In the middle of the last year, the Romanian Law 150/ 2016 (hereinafter referred to as „Law 150“) amending Law no. 321/2009 on the marketing of food products was published. Despite massive criticism from the side of large food retailers, Law 150 has introduced substantial amendments on the marketing of food products, relevant both for traders and suppliers. Part of the new obligations has entered into force on 01.01.2017.
On 15.02.2017, the European Commission has launched an infringement procedure against Romania. In the formal notice it sent, it argues that the national rules on retail of food products introduced by Law 150 were in breach of EU law.
Summary of Law 150
The main amendments brought by Law 150 include:
- A removal of any taxes and services: the law has expressly forbidden any trader to “request any invoicing / re-invoicing” and to charge taxes and services from suppliers;
- The amendment of payment deadlines: the new maximum term for a trader’s payment to its supplier for the supplied products is 30 calendar days. Before the amendment, such term was subject to negotiation. For “fresh food products”, the maximum payment term was ,massively reduced from 30 to 7 calendar days;
- A newly introduced chapter regarding special provisions for the sale of Romanian food products. It contains a series of traders’ obligations, inter alia connected to
a)The allocation of special spaces for marketing Romanian products;
b)Comply with special labelling formalities for meat products;
c)The procurement of at least 51% of food products from the categories meat, eggs, vegetables, fruit (except for exotic fruit imported from other countries), honey and bakery products from the so- called “short food chain”. This obligation applies to traders with annual net turnovers of at least EUR 2 million. The “short food chain” implies a limited number of economic operators engaged in cooperation and local economic development activities, as well as close geographical and social relationships between producers, processors and consumers.
These obligations have already entered into force on 15.01.2017. Failure to comply with these obligations triggers fines ranging between 100.000,00 and 150.000,00 RON (between ca. 22.000,00 and 33.000,00 EUR).
Main concern: rules on trading Romanian food products
The main criticism raised by the Commission is related to the special rules for trading Romanian food products introduced by Law 150, and especially the obligation to procure 51% of the afore mentioned products from the “short food chain”. According to the Commission, these legislative changes are problematic with regard to the principle of free movement of goods. Furthermore, according to the Commission, in practice, Law 150 obliges retailers to promote products of Romanian origin, thus restricting their “commercial decision of which products to place on offer”. This would contravene the freedom of establishment.
„According to EU law, restrictions of these freedoms are only permitted when there is a justified need to protect an overriding public interest, such as public health, and no less restrictive measures can be taken”. So far, Romania has not provided evidence that its national measures are justified and proportionate.
The Romanian authorities have two months to respond to the arguments put forward by the Commission.
The aforementioned notice initiates an infringement procedure. As a general rule, in a first step, the Commission sends a formal notice regarding the breach of Community obligations and invites the respective country to submit its observations within a certain term. If the respective Member State fails to comply with the European law, the Commission can take the case to the Court of Justice, whose judgment is binding. If a breach is confirmed, the procedure may end with significant payment penalties imposed against that Member State.
The amended version of Law 321/ 2009 does not expressly prohibit placing food products on the Romanian market. Yet, following the amendments entered into force in January 2017, it restricts the principle of free movement of goods and potentially the freedom of establishment. Considering the initiation of the infringement procedure by the European Commission, we may expect further revisions of the legal framework regarding the trading of agricultural and food products in order to be compliant with EU regulations.