THE COMPETITION COUNCIL SANCTIONS A RETAIL COMPANY “PALINK” FOR UNREASONABLY RESTRICTED POSSIBILITIES OF SUPPLIERS

The Competition Council acknowledged that UAB „PALINK“ (further – PALINK), managing the stores belonging to the retail network IKI had infringed the Law on the Prohibition of Unfair Practices of Retailers, as it unreasonably restricted possibilities of suppliers to freely operate in the market. For the established infringement the company was fined of LTL 360,000.

Having assessed the findings of the investigation the Competition Council concluded that PALINK as a retailer having significant market power conducted prohibited actions while concluding contracts with food and beverages suppliers regarding the provision of advertising services. These contracts included a provision that similar goods will not be supplied to other retailers at the same or lower price within a promotion period. Such practice is prohibited by the Law on the Prohibition of Unfair Practices of Retailers. The Law prohibits requiring from a supplier to ensure that the prices of goods supplied to the retailer will be lower than the prices of the same goods supplied to other buyers (e.g., supermarkets). Having assessed the investigation material and taking into account the fact that in its standard contracts on provision of advertising services PALINK included a provision that suppliers will not supply goods to other retailers at the same or lower prices during all promotion, the Competition Council concluded that the company had acted unfairly and unreasonably had restricted the possibilities of suppliers to freely operate in the market.

The Competition Council notes that the prohibition established on the initiative of PALINK in the contracts on advertising services for suppliers of food and beverages to supply goods to other supermarkets at the same or lower price restricted not only the freedom of suppliers. As a result of such restriction, consumers also could suffer as there was less possibility for other supermarkets to offer customers the same products at lower prices.

When imposing a fine on PALINK for the infringement of the Law on the Prohibition of Unfair Practices the Competition Council took into account the mitigating circumstance that the company took immediate action and prevented the harmful consequences of the infringement.

The Competition Council carries out monitoring of the Law on the Prohibition of Unfair Practices, which prohibits companies from engaging in economic activities contrary to honest practices indicated thereof. The PALINK case is the first case when the Competition Council established the infringement of the requirements of this Law.