RETAILER FINED FOR UNFAIR COMMERCIAL PRACTICES TO SUPPLIERS

Konkurencijos taryba found that Norfos mažmena and Rivona infringed the Law on the Prohibition of Unfair Practices of Retailers (Law) by setting requirement for food and drink suppliers to pay fees for sales promotion.

During the investigation the authority analysed agreements between the suppliers and companies Norfos mažmena and Rivona concluded in 2017 and 2018. The agreements showed that suppliers were obliged to pay particular fees for sales promotion set for each of the product categories, as well as pay for the retailer any unspent sums.

The Law prohibits retailers from requiring the suppliers to pay the costs (or part of them) of sales promotion, except for the cases when there is a written agreement between the retailer and the supplier regarding the amount of such costs and types of sales promotion activities. In the present case, Konkurencijos taryba found that the aforementioned retailers agreed with their suppliers only on the costs, but no promotion activities were described in the agreements.

The companies not only failed to sign an agreement serving the suppliers’ interest and goodwill, but also caused financial burden since the suppliers had to pay for sales promotion, irrespective of whether the promotion activities were undertaken or not.

Ditė Anilionienė, Head of Unfair Commercial Practices Investigation Group

Although the Law was infringed by two companies constituting one economic unit, EUR 72,000 fine was imposed only on Norfos mažmena which applied the discounts agreed upon between Rivona and the suppliers.

The Law sets prohibition for five major retailers, namely MAXIMA, RIMI, IKI, NORFA, LIDL, to require from their suppliers any “entry” fees, ask to buy goods or services from third parties, as well as compensate for smaller-than-expected income, pay any operational costs related to sales promotion, etc.

From 1 July 2019 the Law also prohibits retailers from asking commercial discounts or any other type of remuneration from the suppliers if it has not been agreed upon in writing, and apply punitive measures to the suppliers if they decide to inform Konkurencijos taryba or courts about unfair commercial practices exercised by the retailer.