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Another Case of Abuse of Significant Market Power Fined!

A major amendment to Act No. 395/2009 Coll., on Significant Market Power and Unfair Commercial Practices in the Sale of Agricultural and Food Products (hereinafter referred to as the "Act"), effective from January 1, 2023, brought significant changes in the relationships between buyers with significant market power and suppliers in the agriculture and food sector. In recent years, we have informed you about these changes and cases of violations of buyer obligations, for example HERE, HERE, and HERE.

Last month, the Office for the Protection of Competition (hereinafter referred to as the "Office") announced the imposition of another fine of CZK 1,560,000 (approximately EUR 62,400) for disregarding mandatory elements of supplier-buyer contracts and using unfair commercial practices.

This case involved several concurrent offenses, where the entity (buyer) with significant market power, among other things, did not negotiate mandatory elements when providing logistics services, unlawfully negotiated complaint discounts for product quality deterioration, demanded introductory discounts when introducing new products for sale, and applied invoice payment terms longer than the maximum legal 30-day period.

According to information published by the Office, this is the second highest fine the Office has imposed for abuse of significant market power, following the fine imposed in 2024 of CZK 1,836,000 (approximately EUR 73,400) for the so-called marketing bonus and trademarketing support, where the supplier-buyer contracts did not include the necessary elements required by the Act.

It is clear that, among other things, after sectoral investigations conducted in recent months, the Office pays great attention to the abuse of significant market power and regularly imposes high fines for violations of legal obligations (the upper limit of fines can reach up to CZK 10,000,000 (approximately EUR 400,000) or 10% of the buyer's net turnover).

It is therefore essential to pay due attention to fulfilling legal requirements in legal actions within the supplier-buyer chain and regularly check the settings of your contracts with suppliers to ensure compliance with these obligations.

If you are interested in further information, please contact the authors of the article or other members of the EY team you collaborate with.

Authors:

Jan Turek

Michal Sladký