- How are unfair trading practices in the agricultural and food chain regulated in this jurisdiction? When the applicable regulations were introduced and when they were last amended?
- Which entities are protected and under what conditions (e.g. suppliers, buyers, both suppliers and buyers, subject to turnover thresholds etc.)?
- How are unfair trading practices in the agricultural and food chain defined in this jurisdiction? For instance, is there a general clause prohibiting unfair trading practices or is there a list of black and/or grey practices?
- Please describe the enforcement mechanism for compliance with regard to the regulations indicated in Q1 above. In particular, please indicate the competent authority and legal consequences for non-compliance.
- Is the local regulator active in enforcement? If yes, please provide information on a couple of interesting/significant cases.
- Please indicate the necessary amendments that will have to be implemented to the regulations applicable in your jurisdiction in order to comply with provisions of the Directive.
- Do currently applicable regulations in your jurisdiction impose more restrictive obligations on buyers or suppliers than those envisaged in the Directive? Please indicate those restrictions.
1. How are unfair trading practices in the agricultural and food chain regulated in this jurisdiction? When the applicable regulations were introduced and when they were last amended?
In Poland, unfair trading practices in the agricultural and food chain have so far been regulated in the Act of 15 December 2016 on Counteracting the Unfair Use of Contractual Advantage in Trade in Agricultural and Food Products (the Old Act).
The Old Act was repealed on 23 December 2021 regarding the adoption of the new Act of 17 November 2021 on Counteracting the Unfair Use of Contractual Advantage in Trade in Agricultural and Food Products (the Act) which implements the Directive. The Act entered into force on 23 December 2021.
2. Which entities are protected and under what conditions (e.g. suppliers, buyers, both suppliers and buyers, subject to turnover thresholds etc.)?
Unlike the Directive, the Act prohibits the unfair use of contractual advantage not only by the buyer against the supplier, but also by the supplier against a buyer of agricultural or food products, thus protecting both buyers and suppliers. In general, the Act applies where there is a considerable disproportion between the two in terms of their economic strengths. That said, the previous decisional practice of the Polish President of the Office of Competition and Consumer Protection (Urząd Ochrony Konkurencji i Konsumentów) (the PCA) shows that most often the advantage exists and is unfairly used by an economically stronger buyer against an economically weaker supplier.
The Act also refers to differences in levels of turnover achieved by a buyer and a supplier to determine the extent of economic disproportions between the two. The Act applies the same turnover thresholds as set out in the Directive.
In addition, the Act extends the definition of a buyer to entities defined in the Polish Public Procurement Law. The Directive only refers to the notion of “public authority”, and as Polish law does not contain a legal definition of “public authority”, the reference to the Public Procurement Law has been included.
3. How are unfair trading practices in the agricultural and food chain defined in this jurisdiction? For instance, is there a general clause prohibiting unfair trading practices or is there a list of black and/or grey practices?
The Act includes a general clause prohibiting the unfair use of contractual advantage by the buyer against the supplier, and the supplier against the buyer. According to this provision, such use is unfair if it is contrary to good practices and endangers the material interests of the other party.
In addition, the Act includes a non-exhaustive list of 16 practices that can be considered as unfair use of contractual advantage, of which ten practices are prohibited in all circumstances, and six are allowed if they were agreed by the supplier and the buyer in a clear and unambiguous manner before their application in the agreement, or provided that other conditions specified in law have been met.
In general, the Act mirrors the list of prohibited practices set out in the Directive but extends its scope to include one additional, country-specific practice, namely reducing the amount due for the supply of agricultural and food products after it has been accepted by the buyer in full or in the agreed part, in particular as a result of a demand for a discount.
4. Please describe the enforcement mechanism for compliance with regard to the regulations indicated in Q1 above. In particular, please indicate the competent authority and legal consequences for non-compliance.
The PCA is the competent authority in terms of the enforcement of the Act.
Under the Act, the PCA has the power to initiate proceedings on its own initiative. Additionally, anyone can notify the PCA of a suspected unfair trading practice.
Furthermore, the PCA is competent to require buyers and suppliers to provide required information, carry out unannounced inspections, order the discontinuation of illicit practices, accept commitments from business entities, and publish decisions on its website. In addition, the PCA is entitled to impose fines up to 3% of the turnover achieved by a “wrong-doer” in the financial year preceding the year in which the fine is imposed.
In addition, the Act implements a settlement procedure that enables businesses that submit voluntarily to a penalty proposed by the PCA to have their fine reduced by up 50% if they do not appeal against the decision.
In addition, the Act provides the PCA with the competence to impose fines on a managing individual (an individual person) of up to 50 times the average monthly remuneration in the business sector, calculated on the basis of separate regulations, if such individual, either intentionally or unintentionally: (i) fails to implement the decision of the PCA; or (ii) prevents or impedes the commencement or performance of an inspection.
5. Is the local regulator active in enforcement? If yes, please provide information on a couple of interesting/significant cases.
The PCA has so far been very active in enforcing the Old Act and it is expected that it will be equally engaged in enforcing the Act. In the past, the PCA has initiated proceedings not only against processors of agricultural and food products, but also against retail chains which unfairly use their competitive advantage.
In 2017–2020, the PCA received 188 notifications regarding unfair trading practices, initiated 76 explanatory proceedings, instituted 13 proceedings on the substance of the matter, addressed 93 soft statements to businesses, issued ten decisions (including five in which it imposed financial sanctions and five commitments decisions). In 2019 and 2020, the main unfair trading practices identified by the PCA related to lengthy payment terms and late payments (up to six-month payment terms that were still exceeded).
In October 2019, the PCA imposed its first fine on a processor of fruits of over PLN 8.3 million (EUR
1.9 million) for late payments (the record delay amounted to almost a year). In November 2020, the PCA imposed a fine of nearly PLN 1.7 million (EUR 400,000) on the producer of processed fruit products for unfair use of its contractual advantage over suppliers by significantly delaying payments for completed deliveries.
In December 2020, the PCA imposed a record fine of PLN 723 million (EUR 157 million) on one of the largest retail chains in Poland. According to the PCA, the retailer, in its relations with suppliers, in particular of fruit and vegetables, engaged in practices which could be considered unfair. The retail chain claimed discounts from suppliers but did not inform them in advance of the amount (suppliers were informed of the amount of the discount at the end of the month, after the deliveries had been made). As a result, the supplier concluding an agreement with the retail chain did not know how much it would be able to earn.
Most recently, in December 2021, the PCA imposed a fine of PLN 124 million (EUR 27 million) on yet another large retail chain operating in Poland. The PCA established that the retailer was agreeing on the terms of business with its suppliers retrospectively, e.g. was requiring that the suppliers reduce the price of agricultural and food products after they had already sold the products to the retailer. For this reason, the suppliers did not know on what terms they would finally deliver the products.
6. Please indicate the necessary amendments that will have to be implemented to the regulations applicable in your jurisdiction in order to comply with provisions of the Directive.
The Act mirrors the provisions provided for in the Directive, and in some cases it is even stricter than the Directive itself, e.g. it includes one additional black practice.
7. Do currently applicable regulations in your jurisdiction impose more restrictive obligations on buyers or suppliers than those envisaged in the Directive? Please indicate those restrictions.
Unlike the Directive, legal protection under the Act is not limited to cases of buyers’ unfair use of a contractual advantage over suppliers but also covers reverse relations. The Act implies, firstly, that a contractual advantage may exist both on the supply side (supplier to buyer) and on the demand side (buyer to supplier).
In addition, the Act adds one additional, country-specific prohibited practice to the list of unfair trading practices provided for in the Directive.
