Which sales-related charges may constitute an unfair commercial practice – important guidelines laid down by the President of UOKiK for retail chains and their suppliers

Poland
Available languages: PL

On 7 November 2022, the President of the Office of Competition and Consumer Protection (“President of UOKiK”) released a report summarising a study of the daily consumer goods market (“Report”). The Report concerns the charges imposed by retail chains on suppliers of agri-food products for services performed for their benefit (so-called sales-related charges).

As part of the study, the President of UOKiK obtained information from 35 entities operating 52 retail chains and identified 312 services provided by the chains which, for purposes of the Report, were subsequently divided into four main categories: (i) marketing, (ii) logistics, (iii) IT, and (iv) examination and audit charges.

The Report is yet another activity undertaken by the President of UOKiK on the market of agri-food products. This is a particularly topical issue given the entry into force of the new law on contractual advantage on 23 December 2021 (“Act of 2021”)[1].

According to the President of UOKiK, the Report should:

  • make it easier for business entities (mainly retail chain suppliers) to assess the practices employed by their counterparties with respect to sales-related charges) and, on the other hand
  • serve as a guideline to retail chains for bringing their operations into line with the provisions of the Act of 2021.

Sales-related charges – general considerations

The Act of 2021 provides a non-exhaustive list of 16 practices which may be regarded as an unfair use of a contractual advantage, including: (i) “black” practices, the adoption of which is strictly prohibited, and (ii) “grey” practices, which are allowed only if agreed by the parties to the agreement beforehand in a clear and transparent manner. Additionally, the Act of 2021 includes a general clause, whereby other practices, which are not specified clearly therein, need to be assessed in terms of their being contrary to good customs and threatening or violating a substantial interest of the supplier.

As indicated in the Report, the imposition of charges for marketing and some logistics services related to the storage of products is a “grey” practice. Other sales-related charges, as referred to in the Report, i.e., associated with some logistics services which are not related to the storage of products, IT services or examination and audit services, are to be assessed in light of the general clause.

Guidelines established by the President of UOKiK for the assessment of each service category

Charges for marketing services, imposed on a supplier by a retail chain, may be regarded as an unfair commercial practice, for instance where:

  • there is a considerable difference between the amount paid by the supplier and the advertising leaflet-publishing costs incurred by the retail chain;
  • the terms of marketing service performance are general only and do not provide the supplier with information, for instance, on the number of its products and the number of advertising leaflets where they will be presented by the retail chain;
  • the terms of performance of such services as “active product presentation” or “recommended sales” by the retail chain to the supplier are not set out in the agreement precisely enough for the supplier to have detailed knowledge of the scope of the activities to be undertaken by the retail chain as part of the said services, as well as the terms on which their provision is to be confirmed;
  • the supplier is unable to identify the activities performed by the retail chain as part of marketing budget management services;
  • there is a considerable difference between the amount paid by the supplier and the costs incurred by the retail chain in relation to electronic media communications, such as promoting products via a mobile app or push messages;
  • if marketing services are offered by the retail chain in packages, the supplier is unable to identify the costs of each service included in the package.

As far as logistics services are concerned, unfair commercial practices within the meaning of the Act of 2021 may include:

  • the retail chain charging the supplier for delivering the supplier’s products from logistics centres to retail outlets being part of the chain (which activities, according to the President of UOKiK, form an integral part of the retail chain’s operations and, as a rule, should be paid for by the retail chain);
  • determination of the logistics charge in a manner other than as an amount, e.g. as a percentage of the turnover generated between the parties (according to the President of UOKiK, in such a situation there may be no link between the amount that is ultimately charged on the supplier and the value of the service or the cost of its performance).

Furthermore, charges for IT, as well as examination and audit services, may constitute unfair commercial practices:

  • in the case of IT services, if they are imposed by the retail chain for the possibility of providing billing documents in electronic form via an electronic document exchange system (as the Report indicates, the retail chain itself is the main beneficiary of the system and its costs should be classified as the retail chain’s operating expenses);
  • in the case of examination and audit services, if they are imposed by the retail chain on the supplier on account of remuneration for the entities performing the examinations, audits, inspections and as a product sample purchase cost (the President of UOKiK is of the opinion that there is no rationale for suppliers to be required to incur all costs associated with inspections and audits, as these are performed primarily with a view to protecting the reputation of the retail chain itself).

A full version of the Report is available at: President of UOKiK’s Report.


[1] The Act of 17 November 2021 on combating unfair use of contractual advantage in the trading of agri-food products.