Consolidated non-financial statement
Labour practices and decent work
|LA 1||Total workforce by employment type, employment contract and region|
|Workforce||As at Dec 31 2006||As at Dec 31 2007||As at Dec 31 2008||As at Dec 31 2009||As at Dec 31 2010|
Workforce by employment type and region
|As at Dec 31 2010|
|− indefinite-term employment|
|− fixed-term or temporary employment|
|As at Dec 31 2010|
|− full-time employees|
|− part-time employees|
|LA 2||Total number of employee departures and employee turnover by age group, gender and region|
In 2010, the employee turnover rate at Grupa LOTOS was 10.6%.
|LA 3||Benefits provided to full-time employees that are not provided to part-time or temporary employees, by significant locations of operation|
Grupa LOTOS offers all its employees, i.e. employees working under indefinite-term (permanent) contracts or fixed-term (temporary) contracts, on a full-time or part-time basis, the same package of social benefits, guaranteed under the Collective Bargaining Agreement and the Rules of the Social Benefits Fund. The benefits offered to the Company’s employees include a unit-linked life insurance, additional medical care provided by a non-public healthcare establishment, parental leave for mothers and fathers, and social benefits in the form of loans, allowances, and partial financing of holidays for employees and their children.
|LA 4||Percentage of employees covered by collective bargaining agreements|
The Collective Bargaining Agreement in place at the Company covers 95.5% of its employees.
|LA 5||Minimum notice periods regarding significant organisational changes, including whether it is specified in collective bargaining agreements|
In accordance with the labour law provisions, the minimum notice period for an indefinite-term employment contract depends on the duration of work with the employer. The minimum notice period is two weeks if an employee has worked less than six months and three days if an employee has been employed as a substitute.
|LA 6||Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programmes|
In accordance with the labour law provisions, Grupa LOTOS has set up a Health and Safety-at-Work Committee. It is composed of:
- proxy for trade unions,
- staff responsible for health and safety,
- doctor responsible for prophylactic care of employees,
- the Company’s Social Labour Inspector,
- trade union representatives.
|LA 7||Rates of injury, occupational diseases, lost days and absenteeism, and total number of work-related fatalities by region|
The most frequent accident-related injuries at the LOTOS Group are injuries of upper and lower limbs. Incidents have mostly occurred while moving around or operating machinery and equipment. In 2010, there were no serious accidents or fatalities.
2010 saw a year-on-year decline of the rate of accidents at work and the LTIF value at Grupa LOTOS. This was attributable to higher employee awareness regarding occupational safety, resulting, among other things, from large-scale awareness initiatives, increased commitment and fostering the culture of occupational safety. Employees took part in training and informal sessions focusing on occupational safety. Other communication channels were also made available for that purpose. The above initiatives have delivered the expected results, as the level of employee awareness has been steadily rising. At the same time, the focused and planned process aimed at raising employee awareness and fostering the culture of occupational safety is meant to be a long-term effort and pursued also in the years to come. In recent years, there has been a welcome downward trend in accident frequency at Grupa LOTOS, which shows that our efforts in the area of health and occupational safety have put the Company on the right track. A major problem, however, has been a lack of harmonisation between Polish and EU laws. If the applicable legal regimes were harmonised, it would be possible to adopt a uniform approach to the classification and statistical reporting of accidents. This in turn would significantly reduce the number of accidents at work occurring at Grupa LOTOS, while allowing fair benchmarking between Grupa LOTOS and other businesses from the global chemical industry.
