EUR 15,000 fine for ULTRA GROS for imposing unfair trading practices

The Croatian Competition Agency (CCA) fined ULTRA GROS d.o.o. from Zagreb EUR 15,000 for the infringement of the Croatian Act on the prohibition of unfair trading practices in the business-to-business food supply chain (UTPs Act). The investigation showed that ULTRA GROS used its strong bargaining power and imposed unfair trading practices on its suppliers.

The CCA opened ex officio infringement proceeding against the buyer ULTRA GROS 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 found that in the period from 1 March 2022 to 6 September 2023 ULTRA GROS purchased agri- and food products from 57 suppliers based on 62 purchase agreements stipulating the right of the buyer to refuse and return the delivery of the supplier, at the supplier’s own expense, that had not been delivered within the “tolerable” expiry date of the product concerned or the “valid” expiry date that enables the buyer to sell the product before the expiry date, where it had not been determined in a clear, measurable and transparent manner, what was actually understood under the definition of “tolerable” or “valid” expiration date. By doing so, the buyer failed to agree on a clause of the agreement that was essential for the business transaction with the suppliers, which contravenes with Article 5 paragraph 1 of the UTPs Act) that stipulates that duration of the contract is a mandatory constituent part of any contract,     and thereby constitutes an unfair trading practice within the meaning of Article 4 paragraph 2 item 1 of the UTPs Act, stipulating that the agreement between the supplier and buyer must be concluded in written form and contain all provisions that are material to the business relationship between the contracting parties, and therefore constitutes an unfair trading practice within the meaning of Article 4 paragraph 2 item 1 of the UTPs Act.

At the same time, the CCA found that ULTRA GROS was buying agri- and food products from 37 suppliers based on the agreements containing a clause that imposed the obligation on the supplier, to run annual quality control checks at its own expense upon the request of the buyer. Thus, the extra charges for quality assurance have been transferred on the supplier for the quality control regardless of the results of the quality control and the regular control checks that had been run by the supplier. In this case, the supplier was charged for a service that has not been provided, was not real or measurable for the supplier. This practice contravenes with the very purpose of the UTPs Act that is to prevent and prohibit any transfer of costs from the re-seller, in this particular case Lidl, on its suppliers in a non-transparent manner based on its superior bargaining position. In this case, the CCA found that Lidl did not actually provide the service to the suppliers but merely transferred its own cost on the supplier and therefore constitutes an unfair trading practice within the meaning of Article 4 paragraph 2 items 1 and 6 of the UTPs Act in connection to Article 12 items 11 and 16 of the UTPs Act. In the view of the CCA, that did not contain provisions on delivery deadlines with four of its suppliers. In addition, the SPAs with two suppliers did not specify the quality and the type of the agreed products. With respect to two suppliers, the buyer concerned made payments that exceeded the period of 30 days set by the UTPs Act for the fresh agricultural products while the SPA with one supplier did not specify the place of delivery.

Despite the fact that the individual infringements mentioned above did not cover the same period, the CCA found these were all serious infringements under the UTPs Act for which up to HRK 3.500,000 fine can be imposed.

Considering the gravity, the scope and the duration of the infringement, the consequences for the suppliers, and a number of mitigating and aggravating circumstances, the CCA imposed a fine in the amount of HRK 120,000.