Poland: Dairy producers against private label products

10 January 2013

Krzysztof Kossakowski

Polish dairy producers and their cooperatives have started a battle against private label products. Concerned that the biggest chain stores will monopolise the market with their private label products, which are much cheaper than the Polish products, producers are currently trying to limit the number of private labeled products offered by chain stores.

In summer of 2012 the Polish National Association of Dairy Cooperatives (KZSM) started their fight against private label products with a letter to the Minister of Economy alleging unfair competition actions by stores selling private labels. According to the KZSM selling private label dairy products for less than other products on the market is unfair action towards Polish producers. The Ministry of Economy passed the letter to the Polish antimonopoly authority – the Office of Competition and Consumers Protection (UOKIK).

The UOKIK refused to take further action because, according to the UOKIK, the case did not have anti-competitive character and there were no grounds to take action based on the Polish Act on the Protection of Competition and Consumers.

The UOKIK gave the following reasons:

Firstly, that marketing private label products improves competition rather than inhibits it. Offering new products on the market meets consumers’ needs and is also an incentive to increase market dynamics, which in turn leads to economic growth.

Secondly, UOKIK pointed out that having a choice between Polish products and private label products is advantageous for consumers as it increases competitive pressure on the producers of the quality products. Thus, having a choice is always to the benefit of the consumers.

Thirdly, the UOKIK indicated that reputation should be the result of meeting consumers’ needs, rather than eliminating cheaper competition through legal means.

Thus in the UOKIK’s view the acts alleged by KZSM are not anticompetitive, but it is for the court to decide whether they are acts of unfair competition. Under article 17D of the Polish Act on Combating Unfair Competition (the Act) a discount store is forbidden to offer for sale private label products of a value constituting more than 20% of the yearly turnover of that discount store.

The battle has also been joined by Mlekovita – one of the biggest dairy producers in Poland. Mlekovita’s chairman Dariusz Sapiński proposes extending the scope of art. 17 D of the Act. According to his proposal, article 17 D should apply to all stores and private labels should comprise a maximum of 20% of products offered rather than the value of products sold. Sapiński declared he will lobby for such a solution before the Ministry of Economy and the Ministry of Agriculture. The other market players seem sceptical about the legality of such a solution which may mean that the proposal will not have much support.

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