• Tomasz Chróstny, President of UOKiK, imposed a fine of more than PLN 76 mln on Eurocash for unfair use of contractual advantage.
• Suppliers delivering food and agricultural products to Eurocash-owned stores were forced to pay numerous additional and unreasonable fees.
• The fees were aimed at reducing the amount of remuneration due from Eurocash to its counterparties.

Eurocash's core business is the wholesale and retail of food and daily necessities. Eurocash owns – partially through subsidiaries – the largest wholesale chain in Poland, as well as numerous store chains, including ABC, Delikatesy Centrum, Lewiatan, Gama, Groszek and Euro Sklep. The decision issued by the President of the Office pertains to Eurocash's relationships with entities supplying food and agricultural products to its stores.

"The investigation revealed that Eurocash charged suppliers of agricultural and food products numerous additional and unjustified fees. Some of the services paid for by the counterparties were never rendered at all, and some should have been provided by the company free of charge under the contracts with its suppliers. Additionally, the suppliers received no information on the cost and results of certain services. These actions taken by Eurocash were aimed at reducing the amount of remuneration paid to entities delivering food and agricultural products to its stores. Based on the findings made as part of the investigation, the amount of unjustified profit that Eurocash attained by exploiting its contractual advantage over its counterparties in the 2018-2020 period amounted to more than PLN 43 mln", said Tomasz Chróstny, President of UOKiK.

Examples of unfair practices

The services that Eurocash failed to perform diligently despite charging its counterparties fees for doing so included a guarantee of retaining the given product in the commercial offer, among others. Yet the contract offered no guarantees as regards maintaining the sales of products delivered by the given supplier for a specific time and in specific locations.  Information obtained during the investigation indicates that entities who opted to pay for this service were treated the same as those who did not. Suppliers were also charged for the possibility of organising certain special offers at chain stores and the ability to oversee such offers. At the same time, some of them paid other fees and provided discounts to organise special offers at Eurocash stores, e.g. 14.5% of monthly remuneration for custom promotional services or having one's product shown on a promotional flyer.

Eurocash also charged fees for the possibility of holding retail chain community events by suppliers; however, any supplier who actually wanted to take advantage of this option had to incur extra costs on this account. Despite paying the fee, the suppliers had no guarantees that they would be able to promote their products at such events (e.g. as part of taste-testing).

The President of the Office of Competition and Consumer Protection also called into question the fees charged for training store personnel on techniques for selling the supplier's goods. In reality, such training was of a general nature and pertained to selling products of various categories (e.g. fresh meat, cold meats, fruit, vegetables) rather than the product range offered by the given supplier who paid for it in the first place. This also applied to fees charged for educating and informing franchisees about new products offered by suppliers. The franchisees questioned by the Office of Competition and Consumer Protection knew nothing about such services, nor did they provide information about new products to Eurocash, claiming instead that the company ordered and distributed all products at its own discretion.

In addition, Eurocash would have inevitably carried out some of the paid activities anyway because of its economic interest. This was the case with such things as monitoring market demand and sales trends related to the supplier's products. Such activities were carried out by Eurocash for all products available at its stores – not just those whose suppliers paid for the extra services. This also applied to fees for the supervision of orders submitted by stores that were part of a given retail chain.

"The analysis of the evidence collected leaves no doubt that many of the fees charged by Eurocash were intended to reduce the remuneration due to suppliers of food and agricultural products rather than to enable Eurocash to diligently perform the services ordered. Its counterparties had no way of knowing how the services they paid for would be carried out – or even if they would be carried out at all. Such actions are unacceptable and constitute unfair use of contractual advantage. The decision to fine Eurocash PLN 76 million concludes a difficult and labour-intensive proceeding in which we not only examined whether the principle of equal consideration was observed but also verified whether the services ordered were actually performed. It has also provided us with valuable lessons learned that we will use in further proceedings, including ones concerning the so-called 'leaflet fees'", said Tomasz Chróstny, the President of UOKiK.

The issued decision is not final – the company has the right to appeal to the Court of Consumer and Competition Protection.

If you are a farmer or entrepreneur operating in the agri-food industry and your large counterparty abuses its contractual advantage by imposing unfavourable terms of cooperation, please do not hesitate to notify UOKiK. We have prepared a special form to help you report any irregularities. Click here to fill it out: https://ankieta.uokik.gov.pl/formularz-zgloszenie-przewaga/.

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL