The sale of food is currently a much-debated topic across society, at least when it comes to prices. This area is subject to significant control under the Act on Unfair Terms in Food Trade1. The Act contains almost 60 different unfair terms that affect not only prices. However, the interpretation of the Act is not straightforward. When interpretation is unclear, one usually refers to the decision-making practice of the courts or the competent administrative authority, i.e. the Ministry of Agriculture and Rural Development of the Slovak Republic. What does this decision-making practice look like?
A bit of judicial practice
The Unfair Terms in Food Trade Act (the Act) has already reached the highest level of judicial review. The Constitutional Court of the Slovak Republic (CC) has considered whether the Act is in line with the Slovak Constitution. In 2019, the Constitutional Court ruled on a motion proposed by a part of the members of the National Council of the Slovak Republic in its ruling PL. ÚS 12/2020-42.
In substance, the Constitutional Court dealt with two unfair practices: payments for a visit to the other party to a business relationship and the possibility of penalising an act or omission deviating from a fair course of business. Both provisions withstood the constitutionality test.
The payment for a visit to the other party was considered by the CC as economically irrational. The CC considered its provision as evidence of a weaker position of the party that is to provide the payment. As a result, according to the Constitutional Court, the control is justified.
In the case of a breach of the principles of fair course of business, the CC examined the certainty of the prohibition. The CC found that the prohibition of breach of the principles of fair course of business was sufficiently determinate. It is for the Ministry of Agriculture and Rural Development of the Slovak Republic (the Ministry) and the courts to further interpret this prohibition. However, we have not found any court judgments concerning the Act.
In the absence of judgments, what is the decision-making practice of the Ministry?
The Ministry does not publish its decisions. It only publishes annual reports in which it informs about the inspections carried out. Inspections may result in a finding of misconduct and referral to delict proceedings, or a finding of no misconduct and the termination of the inspection. The published annual reports for 2021 and and 2019/633) on which the Act is based and which allows to limit the application of this regulation to the relationships of entities reaching certain turnover levels, which some countries (such as the Czech Republic) also apply.
Nevertheless, in the last two years, the Ministry has dealt with only 12 cases, with only 4 cases resulting in the imposition of a fine. At the same time, despite the existence of almost 60 different unfair practices, the Ministry has dealt with only one unfair practice in administrative proceedings.
In our view, there are two explanations for these data. Either: the Act is a widely accepted regulation respected by all relevant players. This is certainly a desirable state of affairs from the perspective of both the state and entrepreneurs who must comply with the Act. Or: the enforcement of the Act in Slovakia is insufficient. For entrepreneurs, this option is also favourable, as the very necessity of regulating relations in the food industry may be a matter of debate. But it is certainly not satisfactory from the perspective of the state that introduced the regulation, because unenforced regulation is in fact toothless.
All we can say with certainty in the present situation is that we will continue to bring you such an overview of the activities of the Ministry and interesting facts about unfair practices in the future.
Footnote
1 No. 91/2019 Z. z.
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