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Office of Competition and Consumer Protection

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Collusion on the fitness market - decision by the President of UOKiK

< previous | next > 11.01.2021

Collusion on the fitness market - decision by the President of UOKiK
  • Tomasz Chróstny, the President of UOKiK, has imposed over PLN 32 million in financial penalties on the largest fitness chains, including Benefit Systems (operator of MultiSport cards) for a competition-restricting collusion scheme that consisted in allocation of the market.
  • The President of UOKiK has also imposed fines on 6 managers directly participating in the scheme. The overall value of such penalties equalled nearly PLN 800,000.
  • The activities of the entrepreneurs restricted the customers’ selection of fitness chains operating at specific locations.

The anti-monopoly investigation concerned with illegal practices on the fitness market was first initiated in 2018. It involved 16 companies and 6 managers allegedly being personally responsible for making the illegal arrangements.

It was determined in the course of the investigation that the illegal practices had lasted for approximately 5 years, from 2012 (at the latest) to (at least) 2017. The entrepreneurs managed to divide the market in such a manner as not to compete with each other. Benefit played the role of a company that exercised supervision over the illegal market arrangement, serving also as a coordinator and entity resolving any disputes between the individual brands. In the meantime, it was working intensely on strengthening its market position as well. Participants of the collusion scheme intended to retain their strong position in those cities in which they were already present, and to continue taking advantage of the MultiSport programme introduced to the market by Benefit. For example, Warsaw was dominated by the Calypso chain, Poznań - by Fabryka Formy, Wrocław - by Fitness Academy, and Kraków - by Fitness Platinium.

- Thanks to the collusion, fitness chains did not have to fear any competition from other participants in the cities in which they had already established their presence. This means that they were not forced to attract new customers by offering new products or services, improving the standard of service or ensuring competitive prices. Hence, the choice of fitness club customers was limited compared to a situation in which the illegal collusion scheme had not been established. The outcomes of this dishonest activity and market-allocation collusion impacted the consumers directly - says Tomasz Chróstny, President of UOKiK.

Even though the investigation targeted approximately a dozen economic operators, the President of UOKiK imposed penalties on eight companies: Bartosz Gibała Platinium, Benefit Systems, Platinium Wellness, Yes to Move (formerly: Fitness Academy), Calypso Fitness and its subsidiaries - Baltic Fitness Center, EFC Fitness and Fitness MCG. The majority of remaining entrepreneurs wound up their activity in the course of the investigation. This does not mean, however, that the violations they committed have gone unpunished. Due to the fact that the companies in question were taken over by Benefit Systems following the commencement of the proceedings, the latter entity is liable for paying the respective penalties that have been added to the amount of its overall fine.

Collusion scheme

The first arrangements pertaining to dividing the market were made, not later than in 2012, between Calypso and Fabryka Formy. The allocation of the market was expanded, not later than in 2013, to include Fitness Academy, with Benefit Systems playing the role of an intermediary in making the arrangements. Fitness Platinium and Zdrofit - a company whose presence “collided” with the activity of the Calypso chain - also joined the scheme. Currently, Fabryka Formy, Fitness Academy and Zdrofit chains are operated by Benefit Systems, while Fitness Platinium and Calypso operate as separate entrepreneurs. As part of the collusion, representatives of the individual companies contacted each other, in various ways, to allocate the market: they exchanged correspondence, held telephone calls and met in person. The companies were exchanging information pertaining to opening new clubs and to the locations they were interested in, or the ones they were willing to surrender to their competitors. If more players had plans concerning the same area, they agreed that one of the companies would withdraw from its plans to establish its presence there. For instance, the decision whether to allow the opening of a Fabryka Formy club in Warsaw, and the process of determining its location, were preceded by lengthy consultations between the chains’ representatives and were the source of much controversy. It was finally agreed that only one Fabryka Formy location would be opened in Warsaw, at the ONZ Roundabout.

Liability of Benefit Systems

By concluding the illegal market allocation scheme, the chains of fitness clubs were able to strengthen their position on the local markets without having to worry about the activity of competitors participating in the collusion and taking part in the MultiSport programme operated by Benefit Systems. The collusion was also beneficial for Benefit Systems. The evidence collected in the course of the investigation shows that it was in the interest of Benefit Systems to ensure stability of the market and to eliminate competition between the individual chains. Such an approach could help Benefit Systems pursue its business plans that assumed taking over some of the collusion-participating companies, with the said plans depending - to an ever-increasing degree - on the revenues generated from customers taking advantage of the MultiSport programme. In the course of the investigation, the President of UOKiK attached particular attention to the type of the relationship between the participants of the scheme, which was affected by ownership changes. Due to the role that Benefit Systems paid in the competition-limiting practices, and as a result of ownership structure changes, the company may also be held accountable for the participation of those companies that became a part of its structure after the investigation was commenced.

Participation of managerial staff

Financial penalties for participating in the collusion scheme have also been imposed on six managers from Platinium Wellness, Benefit Systems, Calypso Fitness, Zdrofit (currently operated by Benefit Systems) and Fabryka Formy (also currently operated by Benefit Systems). Based on the evidence collected, Tomasz Chróstny, the President of UOKiK, came to the conclusion that these managers were the ones who decided to hold the illegal discussions and who made market allocation-related decisions. In most cases, they were also responsible for reaching specific arrangements. All that makes them individually accountable for pursuing illegal market allocation practices.

