The aim of the Law on the Prohibition of Unfair Practices of Retailers is to limit the use of market power by retailers having significant market power and to ensure the balance of interests between these entities and food and beverage suppliers.
Prohibitions of unfair practices provided for in the Law on the Prohibition of Unfair Practices of Retailers, the Law on the Prohibition of Unfair Trading Practices in the Agricultural and Food Supply Chain apply to 5 biggest retailers: Lidl, Maxima, Norfa/ Rivona, Iki (Palink) and Rimi.
Protection from unfair practices of above mentioned retailers is given to food and beverage suppliers:
- that are established in any EU Member State or outside the EU;
- that entered into a wholesale purchase and sale agreement with 5 biggest retailers on the purchase of food and beverages intended for sale to consumers;
- whose annual turnover from ordinary economic activities, adding up the annual turnover of all associated undertakings, did not exceed EUR 350 million in the past financial year.
The law prohibits performance of any actions contrary to fair business practices, whereby the retailers’ operational risk is passed onto suppliers or additional obligations are imposed on them, or which restrict the ability of suppliers to operate freely in the market and which are expressed as requirements for the supplier:
- to pay directly or indirectly or remunerate in any other way for the consent to start trading in the supplier's goods (“entry” fees);
- to compensate for lost or smaller-than-expected income of the retailer from the sale of the supplier's goods;
- to compensate for the operational costs of the retailer related to equipping new stores or renovating the old ones;
- to acquire goods, services or assets from third parties specified by the retailer;
- to tie the prices of goods supplied to the retailer as well as supply conditions to the supplier’s prices of goods and supply conditions applied to third parties;
- to change the key supply procedures or specifications of goods without notice to the supplier within the time limit set in the contract, which may not be less than 10 days;
- to accept returned unsold food products without paying the supplier for those unsold products or without paying for removal of those products or in both cases, except for non-perishable packaged food products if they are safe, of high quality, with at least 1/3 of the established shelf-life or with unlimited shelf-life, subject to a prior agreement on their return;
- to pay directly or indirectly a part of the costs of sales promotion carried out by the retailer or together with it or to compensate for such costs in any other way, except for the cases where there is a written agreement between the retailer and the supplier regarding the amount of costs to be paid and sales promotion activities to be applied;
- to pay directly or indirectly or to compensate for the arrangement of goods otherwise, except for the cases where there is a written agreement between the retailer and the supplier regarding payment for the arrangement of goods;
- to grant commercial rebates on goods, to pay directly or indirectly or to compensate the retailer otherwise for what has not been agreed in writing, by e-mail or by other electronic means of communication.
Retailers are also prohibited from carrying out the unfair trading practices indicated in Article 4 of the Law on the Prohibition of Unfair Trading Practices in the Agricultural and Food Supply Chain.
If actions of a retailer violate provisions of the Law on the Prohibition of Unfair Trading Practices in the Agricultural and Food Supply Chain and/or the Law on the Prohibition of Unfair Practices of Retailers, such a retailer shall be liable under the procedure set by the latter law.
A fine may be imposed on a retailer for prohibited unfair practices in the amount of up to 0.7% of its annual turnover in the past financial year.
A fine of at least EUR 200 may be imposed on a retailer for late payment to the supplier for the sold food and beverages, but not exceeding 20% of the amount of overdue debts to the supplier.
A fine of EUR 300 may be imposed on a retailer for each day of persisting (continued) infringement in the event of a failure to comply or failure to comply in a timely manner with the obligations imposed by the Competition Council to discontinue the prohibited unfair practices, to perform actions restoring the previous situation or eliminating the consequences of the infringement.
The Competition Council invites food and beverage suppliers to contact it and present information on suspected infringements of the Law on the Prohibition of Unfair Practices of Retailers or pressure they experience from 5 biggest retailers by e-mail [email protected] or by phone +370 646 39103, +370 676 13374. The Competition Council guarantees that the identity of the contacting suppliers will be kept secret.
Suppliers who have questions on what retailers’ actions are prohibited and how they could defend their interests are invited to register for individual consultations by e-mail [email protected] or by phone +370 646 39103, +370 676 13374, during which the experts of the Competition Council will provide detailed information about the provisions of the law.
Associations uniting food and beverage suppliers may also contact the Competition Council’s experts for a possibility to organise information seminars. The Law on the Prohibition of Unfair Practices of Retailers ensures the protection of supplier identification data, so confidentiality is guaranteed even for seminar participants.