COMPETITION COUNCIL IMPOSES A FINE OF 40 000 LTL ON MAXIMA LT, UAB

On January 22, having established that the provisions set forth in MAXIMA LT, UAB (MAXIMA) supply agreements fail to comply with the requirements of the Law on the Prohibition of Unfair Practices of Retailers of the Republic of Lithuania (the Law), the Competition Council (the Council) imposed a fine of 40 000 LTL on the aforementioned company.

The Council determined that terms on return of goods, established in the supply agreements by food and drinks suppliers and MAXIMA, a retail company with a significant market power, have breached provisions of the Law.

The Council highlighted that the retail company could best evaluate the risk of sales and plan the amounts of ordered food products and drinks accordingly. The Law establishes the scope of risk distribution between a supplier and a retail company with regard to certain circumstances. The Council determined that MAXIMA had infringed the provisions of the Law by disproportionately transferring to the suppliers the risks related to the resale of goods already purchased by the company.

The Council also noted that MAXIMA’s actions related to the agreements concerning the supply of food products and drinks may have had a negative impact on suppliers’ potential to plan investments and apply innovations because of reduced income and uncertainty.

When imposing a fine the Council took into account the fact that in the course of the investigation MAXIMA had both publicly and individuallyinformed the suppliers about the termination of the aforementioned provisions applicable to the return of goods. The Council acknowledged that so the company terminated the infringement and, thus, prevented harmful consequences. When adopting the resolution, the Council also took into account other circumstances considered to be important for imposing a fine.

Notice

The purpose of the Law on the Prohibition of Unfair Practices of Retailers of the Republic of Lithuania is to limit the use of market power by retailers with significant market power and ensure the balance of interests between suppliers and retailers with significant market power. Article 3 of this Law prohibits retailers to carry out any actions contrary to fair business practices whereby the operational risk of the retailers is transferred to suppliers or the suppliers are imposed supplementary obligations or which limit the possibilities of suppliers to freely operate in the market and which are expressed as requirements for the supplier. These requirements also include an obligation to accept unsold food products, except for non-perishable packaged food products if they are safe, high-quality and at least 1/3 of time before their expiration date remains or they have no expiration date and there is a prior agreement in relation to their return.