During the previous year, a set of restrictions aimed at combating unfair business-to-business competition in the agricultural and food supply chain were adopted at legislative level. These rules and restrictions must be respected by distribuitors in their negotiations and commercial relations with suppliers. By way of example, the following regulated prohibitions for the agricultural and food supply chain can be mentioned: exceeding the payment deadline by more than 30 days after the due date, the return of unsold food products to the supplier, the exclusive display in stores of the distributor own brand, etc.
It is important to remember that these rules apply according to the turnover thresholds of the suppliers and buyers involved, the maximum limit of application for suppliers being EUR 350,000,000.
On 14.03.2023, a Government Decision was adopted clarifying both the method of calculating turnover, the limits of application of certain prohibitions, as well as the procedure for registration, investigation and settlement of complaints concerning unfair commercial practices in the agricultural and food sector.
Method of calculating turnover
As regards the method of calculating turnover, it is expressly stated that in the case of undertakings belonging to a group, the Competition Council will take into account the total annual turnover of the group, which is calculated by aggregating the turnover of the members of the group.
It is also regulated the possibility for the purchaser to request, at the beginning of the negotiations, an affidavit from the supplier, which will be annexed to the contract, in order to verify the whether the restrictons should apply or not to the contractual relationship.
From the date of conclusion of the contract, the supplier is obliged to notify the purchaser of any change in turnover that affects the thresholds during the performance of the contract.
Limits of application
The Decision adopted by the Government also clarifies the application of certain prohibitions, including: exclusive display of the purchaser’s own brand; application of different commercial conditions for products competing with the purchaser ‘s own brand products, provision of marketing and advertising services; charging of fees which artificially increase the price; imposition of products and services on the supplier by the purchaser.
Thus, with regard to the buyer’s obligation to offer for sale both his own brand and at least one private label of a competing manufacturer in the relevant product category, we note that this obligation does not apply in the case of convenience stores with a sales area of less than 400 sqm or where there is no competing product on the market.
As regards the prohibition on applying different commercial conditions to products competing with the buyer’s own brand products, it is incumbent on the buyer to apply conditions similar to those applied to a brand belonging to the store in a given product category. Thus, according to the Government’s decision, the conditions for listing/displaying competing products on the shelf must be fair and determined by the purchaser taking into account criteria such as the share of sales within the product category concerned and the stock turnover of each product within a category, in order to optimise the use of shelf space.
On the other hand, in the case of the regulated prohibition for the purchaser to provide, at the request of the supplier, advertising, marketing and other services above the limit of 5% of the value received by the supplier under the contract concluded between the parties, the Government’s decision establishes that the value of all marketing and advertising services provided (thus, cumulated) may not exceed 5% of the value received by the supplier under the contract.
As regards the prohibition of the purchaser from charging the supplier fees, in whatever form, whereby the supplier is obliged to artificially increase the invoice price of the product, this prohibition only applies if the fee is actually requested by the purchaser and such results in an artificial price increase by the supplier.
Likewise, the prohibition of the purchaser to impose products and services on the supplier, directly or indirectly, or not to buy or sell from a third party, as determined by the Government decision, does not apply if the purchaser requests compulsory certifications for the marketing of agricultural and/or food products and voluntary certifications used in practice for own-brand products.
Investigation procedure
According to the Government Decision, the procedure for handling complaints is regulated, detailing the steps to be taken in order to carry out investigations, identify infringements and the procedures for establishing and, where appropriate, sanctioning unfair commercial practices between companies in the agricultural and food supply chain.
Thus, according to the new rules, in principle, both suppliers and purchasers in the agricultural and food supply chain can file a complaint.
In the case of a complaint made by a supplier or purchaser in the agricultural or food supply chain, it is stipulated that, in order for the complaint to be taken into account, the complainant must demonstrate, with information and evidence, the existence of a legitimate interest in making the complaint.
However, we draw attention to the possibility of the Competition Council to carry out ex officio in-depth investigations with the scope of identifying and sanctioning unfair commercial practices.
Sources:
- Law No 81/2022 on unfair business-to-consumer commercial practices in the agricultural and food supply chain
- Government Decision No 198/2023 approving the Regulation on the procedure for registration, investigation and settlement of complaints concerning unfair business-to-business commercial practices in the agricultural and food supply chain.