• Faster payments for fruit growers from Real.
• Changes in Polish and EU regulations.
• These are examples of the latest UOKiK activities oriented at farmers.

Thanks to the Act on Contractual Advantage, UOKiK (Office of Competition and Consumer Protection) is able to provide real assistance to Polish farmers. The Office can intervene where a large trader exploits its position with regard to smaller suppliers. This is punishable by a penalty of up to 3% of turnover. It is also possible to oblige a company to change its practices, which can quickly improve the situation of its counterparties.

New rights of the UOKiK

The Council of Ministers has adopted a bill amending the Act on the organisation of certain agricultural markets and the Act on counteracting unfair use of contractual advantage in trade in agricultural and food products. The new regulations, inter alia, prohibit the sale of agricultural products below the reference price. It will be published once a year by the Minister of Agriculture and Rural Development and will apply to selected products.

-The act adopted at my proposal by the Council of Ministers is one of the most important ones in organizing the market of agricultural raw materials - emphasized the Minister of Agriculture, Jan Krzysztof Ardanowski and added that basing trade relations with farmers on cultivation contracts signed in advance, containing the most important agreements concerning the quantity of raw material, its quality, place of delivery, payment dates and possible contractual penalties, is the first attempt since the beginning of political changes in Poland in 1989 at civilizing trade and eliminating thieves feeding off farmers' work.

- The new provisions will mean that farmers will no longer be forced to sell products below a price that reflects their workload. This will also contribute to fair distribution of margins between the producer, the intermediary and the store. A purchase at a price lower than the reference price will result in a penalty imposed by the Office of Competition and Consumer Protection of up to 3% of  turnover - says Marek Niechciał, the President of the Office of Competition and Consumer Protection.

Real's commitment

Another outcome of UOKiK's activity on the agri-food market is the decision concerning Real. It is one of the largest fruit purchasing entities in Poland, producing frozen food and fruit concentrates. Based on the Office’s findings the company set payment deadlines of even up to six months. What is more, Real did not pay within the established term, and the longest delays exceeded 170 days. Meanwhile, according to the Act on payment terms in commercial transactions the parties may agree on a payment term exceeding 30 days, but it should not exceed 60 days.

 - In the course of the proceedings, Real undertook to change its practices. It will significantly shorten payment terms and settle arrears with interest with fruit producers. This means that the situation of farmers will improve - says President Marek Niechciał.

The new payment terms will be 30 days from the delivery date for flat-rate farmers and 60 days for commercial operators. The latter period will be counted from receipt of a duly issued VAT invoice by Real.

In addition, the company will audit the payments due for all fruit deliveries from 12 July 2017 and check for late payments or non-payments. Real will settle all arrears and will also pay statutory interest to farmers who produce and deliver fruit themselves.

UOKiK will check fulfilment of this commitment - Real will have to provide new contract templates and audit results together with a summary of payments made.

Implementation of EU Directive

The problem of using contractual advantage affects the whole of the European Union. In about 20 countries there are various legal regulations or codes of good practices in place. Soon, regulations protecting the weaker party in the agri-food sector will be the same across the EU. In April 2019, the Directive of the European Parliament and of the Council on unfair business-to-business commercial practices in the supply chain of agricultural products and foodstuffs was adopted.

- Our Act on contractual advantage already contains many solutions that will be included in the regulations applicable to all EU Member States. In addition, the position of suppliers will be further reinforced, among others the list of unfair practices will be expanded - says Piotr Adamczewski, Director of the Bydgoszcz branch of the Office for Competition and Consumer Protection.

According to Minister Jan Krzysztof Ardanowski, only an efficient, fair and protective state can ensure the observance of fair rules, which should be in place on the market.

- Unfortunately, the principles of commercial integrity and good manners, which are the basis of Maurycy Allerhand Code, are disappearing in modern trade relations. UOKiK is an institution expected by all consumers and honest entrepreneurs to quickly and effectively eliminate multiple pathologies on the part of stronger, dominant participants of the agricultural market - says the Head of the Ministry of Agriculture.

The Directive provides for the introduction of a blacklist of practices which will be in all cases automatically prohibited from agreements. This includes, but is not limited to, buyers cancelling the delivery of perishable products at short notice, refusing to confirm the terms of the contract in writing, demanding payments not related to the sale of products or threatening to retaliate if the supplier exercises its statutory rights.

Practices referred to as grey practices are also listed. They will not be automatically prohibited, but may not be used unless they have been agreed in advance and explicitly included in the contract. This includes, but is not limited to, charging suppliers additional fees for promotions, storage and new product launches.

In addition, the list of goods covered by the provisions on contractual advantage may be extended to include products that are not intended for human consumption, such as feed, seeds and live animals.

The new rules should be introduced into national legislation by 1 May 2021 at the latest and should come into force six months later.

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: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL