Polish Competition Authority clarifies merger control rules on notification of extraterritorial joint ventures

Under the revised Guidelines, the creation of a JV will not require notification in Poland if the market(s) in which the JV will operate, or where there will be vertical (supplier-customer) relationships between the JV and its parents, will not cover Poland (or its part).

The merger control notification obligation

Under Polish merger control rules, transactions (acquisitions of control/assets, mergers or creation of JVs) must be notified to the PCA if the combined turnover of the participating undertakings in the year preceding the notification exceeded EUR1 billion worldwide or EUR50 million in Poland.

Even if one or both of the above thresholds are met, there is no obligation to notify a transaction (under the de minimis exemption) if:

• In the case of a JV creation or merger, none of the participants in the merger or JV had Polish turnover exceeding EUR10m in either of the two financial years preceding the notification; or
• In the case of an acquisition of control and/or acquisition of assets, the Polish turnover of the target and its subsidiaries and/or acquired assets did not exceed EUR10m in either of the two financial years preceding the notification.

Significantly, the notification obligation will apply when a transaction that meets either of the turnover thresholds has, or may have, an effect on the Polish market. This means that the obligation also applies to extraterritorial transactions (i.e., transactions between entities located outside Poland) if such transactions could potentially have an effect in Poland.

A narrowing of the effects test for JVs

Under the previous Guidelines, a transaction was considered to have an effect in Poland if at least one of the parties (capital groups involved) generated turnover in Poland (in line with the relevant turnover thresholds).

This rule was not controversial for acquisitions of control/assets or mergers as under the de minimis exemption (see above) the target/assets or one of the merging parties needs to generate turnover in Poland.

However, for the creation of a JV, the possibility of applying the "effects doctrine" was very limited since it was sufficient if only one party (e.g., parent company) generated relevant turnover in Poland. In such cases, even if the JV operated in a local market outside Poland, e.g., running a supermarket in Jakarta, the filing could technically be triggered.

Now, the revised Guidelines have clarified that in relation to the creation of JVs, the fact that the parent(s) of the JV meet the relevant turnover thresholds does not always imply that the transaction will have an effect in Poland.

When assessing the effect of the JV on the Polish market, it is also necessary to consider the subject and scope of the JV's activity, in particular whether this activity will have an impact in Poland. Consequently, there will be no effect in Poland if the market(s) in which the JV will operate or in which there will be vertical (supplier-customer) relationships between the JV and its parents will not cover Poland (or its part). As per the PCA’s example, the creation of a JV active in generation and wholesale supply of electricity outside of Poland, for example in France, will not have an effect in Poland, because the markets for the generation and wholesale supply of electricity, according to current case law, have a national dimension.

Practical implications

The PCA published its revised Guidelines on October 25, 2024 with immediate effect. They provide merging parties with very welcome clarity and certainty and will likely reduce the number of JV notifications in Poland.

The revised policy will however require a detailed assessment of the JV’s business activity in light of the decisional practice of the PCA, particularly the PCA’s approach to relevant market definitions (geographical scope). This may be challenging given that the PCA does not publish its views on the relevant market definition in every merger decision, but only in those cases where the relevant markets are considered to be affected.

What also remains unclear is whether the transaction will be considered to have an effect in Poland if the JV does not intend to operate in Poland but the relevant market in which it operates is defined as EU, EEA or global (i.e., technically covering Poland).

Finally, it remains to be seen whether the PCA will apply a more lenient approach to gun-jumping cases involving transactions which were not (but should have been) notified under the previous approach to extraterritorial JVs but are now exempt.