Another new Act on unfair terms and conditions in commercial relationships in Slovakia?

22 April 2010

Anna Gališinová

The proposed new Act on unfair terms and conditions in commercial relationships between food suppliers and food buyers will be the third attempt of the Slovak Government and Parliament to limit unfair terms and conditions in vertical distribution agreements between suppliers and buyers since 2003. The proposed New Act should replace the current Act on unfair terms and conditions in commercial relationships.

The current Act defines terms and conditions that are considered unfair in commercial relationships between any supplier and any buyer, where one of them is economically dependant on the other. Economic dependence means a situation where a supplier is forced to enter into an unfair agreement with a buyer because there is no opportunity to enter into any other agreement. This happens when all other buyers in the market offer the same or very similar unfair conditions. The current Act aims to protect suppliers against a number of unfair conditions imposed on them by buyers, in particular large supermarkets regardless their dominant / non-dominant position.

The current Act enumerates various fees and considerations in kind that constitute unfair terms and conditions and are forbidden. An example of such unfair terms and conditions is the supplier’s obligation to (i) pay a fee in return for being included in the buyer’s list of suppliers or for including the supplier’s goods in the buyer’s list of products; or (ii) sponsor opening of new shops of the buyer, or the buyer’s marketing and promotion activities (e.g. new leaflets); or (iii) pay for non-existent services such as for not being excluded from the list of the buyer’s suppliers.

The proposed new Act, which is a parliamentary initiative of four deputies, introduces two main changes. One is that the Act should apply to food sector only since the abovementioned unfair terms and conditions impact mainly on food suppliers. The other is that it forbids unfair terms and conditions completely notwithstanding the economic dependence between the food supplier and food buyer.

The new Act should take effect on 1 May 2010. It remains to be seen, whether and how its wording will change during the legislative process.