|Number of employees||945||1,098||1,246||1,305||1,310|
|Accidents at work||7||6||7||13||9|
|Post-accident absenteeism (calendar days). Lost days are counted from the day when the injured employee obtains a sick leave certificate from a doctor||177||133||171||537||287|
|The lost time injury frequency (LTIF) (per 1 million hours worked)||4.5||3.1||2.86||5.6||3.4|
|The lost day incident rate (LDIR) (per 200 thousand hours worked)||0.8||0.6||0.6||1.1||0.7|
|Number of employees||5,624||4,764||4,878||4,949||5,010|
|Accidents at work||70||50||49||45||55|
|Post-accident absenteeism (calendar days). Lost days are counted from the day when the injured employee obtains a sick leave certificate from a doctor||2,819||2,008||1,375||1,257||2,502|
|The lost time injury frequency (LTIF) (per 1 million hours worked)||6.9||5.6||5.2||4.4||4.9|
|The lost day incident rate (LDIR) (per 200 thousand hours worked)||1.4||1.2||0.9||0.9||1.2|
The LOTOS Group classifies accidents at work in accordance with the Polish legislation. In addition, the LOTOS Group records and keeps statistics of incidents according to the European scale, i.e. dangerous occurrences (including dangerous states and incidents with potential to cause an injury), accidents resulting in incapacity for work lasting more than one day (LTI – Lost Time Injury), based on which the LITIF (Lost Time Injury Frequency) rate is computed, incidents requiring first-aid treatment and road accidents.
In line with the guidelines contained in the ILO (International Labour Organization) Code of Practice Recording and notification of occupational accidents and diseases, companies of the LOTOS Group:
- have established uniform procedures to address accidents at work,
- perform cause and effect analysis of accidents at work,
- draw conclusions and take appropriate corrective and preventive measures to eliminate the risk of recurrence of similar incidents,
- document accidents at work and other dangerous occurrences,
- identify and analyse dangerous occurrences, based on which they take appropriate proactive and reactive measures to prevent their recurrence.
|LA 8||Education, training, counselling, preventive and risk-control programmes in place to assist workforce members, their families, or community members regarding serious diseases|
The obligatory actions which the Company is required to take under applicable laws concerning occupational safety and health, as well as safety of processes and technologies, are presented on the Company’s corporate website [ link ].
Health and safety topics covered in formal agreements with trade unions
Polish law does not provide for the possibility of concluding agreements related specifically to health and safety at work. The issue is governed by mandatory provisions of law. To the extent provided for by law, representatives of employees have their say in all matters related to the whole area of occupational health and safety, as evidenced by their membership in and attendance of meetings of the Health and Safety-at-Work Committee, an advisory body of the employer. In this way, the obligation to consult employees on all matters related to occupational health and safety is fulfilled.
|LA 10||Average hours of training per year per employee, and by employee category|
|LA 11||Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings|
All employees of Grupa LOTOS, irrespective of age and time left to retirement, are offered the opportunity to attend internal (the LOTOS Academy) and third-party training programmes designed to help them acquire and enhance knowledge and professional qualifications and develop general skill sets. Development of staff’s skills is ensured through financing or co-financing of learning, paid leave to travel and attend training courses aimed to enhance their professional qualifications, as well as educational leave.
Moreover, the Company’s employees may declare that they want to retire early. Employees who at any time during the two years before their due retirement date choose to switch from an indefinite-term to a fixed-term employment contract are offered a one-off 8.5% rise of their monthly base pay, paid under the amended employment contract.
Retiring employees are entitled to a one-off cash severance payment, whose amount depends on the length of service. Its amount may range from an employee’s monthly pay where his or her length of service does not exceed 15 years to 500% of the base amount if the employee has worked 35 years.
|LA 12||Percentage of employees receiving regular performance and career development reviews|
|Employees receiving regular performance and career path reviews (%)||69||86||79||87||(*)|
(*) Employee reviews for 2010 will be performed in Q3 2011.
Based on the Periodic Evaluation of Employees Procedure, all employees working with Grupa LOTOS under employment contracts (save for Management Board members) are subject to evaluation, provided that they have worked for at least 6 months at a given organisational unit at the time when a periodic evaluation is performed. The direct superior of an employee who performs the evaluation must also hold the position for least 6 months at the time of the evaluation. Accordingly, depending on the rate of organisational changes and number of newly recruited staff, the percentage of employees subject to evaluation varies from year to year. The evaluation results are consistent with assumptions.
