The Polish Act on Counteracting the Unfair Use of Contractual Advantage in the Trade in Agricultural and Food Products (the “Act”) applies to all contracts for supply of agricultural and food products (i.e. between supermarkets or retail chains and food producers, as well as food producers and their suppliers) that may have effects in Poland.

The Act prohibits the abuse of contractual advantage in relations between a buyer and a supplier. Contractual advantage is defined as a significant disparity in the economic potential for the benefit of the buyer or the supplier. The abuse of such advantage is unfair if it is contrary to good morals, and threatens to violate, or actually violates, the other party's essential interest.

The abuse can take the form of unjustified contract termination, granting only one contractor the right to terminate the contract (or withdraw from it), making the conclusion of contracts conditional upon obligations not related to the contract (shelf fees), or unjustified extending of payment terms.

Since the Act's entry into force, the Polish Office of Competition and Consumer Protection (UOKiK) has undertaken a number of interventions in the food sector, most of which were finalised with companies voluntarily changing and remedying their practices. However, UOKiK’s enforcement of the Act has recently even intensified with the first fine imposed and new probes in the pipeline.

• On 1 October 2019 UOKiK imposed its first and maximum-possible fine under the Act, i.e. 3% of the company’s annual turnover. The fine of PLN 8.3 million (EUR 1.9 million) was imposed on T.B. Fruit Polska for delaying payments as the average delay amounted to over 100 days. • On 30 September 2019 UOKiK issued its decision regarding Rauch Polska's practice to impose an unfair pricing mechanism on suppliers and delay payments. The company avoided the fine as it agreed to amend its supply contracts, increase the percentage of products supplied directly from farmers, remedy unpaid amounts or reimburse payment delays, and train suppliers on their rights and obligations specified in the contracts with the company. • On 25 September 2019 UOKiK informed that as a result of the dawn raid of Jeronimo Martins Polska’s (JMP) premises they have initiated proceedings against the company's alleged abuse of contractual advantage. UOKiK expressed concerns about a rebate that JMP receives from its suppliers and that is not fixed in advance, but is only determined once the supplies are executed. As a result, JMP’s suppliers cannot foresee if they will have to give an additional rebate or how big it will be.

Companies active in the Polish food sector should verify the compliance of their supply contract with the Act. They should also monitor any payment delays, as well as any situations that may lead to suppliers' complaints to UOKiK.

More information is available on UOKiK's website: the recent decisionsthe probe of JMP's practices.