently, the 20% market share exemption may be viewed as referring only to the overlapping and upstream/downstream markets. If this approach were applied to the merger case described above - that is, where one of the merging entities trades in cars and vans while the other one trades in cars and trucks - only the car market would have to be looked at and then only if the aggregate market share of the merging entities exceeded 20% of this market would notification be required.
International competition practice strongly supports this position. In other countries using the market share test, such as the U.K., Portugal, Spain and Greece, the product markets are, generally, only the overlapping markets of the merging entities (and their capital groups). Thus, by defining "market" in such a broad manner that it includes any market on which the merging entities are active, the position of the Polish antitrust authorities is not in line with international competition practice. On the other hand, the European Union system (as opposed to the systems of certain member states) does not use a market share test. The thresholds used by EU law in order to establish if a merger falls under the jurisdiction of the European Commission are based on turnover. In any event, if the market share exemption were to be maintained, an amendment of the law would be advisable in order to introduce, when applying this test, the "overlapping markets approach" as described above. Alternatively, our legislators might consider, in light of the tendency to further harmonize national legal systems with that of the EU, resigning entirely from the market share test.
Agnieszka Raczkowska heads the antitrust law department of White & Case W. Danilowicz, W. Jurewicz i Wspólnicy - Kancelaria Prawna Sp. komandytowa