|LA 13||Composition of management and supervisory bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity|
|As at Dec 31 2010||%|
|As at Dec 31 2010||%|
|− up to 30 years|
|− 30 – 50 years|
|− over 50 years|
|LA 14||Ratio of base pay of women to men by employee category|
Ratio of base pay of women to men
|number||average base pay (PLN)||number||average base pay (PLN)|
Investment and procurement practices
|HR 1||Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening|
To date, Grupa LOTOS has not incorporated human rights concerns into its agreements or contracts, however work is under way to prepare relevant contractual provisions. A document entitled “Ethical principles to be followed by employees of Grupa LOTOS in their dealings with business partners” has also been drafted. The draft document, which is a sort of “Code of Ethics”, is now being reviewed and awaiting approval. It contains provisions designed to counteract violation of human rights.
|HR 2||Percentage of significant suppliers and contractors that have undergone human rights screening, and actions taken|
Grupa LOTOS has not yet undertaken human rights screening when selecting its suppliers and contractors or during the ensuing cooperation.
|HR 3||Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to business operations, including the percentage of employees trained|
Grupa LOTOS has provided 550 hours of employee training on policies and procedures concerning aspects of human rights that are relevant to its business operations. In total, such training has been provided to 22.6% of employees.
|HR 4||Total number of incidents of discrimination and corrective actions taken|
At Grupa LOTOS there have been no incidents of discrimination against employees on account of their race, colour, gender, religion, political leanings, national origins or social background.
|HR 5||Operations identified in which the right to exercise the freedom of association and collective bargaining may be at risk, and actions taken to support these rights|
At Grupa LOTOS there have been no operations in which the right to exercise the freedom of association or collective bargaining would be at risk.
|HR 6||Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the effective abolition of child labour|
At Grupa LOTOS there have been no operations deemed as involving significant risk for incidents of labour of children and minors in which they would be put in danger of developing health problems and losing their lives.
|HR 7||Operations identified as having significant risk for incidents of forced or compulsory labour, and measures taken to contribute to the elimination of all forms of forced and compulsory labour|
At Grupa LOTOS there have been no incidents of forced or compulsory labour.
|HR 8||Percentage of security personnel trained in the organisation’s policy or procedures concerning aspects of human rights that are relevant to business operations|
In accordance with the policy and procedures concerning aspects of human rights that are relevant to the Company’s business operations, training has been provided to 90.9% of security personnel. In the case of the external firm providing Grupa LOTOS with security services, similar training has been provided to 84.5% of personnel.
Customer health and safety
|PR 1||Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant product and service categories subject to such procedures|
The Polish and EU legislation requires Grupa LOTOS to assess the impact of all its products on human health and safety. All products of crude oil refining are subject to classification, and thus to a health and safety impact assessment. Most products of crude oil refining are subject to registration or at least classification, and thus to a health and safety impact assessment. These activities are defined by the REACH (Registration Evaluation Authorisation of Chemicals) Regulation, together with numerous amendments – an EU initiative aimed to provide a systematic and disciplined framework for placing chemical substances on the market [Regulation EC 1907/2006 of the European Parliament and of the Council of 18 December 2006]. Articles demonstrating the level of the Company’s fulfilment of its obligation to assess health and safety impacts of its products are available on the corporate website [ link ].
|PR 2||Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services|
No incidents of non-compliance with regulations concerning health and safety impacts of products occurred at the LOTOS Group in the reporting period.
|PR 3||Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements|
Under applicable laws, documents referred to as Material Safety Data Sheets are drafted for all products manufactured by Grupa LOTOS. They provide information on the product’s health and environmental impacts, presence of hazardous ingredients, exposure controls, measures to take in the case of a fire or product release to the environment, as well as on waste disposal.
Our products’ Material Safety Data Sheets are available at the Internet portal of Grupa LOTOS [ link ].
|Scope of product and service information required by the reporting organization’s procedures||Yes|
|The sourcing of components of the product or service||x|
|Content, particularly with regard to substances that might produce and environmental or social impact||x|
|Safe use of the product or service||x|
|Disposal of the product and environmental/social impacts||x|
handling during storage and transport,
physical and chemical properties, stability and reactivity,
Details on the type of product and service information required under internal procedures and published by individual commercial companies of the LOTOS Group, can be found on the Company’s website. [ link ].
|PR 4||Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling|
No incidents of non-compliance with regulations and codes concerning product information were identified at the LOTOS Group in the reporting period.
