SUPPLIERS FEEL BACK UP FROM THE COUNCIL, HOWEVER, PRESSURE OF RETAILERS REMAINS STRONG
In March the Council launched a traditional annual report on the situation in Lithuanian retail market. This report is based on provisions of the Law on Prohibition of Unfair Practices of Retailers. The Law aims to prevent retailers with significant market power from misusing it. In the meantime four companies running four biggest retail chains (MAXIMA, IKI, RIMI and NORFA) are deemed to have significant market power.
In 2014 Council’s experts carried out two surveys:
- a survey on fines imposed by retailers, including frequency, reasons and other aspects;
- a survey on cooperation between biggest retail chains and suppliers, including supply procedures and other aspects.
70 out of 100 suppliers and 4 retailers responded to the survey on fines and 82 out of 120 respondents took part in the survey on cooperation.
Most suppliers have noted the positive effect of the Law as fines by retailers have become less common and interest of both suppliers and retailers more balanced. In January 2015 the draft amendments to the Law, aiming for even better balance of interests of both suppliers and retailers, was presented to the Parliament and is due for consideration in late April. The Government proposal to the Parliament includes the following suggestions by the Council:
- to carry out the survey every second year instead of annually and, thus, reduce the administrative burden to market participants;
- to safeguard suppliers from possible pressure related to pricing and other conditions applied to third parties;
- to classify identity of suppliers reporting to the Council.
Even 20 per cent of suppliers noted that in 2014 they felt stronger when negotiating with retailers though back in 2013 so felt only 10 per cent of suppliers. “One of the suppliers, who took part in the survey marked that effective supervision of retailers helped him to stay in the market and to invest incomes into new products. This particular case as well as overall situation proves the efficiency of the Law”, says Elonas Šatas, Deputy Chairman of the Council.
The suppliers reported two major problems related to fines:
- retailers impose fines unilaterally;
- fines imposed by retailers against suppliers are often too high.
However retailers claim that they impose fines only in order to ensure proper supply of goods and to discipline some misbehaving suppliers. Retailers also noted that they fine undisciplined suppliers for the sake of consumer interests.Competition Council Spokesperson