The Largest Polish Wholesaler Fined For Unfair Use Of Its Contractual Advantage

At the end of November, the Polish Competition Authority (UOKiK) imposed a fine exceeding PLN 76 million (approx. EUR 16.5 million) on Eurocash for the unfair use of its contractual advantage in trading agricultural and food products. That is another UOKiK infringement decision in this area. Earlier this year, we wrote about the record-breaking fine imposed on Jeronimo Martins Polska.

Active in the wholesale and retail of food and daily necessities, Eurocash is a significant buyer of agricultural and food products. Eurocash owns the Polish largest wholesale chain and a few retail stores chains, such as Delikatesy Centrum, ABC, Groszek, and Lewiatan.

In its decision, UOKiK alleges that Eurocash’s suppliers are required to pay additional and unjustified fees, for example, for certain sales support services, such as ensuring the maintenance of products in the commercial offer or supervising and coordinating product orders. In addition, UOKiK informed that some suppliers do not receive an equivalent performance. UOKiK also stated that some of the services offered by Eurocash, such as monitoring market demand and sales trends or the supervision and coordination of orders, Eurocash would carry out anyway due to its economic interest.

In consequence, the additional fees are said to be used for burdening suppliers with the costs of running and organizing commercial chains.

One of the questioned services is a guarantee of maintaining certain suppliers’ products in the commercial offer of certain stores owned by Eurocash. Despite the contractual obligation of Eurocash, the supplier had no guarantee that its products would be offered within a specific time and location. Retaining certain products in the offer depended on Eurocash’s discretion. Although it agreed to retain a specific assortment, Eurocash has a wide range of modifying factors that it can use to control its assortment. Therefore, UOKiK established that these suppliers who paid for such a guarantee were treated equally as those who did not pay it.

Furthermore, UOKiK claims that Eurocash established fees charged for training store personnel to improve sales skills in relation to suppliers’ products. However, according to UOKiK’s decision, the training conducted did not focus on products of certain suppliers but was generic and covered categories of food products, such as meat, fruit or vegetables. None of the training sessions focused on products offered by certain suppliers.

In the light of an upcoming amendment of the Act on Combating Unfair Use of Contractual Advantage in Trading Agricultural and Food Products, Eurocash has convinced UOKiK that no exploitation of contractual advantage should be found towards suppliers whose global turnover exceeds EUR 350 million. In effect, UOKiK withdrew charges that Eurocash exploited its contractual advantage towards three large global food suppliers. Nevertheless, this does not seem reflected in the final amount of the fine imposed.

In respect to other claims, Eurocash argued that purely incidental non-performance of some of its services cannot be considered as practice.

Eurocash has also declared that it will appeal against this decision to the Polish Competition and Consumer Protection Court.

For UOKiK’s press release regarding Eurocash (in English), please see here and for the decision (in Polish only), please see here.

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