An amendment to the Czech Food and Tobacco Act may lead to a compulsory quota of 55% Czech food products as of 2022, which is slated to increase to 73% by 2028.
On 20 January 2021, the Lower House of the Czech Parliament – the Chamber of Deputies – passed an amendment to the Food and Tobacco Act (Act No. 110/1997), which was unanimously rejected by the Senate on March 18, 2021 and is now back in the House of Commons for deliberation. The amendment envisions a mandatory quota for Czech food and agricultural products in stores with a shopfloor of at least 400 sq.m. A specific list of food and agricultural products is given in Annex 1 to the amendment bill –approx. 130 items, starting with green beans and green peas, and ending with eggs and yeast. The list is rather absurd for a market economy, and one cannot shake the impression that one comrade or another who back in the day learned his ropes in the Soviet Office for the Planned Economy – GosPlan (or “Госплан”) – or in its Czechoslovak branch – the State Planning Commission – has been called back from their well-deserved retirement by the Ministry of Agriculture, or in the caucus of the Social Democrats, in Okamura’s SPD or among the Communists, and has now compiled this list.
It is currently unclear whether the Senate will approve the bill or not, but even if it were to reject the law, the members of the lower house could overrule the veto of the Senate with an absolute majority and thus pass the law. It would then be up to the President of the Czech Republic to promulgate the law or to refuse to sign it.
The amendment contains, somewhat hidden, significant restrictions on offering foreign products which only affect operators of stores in excess of 400 sq.m. – this particularly affects international chains such as Lidl, Kaufland, Billa, Tesco, Globus, etc. The share of Czech products in the food market is to rise gradually from 55% as at 1 January 2022 to 73% as of 1 January 2028.
The amendment bill has one particularly salacious aspect: its main beneficiary may well be the Minister of Agriculture and the Prime Minister, and the companies in which they have a stake.
The amendment also stipulates stiff fines, depending on the size of the store: A fine of up to CZK 10 million may be imposed for violating the rules. Businesses may be monitored, and infringements be sanctioned, by the competent authorities – the Ministries of the Interior and Defense, the State Agricultural and Food Inspection Authority, veterinary authorities, public health centers on the regional level, or the Czech Trade Inspection Authority. This will likely lead to the usual bureaucratic confusion as to the competences of individual authorities, which is par for the course in this country.
The amendment is extremely controversial as to its intent and purpose. Not only does it violate common sense and consumer rights, but it also violates European law – its burgeoning number of references to European directives and regulations notwithstanding. In particular, the amendment falls foul of Articles 34 and 49 of the Treaty on the Functioning of the European Union (TFEU), i.e. the basic principles of the single market and freedom of establishment which guarantee the rights of importers and traders. As to the quotas, these are so-called quantitative restrictions with equivalent effect, which cannot be justified according to Articles 36 and 51 et seq. TFEU. The quotas indirectly affect imports into the Czech Republic, since they endanger companies in the Czech Republic that are engaged in this type of business. Strictly speaking, imports of goods won’t be restricted in quantity, but if stores with an area of more than 400 sq.m. in a certain field – i.e., in this case, food and agricultural products – may only offer 45% of foreign products as of 2022 and only 27% as of 2028, then this imposes a restriction which essentially acts as an import ban. According to settled case law of the Court of Justice of the EU, this is a restriction having an equivalent effect, which is prohibited. In addition, the amendment bill, if written into law, would raise the specter of constant inspections as to the extent to which Czech goods are offered by one store or another, and the constant threat of being fined. In the case of many products, it is not easy to determine the origin in the first place: for instance, when Polish milk and Hungarian strawberries are used to produce yogurt in the Czech Republic.
The Czech Republic also apparently failed to notify the European Commission of the amendment bill under the Single Market Transparency Directive; this alone makes it possible to challenge the law – even in its draft stage – before the Czech courts.
With this amendment, the Czech Republic engages in a single market nationalism which sits very uneasily with its self-proclaimed motto, on occasion of its 2009 EU presidency, of „Europe without barriers“.
Amendment to the Food and Tobacco Act (Act No. 110/1997 Coll.)
Parliamentary Press No. 502