Communication
The aim of the protection of market competition is primarily to create benefits for consumers and equal conditions for all entrepreneurs on the market, who, acting in accordance with the existing rules and competing on the market with the quality, price and innovation of their products and services, contribute to the overall development of the economy.
CCA fines EUR 65,000 retailer DJELO for imposing unfair trading practices
The Croatian Competition Agency (CCA) fined DJELO d.o.o. from Bilice EUR 65,000 for a serious infringement of the Croatian Act on the prohibition of unfair trading practices in the business-to-business food supply chain (UTPs Act).
The CCA opened ex officio infringement proceeding against the buyer DJELO within the meaning of the UTPs Act with the view to establishing whether it used its strong bargaining power and imposed unfair trading practices on its suppliers of agri- and food products.
The investigation showed that DJELO used its strong bargaining power and imposed unfair trading practices on its suppliers by:
- Violation of agreed payment terms: with one supplier DJELO conducted business based on a contract that was not compliant with the UTPs Act, as it stipulated a payment term for perishable food products contrary to Article 5 paragraph 1 item 3, and paragraph 6 of the UTPs Act. This constitutes an unfair trading practice under Article 4 paragraph 2 item 1 of the UTPs Act.
- Lack of price clarity: with two suppliers DJELO conducted business under contracts that did not include a provision indicating the price of agricultural or food products expressed in a fixed amount. The agreed pricing method did not allow for an unequivocal and objective calculation of the price since it could not be determined or calculated by adding the parameters outlined in the contract. This constitutes an unfair trading practice under Article 4 paragraph 2 item 1 of the UTPs Act in conjunction with Article 5 paragraph 1 item 1, and paragraph 2 of the UTPs Act.
- Absence of Delivery Deadlines: with 67 suppliers DJELO conducted business under contracts that did not include a provision for delivery deadlines, nor were delivery deadlines subsequently agreed upon in a written form prior to delivery. This contravenes Article 5 paragraph 1 item 4 of the UTPs Act and constitutes an unfair trading practice under Article 4 paragraph 2 item 1 of the UTPs Act.
- Undefined product shelf life: with two suppliers DJELO conducted business under contracts that granted the buyer the right, at the supplier’s expense, to reject delivery and return products that were not delivered within a sufficient shelf-life period. However, the term “sufficient shelf-life period” was not clearly, measurably, or transparently defined. This omission in defining key provisions for the business relationship violates Article 5 paragraph 1 of the UTPs Act and constitutes an unfair trading practice under Article 4 paragraph 2 item 1 of the UTPs Act.
- Unjustified quality control costs: with two suppliers DJELO conducted business under contracts requiring the supplier to conduct a product quality analysis once a year at the buyer’s request and cover its costs, regardless of the outcome. This included situations where the analysis confirmed the product met the agreed quality standards and irrespective of the regular analyses previously conducted by the supplier. This constitutes an unfair trading practice under Article 11 paragraph 1 item 21 of the UTPs Act in conjunction with Article 4 paragraph 2 item 6 of the UTPs Act, as the additional quality control was agreed at the supplier’s expense regardless of the analysis results.
- Delayed payments: DJELO made payments to nine suppliers exceeding the mandatory payment term of 30 days for perishable agricultural and food products and exceeding 60 days for non-perishable agricultural and food products, which is in breach of the UTPs Act.
To remedy these violations and irregularities in DJELO’s dealings with its suppliers of agricultural and food products, the CCA issued a decision imposing commitments on DJELO for the elimination of unfair trading practices.
Considering the gravity, the scope and the duration of the infringement, the consequences for the suppliers, and a number of mitigating circumstances, the CCA imposed a fine in the amount of EUR 65,000. The CCA found that the fine would have a deterrent effect not only on DJELO but also on other actors in the food supply chain.