The acquisitions of Huta Łabędy and Nadwiślańska Spółka Energetyczna by Kompania Węglowa have both been approved by UOKiK, Poland's competition authority. 

The transactions are part of implementation of the government's 'Strategy for coal mining in Poland 2007-2015', which provides funding for Kompania Węglowa.

Kompania Węglowa (state-controlled coal concern) is mainly involved in mining and selling coal. Its share of the European coal market is estimated at around 13%. 

The coal concern was cleared to acquire 93.33% of the share capital in state-controlled Huta Łabędy, which produces mainly paving stones and mine accessories. UOKiK issued a conditional approval to this acquisition, which can go ahead provided that Kompania Węglowa sells most of its shares to an independent investor within at least two years. This will result in Kompania's loss of control over Huta. In addition, Kompania Węglowa will not be able to reduce Huta's production to less than 80% of the current level. If these conditions are violated UOKiK may impose a financial penalty of up to €10,000 for each day of delay.

The economic aim of this concentration is to provide financial security to Kompania Węglowa. Huta Łabędy until being sold by Kompania Węglowa will constitute the security of Kompania's external financing. Pursuant to the UOKiK's approval, the concentration takes the form of state aid to the Polish coal mining sector.

Conditional approvals are extremely rare – they stand less then 2% of this year's awarded decisions. Usually upon the conditional approvals UOKiK imposes on the business entities obligation to divest control over other business entity or to dispose of the entirety or part of the assets of one or several undertakings.

According to the second decision, Kompania Węglowa has been cleared to take over control of Nadwiślańska Spółka Energetyczna, company producing and distributing of heat and water supplies as well as sewage disposal.

Polish competition law requires UOKiK to be notified of an intended merger where the combined turnover of the merging parties in the preceding financial year exceeds €1 billion worldwide or €50 million in Poland.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 21/10/2010.