Law no. 81 on unfair commercial practices between enterprises within the agricultural and food supply chain was published in the Official Gazette (Part I) no. 363 of April 12, 2022, with applicability of April 15, 2022.
Through the document, the initiators intended to eliminate and amend a number of unfair competition practices in relation to food and / or agricultural suppliers and buyers, referring to large retail chains, such as supermarkets / hypermarkets.
We specify that Law no. 81/2022 is based on a European directive which seeks to prohibit abuses in the producer-distributor relationship, such as the imposition of shelf exposure fees, the return of unsold products or the bearing by suppliers of the costs of reductions. applied by buyers for products sold for promotional purposes.
Thus, the document contains rules that address issues that arise in the relationship between suppliers of agricultural and / or food products and buyers.
The normative act contains several relevant definitions, namely:
– consumer – any natural person or group of natural persons formed in associations who buy or acquire agricultural products and/or foodstuffs for their own consumption;
– commercial contract – comprises the actual commercial terms defined as the sum of all commercial terms, expressed as a percentage of the estimated value of sales, plus all commercial costs charged in connection with the sale of products, absolute or percentage of turnover;
– purchaser – any natural person, authorised natural person, sole proprietorship, family business or legal person, regardless of the place of establishment of that person, who buys agricultural products and/or foodstuffs; the term “purchaser” may include a group of such natural and legal persons;
– supplier – any agricultural producer or any natural person, authorised natural person, sole proprietorship, family business or legal person selling agricultural products and/or foodstuffs; the term ‘supplier’ may include a group of such agricultural producers or a group of such natural and legal persons, such as producer organisations, supplier organisations and associations of such organisations;
– unfair commercial practices – are considered to be practices contrary to good commercial conduct, good faith and fair dealing which are unilaterally imposed by one trading partner on another, even when they result from an agreement between the parties;
– agricultural products and foodstuffs – products listed in Annex I to the Treaty on the Functioning of the European Union, as well as products not listed in Annex I, but which are processed for use as food using products listed in that Annex;
– perishable agricultural products and foodstuffs – agricultural products and foodstuffs which, by their nature or at their stage of processing, are likely to become unfit for sale within 30 days of harvesting, production or processing
According to the law, specific rules are established on how the supplier will be paid, depending on certain types of products.
Therefore, the buyer is prohibited:
- to exceed the supplier’s payment term by more than 14 calendar days after receipt of agricultural and perishable food products, such as: meat, fish, bakery and pastry products, poultry eggs, milk, and fresh vegetables and fruits, except frozen ones; and
- exceed the payment deadline by more than 30 days after receipt of other, hard perishable products.
Another prohibition concerns the cancellation of orders and how long this can be done. The buyer cannot set a notice period of less than 30 days for cancelling orders for certain types of products or less than 60 days for delisting a manufacturer’s private label product for product categories that include the sale of a store’s own brand.
The buyer is also prohibited from:
- to unilaterally amend the terms of a commercial contract for agricultural and / or food products which refer to the frequency, method, place, schedule or volume of supply or delivery of agricultural and food products, quality standards, payment terms, prices or so on. regarding the provision of services;
- to request invoicing and / or re-invoicing and to collect from the supplier any other costs than those agreed in the commercial contract; the costs related to the extension of the buyer’s distribution network, the arrangement of the merchant’s sales spaces and the events for the promotion of the buyer’s activity and image cannot be borne by the supplier;
- to use self-invoicing for agricultural and / or food products, except for the cases provided for in article 320 in Law no. 227/2015 on the Fiscal Code, with subsequent amendments and completions;
- to apply financial and commercial discounts in the form of rebates, except for discounts and rebates, the cumulative discounts of which do not exceed 20%, applied according to the value invoiced between the buyer and the supplier, for agricultural and / or food products, by derogation from the provisions of Law no. 227/2015, with subsequent amendments and completions
- to request from the supplier payments for the damage or loss of agricultural and / or food products, which occurred in the buyer’s premises after receipt, when such damage or loss did not occur due to the negligence or fault of the supplier; except for hidden defects in agricultural and food products for which the supplier will have to bear the equivalent value or their replacement;
- to refuse to confirm in writing the terms of a contract between the buyer and the supplier in connection with which the supplier has requested a written confirmation; does not include the situation where the contract relates to products to be delivered by a member of a producer organization, including a cooperative, to the producer organization of which the supplier is a member, if the status of that producer organization or if the rules and decisions in the respective statute or derived from it contain provisions with effects similar to the clauses of the contract;