|PR 5||Practices related to customer satisfaction, including results of surveys measuring customer satisfaction|
Major service and distribution companies of the LOTOS Group conduct customer satisfaction surveys on a regular basis. Methodologies used in such surveys, along with their scopes and findings, are posted on the Company’s website. [ link ].
|PR 6||Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship|
The following rules are strictly applied in the management of the overall process relating to the corporate brand strategy, product brands, promotion strategies, value creation, creation of the desired image of the LOTOS brand, promotional materials distribution and marketing research:
- compliance with the effective laws,
- no deliberate harm or damage,
- putting to good use the education, professional background and experience of our personnel.
All our operations are carried out with regard for human dignity and gender equality; without presenting controversial content which may offend social groups, and without inciting negative emotions. These rules complement the effective and unconditionally binding laws and regulations, in particular: the Constitution of the Republic of Poland and the following Polish Acts: the Civil Code, the Act on Combating Unfair Competition, the Press Law Act, the Radio and Television Act, the Act on Protection of Certain Consumer Rights, the Act on Provision of Electronic Services, the Act on Personal Data Protection, the Act on Copyrights and Related Rights, the Act on Industrial Property, and the Code of Ethics in Advertising.
Internal procedures are governed by the Rules of the Committee for Marketing and Communication, whose purpose is to ensure appropriate marketing across the LOTOS Group.
The LOTOS Group’s partners for marketing communications are under an obligation to comply with the International Code of Advertising Practice, published by the International Chamber of Commerce.
In its sponsorship activities, Grupa LOTOS adheres to standards and applies rules spelled out in voluntary codes of conduct published e.g. by unions of entrepreneurs, whose members carry out operations in the area of promotion, advertising or sponsorship, as well as by organisations which promote good business practices. All sponsorship contracts are transparent in terms of their nature, and clearly specify all obligations of the parties to such contracts. Grupa LOTOS does not engage itself in any events which may cause damage to objects or facilities of historical or artistic value, or events which could have an adverse environmental impact.
With respect to marketing communications and sponsorship, the Company, as a member of the Global Compact, acts on the Global Compact’s Principle 7 related to responsibility for natural environment, which states that businesses should support a precautionary approach to environmental challenges, and on Principle 8, which calls for undertaking initiatives to promote greater environmental responsibility.
|PR 7||Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by types of outcomes|
No incidents of non-compliance with regulations and codes concerning marketing communications were identified in the reporting period.
|PR 8||Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data|
No complaints regarding breaches of costumer privacy or loss of data were received by the distribution and service companies of the LOTOS Group.
|PR 9||Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services|
No significant incidents concerning the provision and use of products and services occurred in 2010. Accordingly, no administrative or court sanctions, imposed on business entities as a result of their non-compliance with laws or regulations concerning the provision and use of products and services, were placed on members of the LOTOS Group. However, in 2010 proceedings were pending within this subject matter, which are decribed under Anti-competitive behaviour.
|SO 2||Percentage and total number of business units analyzed for risks related to corruption|
Internal regulations, procedures and instructions implemented at the LOTOS Group have embedded controls, whose aim is also to mitigate the risk of malpractice or corrupt practices.
In addition, internal regulations are defined for the Company which specify desirable ethical and moral behaviours. These include:
- the Code of Conduct of LOTOS Group’ Employees,
- the Code of Managers of the LOTOS Group,
- Corporate Decalogue,
- Internal Auditor Code of Ethics.
There are also solutions in place at the Company which seek to counteract abuse and corrupt practices in certain areas, such as physical security, information security, transacting, or business partner selection process. Furthermore, if events or areas exposed to corrupt practices are identified at the Company, there is a procedure in place providing for ad-hoc audits, which facilitate a speedy response to such risks or practices. Grupa LOTOS also clearly communicates, through its website, its adherence to the Global Compact Principles, which require the Company to counteract all forms of corruption, including extortion and bribery.
|SO 3||Percentage of employees trained in organization’s anti-corruption policies and procedures|
|Type of position||Trained employees (%)|
|SO 4||Actions taken in response to incidents of corruption|
No corrupt practices which would require litigation were identified in the reporting period.
|SO 5||Public policy positions and participation in public policy development and lobbying|
Grupa LOTOS operates in the oil sector, a part of the larger energy sector, which is strategic to the state. The majority shareholder of the Company is the Polish Treasury. However, even if this was not the case, the state would still be granting certain rights to and imposing certain obligations on companies from the strategic sectors by using regulation. One such obligation is the requirement to cooperate on energy sector security.
