Czech Republic: new curbs on retailers’ powers

Controversial legislation aimed at preventing strong retailers from imposing unilaterally advantageous conditions on suppliers has been adopted by the lower chamber of the Czech Parliament.

Parliament’s upper chamber can still prevent the law from coming into force but is unlikely to do so.

Under the legislation, purchasers with an annual turnover exceeding CZK 5 billion (c. €185 million) would be presumed to have strong market power - enabling them to impose unilaterally advantageous business conditions on their suppliers, who are dependant on the purchaser to channel their products or services to consumers.

Any purchasers with a strong market power would be prohibited from breaching certain business conditions in their dealings with suppliers. These include:

• making all payments and rebates visible on invoices
• paying all invoices from the supplier within 30 days of receiving the goods or services
• putting all business terms and conditions in writing and making them only capable of modification by agreement
• making all prices charged by the purchaser for the supplier’s products no lower than their actual purchase price
• not threatening to stop doing business with the supplier in order to increase profitability or gain some other advantage
• not profiting from retroactive rebates or provisions, receiving listing fees before issuing orders or automatically profiting from better business conditions than those agreed by the supplier with other purchasers

Any such breach would constitute an abuse of strong market power and make the purchaser liable to be fined up to CZK 10 million or 10% of its annual turnover by the Office for the Protection of Competition.

Law: Act on abuse of strong market power