Antimonopoly Office - First decision concerning abuse of dominant market power

10 August 2011

Andrea Jarolimkova

As we already informed you in Food Law Digests in 2010, a new Act on the significant market power in the sale of agricultural products and groceries and on its abuse ("Act") took legal effect on 1 February 2010 in the Czech Republic. More than one year later, on the one hand, we can observe a rising criticism of the Act and the intent of the Ministry of Industry and Antimonopoly Office to cancel the Act and replace it by some more precise regulation.

On the other hand, on 19 July 2011 the Antimonopoly Office issued its first unprecedented decision based on the Act. The Office imposed a financial penalty in the amount of CZK 13.628.000 (EUR 568.000) on supermarket chain retailer Kaufland. According to its findings, Kaufland has negotiated with its suppliers due terms later than 30 days after delivery of the goods and thus violated the Act. Moreover, Kaufland requested its trading parties to apply price reductions on every invoice provided that the invoice had been paid off earlier.

These trading conditions have been found leading to disadvantageous position of the suppliers and thus unfair. This conduct of Kaufland, an undertaking with significant market power, has been assessed as using of its market position in the abusive way and exploiting its position unjustifiably which is incompatible with the free competition.

Although the Act is highly criticized and planned to be replaced by more precise regulation, we can say that it has accomplished at least partially its purpose to effectively protect suppliers against big supermarket chain retailers.

Authors

Andrea Jarolimkova

Andrea Jarolímková

Associate, Prague
Czech Republic & Slovakia

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