The President of UOKiK obliged PGNiG to change the practices that hindered liberalization of the natural gas market in Poland. For the first time in the Office’s history a market test was performed. Prior to issuing the decision, entities interested in the situation of the natural gas market were asked to express their opinions

Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) deals, inter alia, with retail and wholesale of natural gas. It enjoys, on both of those markets, a nearly monopolistic position, as its share exceeds the 90 per cent mark. Some of the dominant party’s business partners are authorized to resell the fuels purchased from PGNiG. Higher number of sellers foster development of competition and facilitate liberalization of the natural gas market. 

In April 2013, the President of UOKiK initiated anti-monopoly proceedings against PGNiG. It was substantiated, in the course of the proceedings, that the company could have abused its market position by applying contractual terms and conditions that were disadvantageous for entrepreneurs making wholesale or retail purchases of natural gas. The contractual clauses that were questioned, limited the entrepreneurs’ ability to reduce the amount of the fuel ordered and to decrease the contracted power. The ability to resell the fuel was also restricted, as it was conditioned upon obtaining the dominant entity’s consent. In the case of some of its customers, PGNiG was also setting the maximum amount of natural gas that could be resold to other market participants. In addition, the company limited the application of the so-called “backpack” principle to the end users only - according to that principle, if the customer decides to change its gas supplier, the contracted power is transferred, along with the customer, to the new supplier. This solution could not be taken advantage of by those entities that were reselling natural gas purchased from PGNiG.

The dominant entity’s practices could exert a negative impact on the liberalization of the natural gas market, as they hindered the regular operation of those entrepreneurs who were reselling gas purchased, on a wholesale basis, from PGNiG, and could even result in eliminating such entrepreneurs from the market altogether. They could also prevent new sellers, including those from the EU countries, from starting their activity. Therefore, the decision has been issued both on the grounds of Polish and EU regulations.

A penalty in the amount of up to 10 per cent of revenues generated in the year preceding the year in which the decision is issued, may be imposed upon an entrepreneur who is abusing his dominant market position. Following the commencement of the proceedings, the company undertook to amend its competition-limiting practices. At that time, the President of UOKiK decided to perform the market test, i.e. consult the PGNiG’s proposal with other interested entities. It was the first case in the history of the Office when we decided, prior to issuing our final decision, to ask other market participants for their opinion. 14 entities have provided us with their standpoints, including the President of the Energy Regulatory Office, PGNiG’s competitors and business partners, as well as entrepreneur associations – says Małgorzata Krasnodębska-Tomkiel, President of UOKiK.

Upon the analysis of the conditions proposed by PGNiG and the opinions of the market participants, an ordering decision has been issued, pursuant  to which the company will be required to modify its contract templates and offer their customers an ability to amend previously concluded agreements. Once the requirement referred to above has been complied with, customers will be able to reduce, at their own discretion, the amounts of gas ordered and the contracted power for a given gas year. Provisions limiting further resale of gas or determining the maximum amount of gas that can be resold will be abrogated as well. In addition, entrepreneurs reselling natural gas will be able to take advantage of the “backpack” principle.

Apart from modifying the terms and conditions of its contracts, the company will be required to submit to the Office, reports on its fulfillment of the obligation that has been imposed upon it, i.e. it will have to submit new contract templates, inform about the number of customers who have been offered to amend their previously concluded agreements, provide a copy of the annex proposed, and submit information on the number of customers who have taken advantage of the opportunity to amend their contracts or have rejected the proposal.

The decision is favorable for the Polish natural gas market and for its liberalization, as it allows to eliminate competition restricting practices in a more expeditious manner. The decision has already become legally valid, which means that PGNiG is required to comply therewith.

Additional information for the media:
Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Phone: +48 22 827 28 92, 55 60 314
Fax +48 22 826 11 86
E-mail: malgorzata.cieloch@uokik.gov.pl