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Brussels, 8 March 2006

Free movement of capital: Commission opens infringement procedure against Poland in context of UniCredit/HBV merger

The European Commission has decided to send Poland a formal request to submit its observations on a non-compete clause contained in the Bank Pekao Privatisation Agreement concluded between the Polish Ministry of State Treasury and the UniCredit banking group in 1999. The clause in principle prevents UniCredit from investing in any of Pekao's competitors in the Polish market. It has been invoked by the Polish authorities when inviting UniCredit to sell its shares in a Pekao competitor in the context of the UniCredit / HBV merger procedure. The Commission is concerned that the clause may violate EC Treaty rules on the free movement of capital (Article 56) and the right of establishment (Article 43). The Commission's request takes the form of a letter of formal notice, the first stage of infringement procedures under Article 226 of the EC Treaty. In the absence of a satisfactory reply within two months, the Commission may decide to issue a formal request in the form of a 'reasoned opinion' to the Polish government to refrain from the use of the non-compete clause in the context of merger procedures and amend the Pekao Privatisation Agreement accordingly. The Commission has also started a procedure against the Polish measure based on the EU’s Merger Regulation (See IP/06/277).

When UniCredit acquired a 50%+ participation in Pekao in 1999, a non-compete clause was included in the Privatisation Agreement, according to statements by the Polish Government, "to safeguard the competitiveness of the Polish market in banking services". The effect is that UniCredit in principle cannot invest in any of Pekao's competitors on the Polish market. However, through the acquisition of control by UniCredit of Bayerische Hypo- und Vereinsbank AG, UniCredit has indirectly acquired control of another Polish bank. A breach of this non-compete clause with the acquisition of this other bank has recently been confirmed by the Polish auditing authority, and UniCredit has been invited by Polish authorities to sell its shareholding in this other bank as a result.

The Commission is concerned that the inclusion of the non-compete clause in the Pekao Privatisation Agreement represents a restrictive state measure that infringes the freedom of capital movement as well as the right of establishment, Articles 56 and 43 of the Treaty respectively.

In expressing its concerns, the Commission takes account of several European Court of Justice rulings – e.g. Commission v France (C-483/99), Commission v Belgium (C-503/99) and Commission v Portugal (C-367/98) of 4 June 2002 - according to which state measures liable to dissuade investors in other Member States from capital investments may render the free movement of capital illusory, and thus constitute a restriction on movement of capital.

Furthermore, in its decision of 5 November 2002 in case C-208/00 ("Überseering"), the European Court of Justice ruled that the acquisition of shares in a company incorporated and established in another Member State is covered by the Treaty provisions on the free movement of capital, and for cases in which the shareholding confers a definite influence over the company's decisions and allows the shareholders to determine its activities, it is the Treaty provisions on freedom of establishment which apply.

In 2001, the Commission clarified (see IP/01/872) that when a Member State is privatising a company, and when that Member State acts in its capacity as a controlling shareholder, it may apply certain conditions concerning the sale (including possible limits on the participation of public sector companies in privatised company) as long as such conditions:

  • are based on specific economic policy objectives and are clearly defined beforehand,
  • are applied without discrimination,
  • are limited to the time necessary to achieve the specific objectives and
  • leave no margin for interpretation by the administration responsible.

The Commission is concerned that non-compete clause contained in the Pekao Privatisation Agreement does not meet these requirements, because

  • the Polish authorities have not set a clear and specific policy objective which could justify the measure,
  • the competitive structure of the Polish market for banking services is sufficiently protected by Community law and therefore such a justification is not valid,
  • the conditions in the clause as such go beyond the time necessary, in particular for the post-accession period and
  • the application by the Polish authorities with regard to the non-compete clause leaves a margin of discretion.

The Commission is consequently concerned that the non-compete clause constitutes an unjustified restriction on movements of capital, Article 56 EC, as well as, regarding direct investment, on the freedom of establishment in the sense of Article 43 EC. Therefore, the Commission is concerned about Polish authorities invoking this clause in the context of merger procedures. This aspect is the subject of parallel action by the Commission by means of a letter to the Polish authorities pursuant to Article 21 (4) of the Merger Regulation[1].

The latest information on infringement proceedings concerning all Member States is available at:

[1] Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation); OJ L 24, 29.01.2004, pages 1-22

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