- Collusion is a type of practice that is most difficult to discover. In many cases it requires that we take special measures, such as on-site inspections or searches performed directly at the entrepreneurs’. However, collusion schemes are always conceived by people that may be named. They often hold the positions of board members, executive directors of chief sales officers. This is my second decision, and also the second in the history of the Authority, under which financial penalties amounting to several hundred thousand zlotys have also been imposed on specifically identified natural persons. They are the ones who actively participated in creating or implementing illegal collusion schemes on behalf of their companies, thus adversely affecting the consumers and the market – explains Tomasz Chróstny, President of UOKiK.

Penalties imposed

Tomasz Chróstny, President of UOKiK, imposed penalties exceeding the total of PLN 32 million, on eight companies and six natural persons. The largest fine of PLN 26 million has been imposed on Benefit Systems. The sanctions for natural persons varied from over PLN 40,000 to over PLN 302,000 and depended on the severity of violation and on the role that a given manager played in the collusion.

By means of its decision, the President of UOKiK has imposed penalties on:

  • “Bartosz Gibała, conducting business activity under the name of Bartosz Gibała Platinium - financial penalty in the amount of PLN 167,569.64 (…)
  • Benefit Systems S.A. headquartered in Warsaw - financial penalty in the amount of PLN 26,915,218.36 (…)
  • Platinium Wellness sp. z o.o. headquartered in Kraków - financial penalty in the amount of PLN 3,015,592.17 (…)
  • Yes to Move sp. z o.o. headquartered in Warsaw (formerly: Fitness Academy sp. z o.o. headquartered in Warsaw) - financial penalty in the amount of PLN 1,748.74 (…)
  • Baltic Fitness Center sp. z o.o. headquartered in Warsaw - financial penalty in the amount of PLN 31,045.34 (…)
  • Calypso Fitness S.A. headquartered in Warsaw - financial penalty in the amount of PLN 1,504,490.93 (…)
  • EFC Fitness S.A. headquartered in Warsaw - financial penalty in the amount of PLN 40,275.82 (…)
  • Fitness MCG sp. z o.o. headquartered in Warsaw - financial penalty in the amount of PLN 143,104.81 (…)

By means of its decision, the President of UOKiK has also imposed penalties on the following natural persons:

  • (…) “Bartosz Konrad Gibała - financial penalty in the amount of PLN 161,000.00 (…)
  • Adam Kędzierski - financial penalty in the amount of PLN 302,500.00 (…)
  • Mikołaj Nawacki - financial penalty in the amount of PLN 77,000.00 (…)
  • Jakub Mateusz Raniszewski - financial penalty in the amount of PLN 40,800.00 (…)
  • Ireneusz Sęk - financial penalty in the amount of PLN 90,000.00 (…)
  • Izabela Walczewska-Schneyder - financial penalty in the amount of PLN 125,000.00 (…)”

The maximum penalty for a competition-restricting agreement may equal 10% of the company’s annual turnover, and in the case of natural persons - PLN 2 million.

When imposing financial penalties, Tomasz Chróstny, President of UOKiK took into consideration the fact that the fitness sector is one of those industries that have been affected by the COVID-19 restrictions the most. In other circumstances, the penalties would have been higher. The companies fined may seek postponement of the payment deadline or division of the penalty into instalments.

The decision is not final and may be appealed against to court.

Lower penalties for four companies and one manager

- Penalties imposed on Calypso Fitness and its subsidiaries have been reduced, as those entrepreneurs cooperated with the Authority under the leniency programme. They could not count on waiving the fines altogether due to the fact that Calypso Fitness filed the relevant request long after the searches conducted at the early phase of the investigation at the beginning of 2017, when the Authority was well aware of the existence of the collusion scheme. Nevertheless, the company supplied some crucial information and evidence pertaining to the arrangement. Therefore, in accordance with the provisions of the Act on Consumer and Competition Protection, I decided to reduce the penalties imposed on Calypso Fitness, Baltic Fitness Center, EFC Fitness and Fitness MCG by 50% - says Tomasz Chróstny, President of UOKiK.

The fact that Calypso Fitness decided to cooperate with the President of UOKiK in explaining the case turned out to be beneficial for the entity’s manager as well, since executives of companies participating in the leniency programme are covered by its provisions, too.

Furthermore, the companies and the manager listed above saw an additional 10% reduction in the penalties imposed, as they decided to pay them on a voluntary basis.

How to avoid fines

Entrepreneurs and managers interested in the leniency programme are encouraged to contact UOKiK. By calling a dedicated number of 22 55 60 555, you will be able to talk to UOKiK lawyers, who will answer all of your questions related to leniency applications - also those asked anonymously.

The Authority offers a programme allowing it to acquire information from anonymous whistle-blowers. Visit https://konkurencja.uokik.gov.pl/sygnalista/ and fill out a simple form. The pan-European system we rely on guarantees full anonymity, also towards the Authority’s staff.

The President of the Authority would also like to remind the public that anyone who has suffered a loss as a result of a breach of competition law, may file a civil lawsuit against any of the entities that have violated the law. When filing a claim, it is necessary to indicate the amount of compensation claimed. In determining the amount due, consideration should be given to the counterfactual scenario, i.e. what the market situation would have been like in the absence of the infringement. As a rule, the loss shall be the excess price paid as a result of the anti-competitive practices.

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL

Attached files

 

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