In this study we develop a regime-dependent ARDL model in order to investigate how labour costs feed through into prices conditional on the business cycle position. The estimation results allow us to make inference on the cyclical behaviour of markups. The proposed methodology is applied to Polish industrial sectors. The obtained estimates point to procyclicality as the prevailing pattern of markup adjustment. Thus, overall markups in Polish industry seem to have a mitigating effect on business cycle fluctuations. The degree of procyclicality seems, however, to be positively correlated with the industry's degree of competition.