Accordingly, Grupa LOTOS is an active participant in the process of developing and guiding the public policy in the area of the broad energy sector. Our experts are members of expert teams set up by public institutions to develop new legislative solutions in the energy sector, who actively participate in the public consultation of draft laws regulating the sector.
Such activities include e.g. cooperation with the Ministry of Economy on the report for the International Energy Agency concerning the fuel industry, participation in the work of the Poland-Ukraine Intergovernmental Committee for Economic Cooperation, or of the Interdepartmental Team for Shale Gas.
Legislation-related work in 2010 included provision of opinions on the bills on biocomponents and liquid fuels, and on mandatory stock of crude oil and liquid fuels. Grupa LOTOS provides ongoing information to the Ministry of Economy and the Ministry of Treasury regarding the energy sector for top-level departmental meetings.
Being a member of the Polish Academic and Economic Forum, Grupa LOTOS is an active contributor to initiatives aimed at strengthening cooperation between academic and business communities, promoting innovation and building a knowledge-based economy.
The Company is also monitoring the European Union regulations on the energy sector on an ongoing basis, and cooperates with state authorities in the process of developing documents which implement EU directives into the national law.
On the initiative of Grupa LOTOS, supported by three other entities, namely Energa, Jastrzębska Spółka Węglowa and Kulczyk Investments, as well as by the Polish Academic and Economic Forum, a non-profit organisation Central European Energy Partners (CEEP) was registered in Brussels in June 2010. The organisation represents the energy sector from Central Europe (including crude oil, natural gas, coal, electricity, renewable energy sources, nuclear energy, interconnectors, etc.). The prime objective of the organisation as defined by its charter is to contribute to integration of the Central European energy sector under a common energy and security policy for the EU’s energy sector. To that end, CEEP initiated close cooperation with recognised international think tanks, such as the Center for Strategic & International Studies (Washington), the Windsor Energy Group (London, UK), the King’s College (London), the Atlantic Council (Washington), and such organisations as the International Energy Agency (Paris), or Europia (Brussels). CEEP is an active stakeholder in all major events in the energy sector organised under the auspices of the European Union. It is also a keen participant of consultations organised by the European Commission, is involved in preparing expert materials for the EU institutions, as well as attends working group meetings, including the Berlin Fossil Fuels Forum. President of the Management Board of Grupa LOTOS Paweł Olechnowicz is the Chairman of CEEP’s Directors’ Council.
Grupa LOTOS is also involved in the development of policies and regulations regarding a wide range of energy sector-related matters, in particular those pertaining to the fuel sector, also through membership in the various organisations.
As a member of the Windsor Energy Group (WEG), Grupa LOTOS maintains its active involvement in discussing and analysing global energy matters and challenges, with top experts of the private and public sector also involved in the process. The organisation boasts a long list of recognised personalities, who have decided, and will decide on the lines of development of the oil and gas industry worldwide. In February 2010, the Company hosted an international conference, named “North European Energy Security Forum”, with energy sector security in the European Union and globally on the conference’s agenda.
|SO 6||Total value of financial and in-kind contributions to political parties, politicians, and related institutions|
As prescribed by the ethical principles followed by Grupa LOTOS, the Company has no political affiliation and refrains from offering support to any political group.
