From February 2010, retail chains will be prohibited from abusing significant market power over their suppliers in the food and agriculture sectors.
The new law only applies to retail chains with a turnover above CZK 5 billion. It does not cover cartel agreements or the abuse of a dominant position. The abuse must be systematic rather than a single incident.
A retail chain is deemed to have significant market power where market forces enable it to impose one-sided terms of business on a supplier and the supplier is dependent on it for the supply of its goods to consumers.
There are six categories of prohibited behaviour, each the subject of detailed rules in an appendix to the legislation:
- rules for issuing invoices
- general business terms and conditions
- conditions in contracts between retail chains and suppliers
- conditions of sale
- prohibited practices between retail chains and suppliers
- other customs in business dealings between retail chains and suppliers
The Office for the Protection of Competition will be responsible for supervising compliance with the legislation. Where it declares that a retailer has abused a significant market power, it may impose a fine of up to CZK 10,000,000.00 or up to 10% of its net annual turnover.
Law: Act on abuse of significant market power (Act No. 395/2009 Coll.)
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The original publication date for this article was 18/01/2010.