“51% Local Products”- New Romanian Law on Food Sale, In-between Encouraging National Production and the EU Legal Order?

The Romanian Parliament has recently passed long debated amendments to the Law 321/2009 on the sale of food products (the “Law”). The Law represents a bold step towards the promotion and encouragement of local producers and local agricultural economy, currently facing difficulties in finding a marketplace for their products.

The initiators have justified the enactment of such amendments by the desire to offer consumers more fresh products directly from the source by facilitating their access to the supermarkets, on one hand, and by the need to stimulate the innovation of local producers by allowing their products to compete directly with imported products, on the other. By limiting the number of intermediaries from the supply chain channel and regulating certain financial aspects, subject to certain conditions, the normative act purportedly intends to make room for lower prices and healthier food for the final consumer.

The most important amendments of the Law concern the following aspects:

• large retailers (i.e. those having an annual net turnover or owning assets representing more than EUR 2,000,000) shall be under the obligation to purchase 51% of the products belonging to the category of meat, eggs, vegetables, fruits, honey, dairy and bakery products, from the short supply chain;
• retailers shall have the obligation to ensure distinct exhibition and selling spaces for the Romanian products;
• introduction of an interdiction for retailers to request and collect any additional fees and services from suppliers;
• establishment on a mandatory basis of a maximum payment due date of 7 (seven) calendar days for retailers for the fresh food products purchased from suppliers;
• introduction of an obligation for retailers to organize events for the promotion of Romanian food products, according to a schedule to be established by the local authorities;
• introduction of detailed rules regarding the labeling of the meat sold on the Romanian market, as well as the obligation to include the percentage of meat originating from Romania, on all meat products sold on the EU internal market;
• retailers shall no longer be allowed to perform the qualitative and quantitative checks for the purchased fresh products during a certain time after delivery, but at the moment of delivery.

The applicable fines for non-compliance with the Law could amount up to RON 150,000 (approximately EUR 30,000). In case of repeated offences, public authorities shall have the possibility to stay the activity of the retailer for a period of 6 months by stay of its authorization to operate. 

At a first glance, in the light of the European Court of Justice case law and of the interpretation of the rule regarding prohibition of quantitative restrictions on imports (i.e. art. 34 of the Treaty on the Functioning of the European Union), even measures such as encouraging and promoting the purchasing of national products (ECJ Case 249/1981 Commission v. Ireland (Buy Irish) 24.11.1982) or the obligation to display statistics with the percentage of national goods sold in stores (the European Commission addressed a formal request to Slovakia in November 2015 to amend its food law) have been considered as having the potential to be in breach of the European legal order. In this regard, one can raise concerns about the compliance of newly introduced amendments with the European legislation. Such concerns have also been publicly raised by the Romanian Competition Council within the consultation process regarding the amendments to the Law.

The main concern from this perspective is the obligation to buy a majority of products from the short supply chain together with the obligation to organize promoting events for the Romanian products, which could both create a competitive advantage for national products to the detriment of imported ones.

Nonetheless, the short supply chain is not explicitly defined as referring exclusively to operators/suppliers present in the Romanian territory. Thus, the short supply chain involves a limited number of economic operators active in the local economy and focuses on the close social and geographical relations between producers, processors and consumers. Since such a definition is not very precise and is focused more on the reduced number of intermediaries, one may consider that also products originating from Member States that are in the vicinity of Romania could fall within the scope of this definition, as far as they could be considered as “local”.

However, given the use of such general and uncertain terms, especially in respect of what is to be considered “local” and by reference to which entity, respectively the headquarters of the supermarket or each secondary office/trading unit individually, it is expected that secondary legislation will bring more clarity.

Furthermore, the potential qualification of the rule imposing the organization of events for promotion of Romanian food products as a measure having an effect equivalent to a quantitative restriction depends on how this matter will be regulated by the local authorities, a cautious approach being recommended.

Due to the social and administrative implications of the new rules on the sale of local food products, the respective provisions of the Law shall enter into force after a period of 6 months starting from July 15^th, 2016, in order to allow retailers sufficient time to adapt to the new requirements.