|SO 7||Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes|
1. By decision of President of the UOKIK (Polish Office for Competition and Consumer Protection), dated March 21st 2005, anti-trust proceedings were instigated in connection with a suspected restrictive agreement between Polski Koncern Naftowy ORLEN S.A. of Płock and Grupa LOTOS of Gdańsk, concerning a concurrent termination of production and distribution of U95 gasoline. Since the production and sale of U95 continued, the Management Board of the Company claimed that the UOKIK’s charges were unfounded and, in April 2005, applied for a decision that Grupa had not been engaged in restrictive practices. In July 2005, the Company filed a complaint with the Anti-Trust Court against the UOKIK’s decision, arguing it had had limited access to some case-related evidence. Notwithstanding the complaint, in September 2005 the Company filed another application for a decision that would expressly state that Grupa LOTOS had not been involved in monopolistic practices. In October 2005, another decision was issued by the UOKIK, concerning limited access to some case-related evidence, that the Company complained against to the Anti-Trust Court. The Competition and Consumer Protection Department of the Regional Court dismissed the complaints. Grupa LOTOS filed complaints with the Court of Appeal in Warsaw concerning the dismissal of the previous complaints, which again were dismissed.
By decision of April 18th 2007 Grupa LOTOS’ right of access to evidence in the anti-trust proceedings, namely the materials collected in the course of an inspection at PKN ORLEN S.A. in Płock, and specifically certain annexes to the report from the inspection at Płock offices, was restricted upon a motion from PKN ORLEN S.A., and access to the report from the inspection of their Warsaw offices, and annexes thereto, was also restricted. By the same decision, PKN ORLEN S.A.’s petition for restriction of the right of access to evidence, being the report from the inspection of the petitioner’s Płock offices, was dismissed. On April 26th 2007, Grupa LOTOS filed a complaint against the decision restricting Grupa LOTOS’ right of access to evidence. On May 9th 2007, Grupa LOTOS was served a notice from the UOKIK, whereby the latter demanded information on the change in U95 and Pb95 fuel prices. The Company provided the required information to the UOKIK on the same day. On August 2nd 2007, a notice of termination of U95 petrol production was delivered by Grupa LOTOS to the UOKIK. On December 31st 2007, President of the UOKIK imposed a fine of PLN 1,000 thousand on Grupa LOTOS. An appeal against the decision was subsequently filed with the Regional Court in Warsaw on January 17th 2008.
On September 23rd 2008, the Competition and Consumer Protection of the Regional Court in Warsaw, forwarded the UOKIK President’s reply to the appeal against the UOKIK President’s decision. In the reply to Grupa LOTOS’ appeal, the UOKIK President stated that Grupa LOTOS’ arguments, where they related to both substantive and formal provisions, were unfounded, and applied for dismissal of the petitioner’s case in entirety, and award of legal representation costs from the petitioner. On April 27th 2010, the Court adjourned the decision until May 6th 2010. On May 6th 2010, the Regional Court in Warsaw issued a judgment dismissing the appeal against the UOKIK’s decision in the anti-trust proceedings instigated on own initiative by the UOKIK President on March 21st 2005 and concerning distribution of U95 gasoline, and upheld the fines imposed by UOKIK on Grupa LOTOS, totalling PLN 1,000 thousand, and fines on PKN ORLEN S.A., totalling PLN 4,000 thousand. On June 15th 2010, the judgment dismissing the appeal against the UOKIK President’s decision was served. On June 28th 2010, Grupa LOTOS appealed against the judgment. Subsequently, Grupa LOTOS and the UOKIK filed a reply to PKN ORLEN S.A.’s appeal, whereas PKN ORLEN S.A. and the UOKIK filed a reply to Grupa LOTOS’ appeal. The court announced a judgment dismissing the appeal by Grupa LOTOS and PKN ORLEN S.A on February 11th 2011. After examining the grounds for the judgment, the Company will consider filing a last resort appeal. The case is pending. Provisions for potential liabilities resulting from lost litigation were made in the amount of PLN 1,000,000. On March 10th 2011, the Company paid off the liability amounting to PLN 1,000,000 following the court ruling of February 11th 2011.
