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AFTER SUPPLIERS SUSPEND THEIR TIES WITH RUSSIA AND BELARUS, LITHUANIAN KONKURENCIJOS TARYBA URGES RETAIL CHAINS NOT TO USE THEIR MARKET POWER UNFAIRLY

07 03 2022
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The Lithuanian competition authority Konkurencijos taryba has sent a letter to the firms managing five major retail chains urging them to take into account the recent changes in market conditions and to refrain from actions incompatible with good business practices in respect of food and drink suppliers which suspended or delayed the execution of their sales orders.

Last week Konkurencijos taryba contacted food and drink suppliers seeking to find out whether the sanctions imposed on Russia and Belarus due to the war in Ukraine affect the supply of products to major retail chains. Some suppliers indicated to have decided to cut trade ties with Russia and Belarus and stop purchasing products or raw materials from these countries, which has resulted in difficulties in executing orders to the Lithuanian retail chains in a timely manner.

Given the circumstances, the authority sent a letter to companies managing five major retail chains (Iki, Lidl, Maxima, Norfa and Rimi), stating that changes in the position of suppliers and retail conditions should not serve as a justification for major retail chains to unfairly exercise their market power over suppliers.

In its letter Konkurencijos taryba noted that parties should make mutual and goodwill efforts to avoid financial sanctions being imposed on suppliers for breaches of contractual terms relating to the supply of goods and drinks of the Russian and Belarusian origin, i. e., for the non-delivery of food and drinks or for late delivery resulting from the need to switch raw material suppliers.

Šarūnas Keserauskas, Chairman of Konkurencijos taryba, emphasised that after noticing the actions of retailers which are incompatible with good business practices and which may infringe the interests between food and drink suppliers and retail companies, the authority has the right to take actions, i. e. to launch investigations, as well as to propose changes to legislation.

After conducting the monitoring of the validity of the fines which major retailers impose on the suppliers, last year Konkurencijos taryba proposed to the Ministry of Economy and Innovation to amend the Law on the Prohibition of Unfair Practices of Retailers by establishing a provision whereby retail companies would be prohibited from requiring suppliers to deliver goods if their quantity and delivery terms have not been agreed upon in writing, by e-mail or other electronic means.