Czech Republic: Kaufland suffers a fine for abusing its market power

17 January 2014

Eva Bajaková, Andrea Jarolímková

The Czech Office for Protection of Competition ("Office") confirmed, in the second instance, a fine imposed on the supermarket chain Kaufland for an abuse of significant market power.

According to the information published on 23 October 2013 on the Office's websites, the fine in the amount of CZK 22,130,000 (approximately EUR 820,000) was imposed. Kaufland breached the Act No. 395/2009 Coll., on Significant Market Power in the Sale of Agricultural and Food Products and Abuse thereof ("Act"), as it, contrary to the Act, agreed to terms of payment longer than 30 days with most of its suppliers. In addition, in case of an assignment of receivables, Kaufland charged 95% of its suppliers a fee amounting to 4% of the value of a receivable besides administrative costs incurred in assigning. Last but not least, if Kaufland paid an invoice earlier, an additional discount amounting to  0.5% for every started week before the agreed term of payment was charged to the suppliers. The Act defines the significant market power as a position of the buyer towards the supplier on the basis of which (1) the supplier becomes dependent on the buyer in relation to a possibility to supply its goods to consumers and (2) the buyer may impose unilaterally beneficial terms and conditions on the supplier, reflecting the situation in the market. Unless it is proven otherwise, the buyer is deemed to have significant market power if its net turnover exceeds CZK 5 billion (approximately EUR 185,000,000).

Authors

Andrea Jarolimkova

Andrea Jarolímková

Associate, Prague
Czech Republic & Slovakia

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