2. By petition of May 18th 2001, PETROECCO JV Sp. z o.o. filed for award of PLN 6,975 thousand, and statutory interest charged from May 1st 1999, in compensation for the damage suffered by PETROECCO JV Sp. z o.o. as a result of monopolistic practices of the Company involving the sale of BS base oil in a way which put certain recipients at an advantage, by having a disproportionately higher volume of their orders delivered as compared to deliveries of orders made by PETROECCO JV Sp. z o.o. Engagement of the Company in such monopolistic practices was ascertained by decision of the Anti-Trust Office of September 26th 1996. By the same decision, the Office ordered that the Company should discontinue such practices. The Company appealed against the decision. By judgement of October 22nd 1997, the Anti-Trust Department of the Provincial Court in Warsaw made some editing changes only to the decision, and also ordered discontinuation of the monopolistic practices. The Supreme Court dismissed the Company’s last resort appeal by judgment of June 2nd 1999. By ruling of December 21st 2002, the Regional Court in Gdańsk dismissed the petition for compensation, acknowledging in entirety the Company’s defence that the petition was time-barred. The ruling was however rescinded by the Court of Appeal in Gdańsk on December 4th 2003, case ref. I ACa 824/03, and referred for re-examination to the Regional Court in Gdańsk. The Court of Appeal found that the time-bar defence was unwarranted. As argued by the Court, it was not until June 2nd 1999 (date of the Supreme Court judgment) that it came to PETROECCO JV Sp. z o.o’s attention that the damage they had suffered was an effect of monopolistic practices, resulting in the Company’s liability in tort and, only on that date, as argued by the Court, did the three-year time-bar period for compensation claims commence. The case was examined by the Regional Court in Gdańsk (court of first instance), file ref. IX GC 134/04. The Company replied with substantive defences (by challenging the fact that any damage had been suffered by PETROECCO JV Sp. z o.o, and also challenged the value of the damage, and the presence of a causal relation between the monopolistic practice and the damage). Following the hearing in June 2005, the Regional Court in Gdańsk tasked a court expert in accounting and economy with drafting an opinion on the determination of the value of damage that the petitioner had suffered as a result of Grupa LOTOS’ actions. The expert stated in the opinion that, based on materials provided by PETROECCO JV Sp. z o.o., it was not possible to determine the value of the damage, or ascertain that it actually existed. The court expert also found that the opinion should be drafted by an expert in a field other than accounting. No evidence to support the drafting of such opinion frustrated the petitioner in being granted the claim for appointment of another expert. The hearing took place on March 27th 2007. Announcement of the judgment was originally scheduled for April 10th 2007, but subsequently rescheduled to April 20th 2007. By judgment of April 20th 2007, the petition was dismissed. On May 17th 2007, the Company appealed against the decision on the costs of proceedings. On June 4th 2007, PETROECCO JV Sp. z o.o appealed against the judgment of April 20th 2007. On August 12th 2007, Grupa LOTOS filed a reply to the appeal. On December 20th 2007, the court dismissed PETROECCO JV Sp. z o.o’s appeal against the judgment by the Regional Court. On March 19th 2008, a petition for enforcement against PETROECCO JV Sp. z o.o was filed with the court enforcement officer. On April 17th 2008, PETROECCO JV Sp. z o.o filed a last resort appeal against the judgment of December 20th 2007. The appeal was served to Grupa LOTOS on June 17th 2008. On June 30th 2008, a reply to the appeal was served. The case was referred for preliminary examination, to be held on November 14th 2008. On January 14th 2009, the Supreme Court rescinded the judgement which was appealed against, and referred the case to the Court of Appeal in Gdańsk for re-examination. On March 10th 2009, files of the case were submitted to the Court of Appeal. On April 3rd 2009, the court enforcement officer served a decision on discontinuation of the enforcement procedure. On May 14th 2009, the Court of Appeal referred the case to the Regional Court for re-examination. In a session held on November 3rd 2009, the court ordered that PETROECCO JV Sp. z o.o appoint an expert. A hearing was held on October 1st 2010, where the expert gave testimony. The case is pending. The position of the Management Board of the Company is that the risk of losing the dispute is insignificant and therefore no provisions for potential compensation have been made.
|SO 8||Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations|
In 2010, companies of the LOTOS Group did not pay any significant fines, and no significant non-monetary sanctions were imposed on the companies for non-compliance with laws and regulations. However, in 2010 proceedings were pending within this subject matter, which are decribed under Anit-competitive behaviour.