- to acquire, use or illegally disclose trade secrets of the supplier, according to the provisions of the Government Emergency Ordinance no. 25/2019 on the protection of know-how and undisclosed business information that constitute trade secrets against the illegal acquisition, use and disclosure, as well as for the modification and completion of some normative acts;
- to disclose the terms and conditions of the commercial contract for the purchase of agricultural and / or food products, unless this is necessary for the fulfillment of the obligations assumed towards the respective supplier or the observance of some legal provisions; this provision also applies to the supplier;
- threaten to carry out or carry out commercial retaliation against the supplier, if the supplier exercises his legal or contractual rights, including by filing a complaint with the law enforcement authorities or by cooperating with law enforcement authorities during an in-depth investigation
- require the supplier to compensate the costs of examining customer complaints about the sale of the supplier’s products, in the absence of negligent conduct or fault on the part of the supplier;
- to return unsold agricultural and/or food products to the supplier;
- to delay the receipt and the drawing up of documents for the receipt of agricultural products and foodstuffs;
- to invoice the value of the services provided, provided in article 4 paragraph (2) letters a), b), e) and f), over the amount of maximum 5% of the value received by the provider based on the contract concluded between the parties;
- to purchase and sell food products without verifying their traceability if the purchase price is lower than the average production cost practiced on the relevant market during the acquisition period, according to official statistics at the level of the European Union;
- to impose on the supplier a payment for the listing of its agricultural and food products, as well as for their display for sale;
- to impose products and services on the supplier, directly or indirectly, to buy or sell from a third party;
- to request taxes from the supplier, regardless of their form and name, which obliges the supplier to artificially increase the invoicing price of the product;
- to delist, threaten to delist or withdraw from the exhibition one or more agricultural and / or food products, in order to put pressure or exercise commercial retaliation against the supplier, for accepting unfavorable contractual clauses;
- to list and display on the shelf only the buyer’s own brand, so that the offer includes at least one private brand of a competing manufacturer in the respective product category;
- to apply different commercial conditions for the private label products of the producers compared to the own brand products of the trader, for listing / displaying on the shelf;
- to refuse the listing of an agricultural and / or food product registered on national and / or European quality schemes, offered by a supplier, due to the lack of volumes and its seasonality;
- to offer or sell lost agricultural and / or food products, except in the cases provided by the legislation in force;
- to take over the commercial conditions agreed with the supplier for the purchase of products related to the retail channel and to apply them regarding the purchases of products from the supplier related to the wholesale sales channel.
Exceptional situations established by contractual clauses:
According to Law 81/2022, the supplier’s or buyer’s representative is forbidden to behave in a way that deviates from good faith in the contractual negotiation process between the parties.
In order to avoid the occurrence of unfair commercial practices, regardless of when they occur in the agricultural and food supply chain, unless, at the request of the supplier, they have been previously agreed by clear and unambiguous clauses in the commercial contract or by an additional act concluded subsequently, the buyer is prohibited:
- a) to ask the supplier to pay for the advertising of agricultural and/or food products made by the buyer;
- b) to require the supplier to pay for marketing services provided by the purchaser for agricultural products and/or foodstuffs;
- c) to refuse the supplier a price renegotiation within a period of more than 10 days from the date of the request; the conditions of price renegotiation take effect within the period specified in the contract;
- d) to require the supplier to pay for the staff who arrange the sales premises used for the sale of the supplier’s products or to oblige the supplier to provide staff for the sale of the products or any other activity related to the sales-promotion process;
- e) require the supplier to pay for the secondary placement of its agricultural and food products for sale;
- f) to require the supplier to bear all or part of the cost of any discounts for agricultural and/or food products sold by the purchaser on a promotional basis.
We point out that the penalties applied to these types of commercial contracts are significant. According to the law, those who deviate from the prohibitions on unfair competition may be fined between 250,000 and 600,000 lei, if the act was committed with guilt.
Moreover, the Competition Council, the authority that will apply sanctions in the case of these unfair practices, will also be able to apply complementary fines, as well as reductions in fines, ranging from 1 to 25% of the total amount, if the company admits to these practices and proposes measures that will lead to the removal of the causes of the violation of the provisions of this bill.
Moreover, if unfair commercial practices are committed repeatedly, i.e. within two years from the issuance of a decision establishing/sanctioning such a practice until a new one is committed, a fine equal to 1% of the total turnover achieved in the previous financial year may be imposed.
The provisions of the law are applicable to all commercial contracts signed from 15 April 2022, while those signed before this date will have to be amended to comply with the new legislation by the end of this year.
Legal basis:
– Law 81/2022 on unfair commercial practices between enterprises within the agricultural and food supply chain