First months of the Act on counterfeiting the unfair use of contractual advantage

On 12 July 2017 an Act of counterfeiting the unfair use of contractual advantage entered into force.

The Act lays down the rules and procedures for counterfeiting the unfair use of contractual advantage by purchasers of agricultural or food products, or suppliers of such products if such use has or is likely to have an effect on the territory of the Republic of Poland.

The President of the Office of Competition and Consumer Protection is the competent body in the cases of practices that unfairly use the contractual advantage. According to the Act proceedings concerning these practices are initiated ex officio. However, the entrepreneur has the possibility to notify the President of the Office about the suspicion of the use of unfair practices of contractual advantage. The initiation of proceedings may be preceded by an investigation procedure.

Within first three months of the new Act being in force, the President of the OCCP initiated in total twelve proceedings on the practices that unfairly use the contractual advantage. Those cases concern primarily the rise in prices of food products.

The Office’s doubts were raised by, among others, sharp increase in the prices of butter, whose costs almost doubled in relation to 2016. The President of the OCCP initiated an investigation procedure ex officio against retail chains such as: Lidl Polska, Jeronimo Martins, Tesco Polska, Auchan Polska, Carrefour Polska. These proceedings aim at examining the mechanisms of forming butter prices on the market and checking that these retail chains do not use a strong negotiating position to influence their prices.

The Office also checks whether the sugar producers do not practice the unfair use of contractual advantage over sugar beet suppliers. As a result of notification made by an individual entrepreneur, the Office called on the company Südzucker Polska to clarify the rules for selection of contractors and to provide the applicable industry agreements in order to establish whether the company is not using its strong negotiating position in a manner contradictory to the Act.

The Office also conducts parallel activities on other issues, concerning also milk suppliers and entrepreneurs that purchase industrial apples. Those activities undertaken by the Office are in the process of investigation procedure which means that they are being carried out on the case and not against any entrepreneur.

The President of the Office may impose on a supplier or the acquirer a fine not exceeding 3% of the turnover achieved in the financial year preceding the year in which the fine was imposed, if the supplier or the acquirer, even if unintentionally, has violated the prohibition of the unfair use of contractual advantage.