Company Groups and Development of Competition in Poland

Abstract

This paper analyses the monitoring under competition law of the formation and operation of company groups in Poland. Groups of undertakings, which existed in the centrally planned economy, have been eliminated, or have radically, changed the range of their operations. Reasons for the formation of company groups include: risk management on the emerging market, the creation of common investment funds under the restrictive monetary policy, reduced transaction costs, and the delegation of powers to subsidiaries. The groups operating currently were incorporated through agreements between companies, buy-outs of state enterprises by private investors, acquisitions and outsourcing. The distribution networks form the majority of the agreement-based groups. Sectoral diversification is a characteristic feature of the capital groups and in most cases they are vertically integrated. Polish competition law enables the supervision of agreements between undertakings, acquisitions and buy-outs by private investors. The application of the competition law resulted in the formation of multi-sectoral company groups. The market power of companies and their groups depends not only on their size but also on the size of their relevant markets. Liberalisation of international economic relations results in the elimination of barriers to entry on product and geographic markets, weakening the market power of the domestic market players and developing competition.