The President of the Office of Competition and Consumer Protection (UOKiK) will have greater authority and a wide range of opportunities to impose fines for unfair practices that involve using contractual advantage on the food market. Such changes are provided for in the draft Act on Counteracting the Unfair Use of Contractual Advantage in the Trade in Agricultural and Food Products, which has recently been published by the Ministry of Agriculture.
The new regulations will apply to business entities (both purchasers and suppliers) that use prohibited trade practices whose annual turnover (or the turnover of the capital group they belong to) exceeds PLN 100 million (c. EUR 23 million). At the same time the President of UOKiK will examine only cases where the annual turnover between business partners exceeds PLN 50,000 (c. EUR 11,000) in the year in which the proceedings commenced (or any of the 2 preceding years).
Under the draft act examples of prohibited practices include:
- unfounded termination of an agreement (or a threat of terminating an agreement);
- granting the right to terminate an agreement only to one party;
- making the conclusion or continuation of an agreement contingent on accepting or satisfying another performance which is not connected with the master agreement;
- unfounded extension of the payment deadlines for the supplied goods.
If the use of a prohibited trade practice is suspected, the President of UOKiK may carry out a dawn raid at the premises of a business entity. Under the draft act such inspection may concern, among other things, the company’s documentation related to the subject matter of proceedings, e-mail correspondence and devices containing IT data.
If the use of contractual advantage (i) proves to be contrary to good custom; and (ii) threatens or violates a material interest of the other party, the President of UOKiK will be able to impose a fine of up to 3% of annual turnover. The business entity on which the fine is imposed will have the right to file an appeal to the Court of Competition and Consumer Protection.
Under the draft act it will be possible to commence administrative proceedings within 2 years of the end of the year in which the use of unfair practices was discontinued.
As well as imposing fines on businesses, the draft act also stipulates fines for natural persons. If a person performing a management function or a member of a governing body hinders or prevents an inspection, they may be subject to a fine of up to 50 times the average monthly remuneration (at present this totals approximately PLN 200,000, c. EUR 45,000).
The draft act is undergoing inter-ministerial and social consultations, so the final wording of the new regulations may be changed.