• Kaufland Polska Markety required suppliers to reduce the price of agricultural and food products after their sale, unfairly using its contractual advantage.
• Moreover, it misled consumers as to the country of origin of the vegetables.
• The President of UOKiK, Tomasz Chróstny, imposed penalties of nearly PLN 140 million on Kaufland Polska Markety in two decisions finding illegal practices.

The President of UOKiK protects both the rights of consumers and the protection of competition in relations between retail chains and suppliers of agri-food products. In two decisions regarding the Kaufland chain issued at the end of December 2021, the President of UOKiK stated that the law was violated in both cases.

The first decision on Kaufland Polska Marketa – nearly PLN 124 million penalties for unfair use of the contractual advantage

The first decision concerns the relationship between Kaufland Polska Markety and agricultural and food products suppliers. The company established the terms of cooperation with some of them after the beginning of a given year. In such situations, with prolonged contract negotiations for the next year, the supplier did not know on what terms the deliveries were made from the beginning of the year to the date of signing the contract. In the new contract, additional discounts were often introduced, or the company increased the amount of the existing ones, and the suppliers had to pay compensation on this account. In practice, this meant a retrospective reduction of the already paid selling price of products to the Kaufland chain from the beginning of the year to the date of signing a new contract.

The second practice of unfair use of contractual advantage consisted of charging certain agricultural and food products suppliers with additional discounts not provided in the contract. Therefore, the contractor of the retail chain did not know when it would be asked to grant this discount or what it would be.

The practice of negotiating a contract after the start of the year concerned over 800 contractors in 2018-2020, of which 72 had to pay unfavourable compensation for a total amount of nearly PLN 37 million. In turn, unfair retroactive discounts were obtained from 176 suppliers in a total amount of over PLN 30 million. Affected entities were predominantly small and medium-sized enterprises, farms and producer groups. These were, among others, meat establishments, dairy cooperatives, producers of sweets, bakeries, processors of fruit and vegetables, fish, producers of beverages, snacks and cereal products.

- The principles of cooperation of the retail chain with suppliers, including discount conditions, should be clearly defined and known to the parties before signing the contract. Meanwhile, the contractors of Kaufland Polska Markety were not sure what remuneration they would receive for deliveries and whether the previously negotiated price would be lowered. The company's actions were contrary to morality and constituted an unfair use of a stronger negotiating position. I have decided to impose a financial penalty of almost PLN 124 million on the company. The penalty was reduced due to the attitude of Kaufland Polska Markety, which ceased its practice during our investigation and before the charges were brought against it. The information provided to the Office by the chain shows that it happened after I issued a decision against Jeronimo Martins Polska regarding a similar practice – says Tomasz Chróstny, President of the Office of Competition and Consumer Protection.

The decision is not final and may be appealed against in court. The decision does not prevent Kaufland suppliers from seeking damages in civil proceedings. Thanks to the initiative of the President of UOKiK, the new Contractual Advantage Act, which entered into force on 23 December 2021, includes a provision allowing the President of the Office to present a substantive opinion on the matter. This solution will provide legal support for entrepreneurs or farmers pursuing their claims in court from a large contractor in the agri-food industry.

- I can assure you that every supplier of agri-food products who will seek compensation from a retail chain for unfairly collected discounts can count on our support before the court. This applies not only to contractors of the Kaufland chain but also to Biedronka, Eurocash and Intermarche, which were subject to previous decisions of the Office, says Tomasz Chróstny, President of UOKiK.

The discount policy of retail chains is constantly monitored by the President of UOKiK. An example was the research of 19 retail chains on obtaining discounts from suppliers, as well as last year's investigation, which checked the timeliness of payments and commercial policies of the 100 largest entities in the food sector, including retail chains. They resulted in decisions regarding Kaufland Polskie Markety and SCA PR Polska (Intermarche Group). Moreover, the President of the Office found unfair use of contractual advantage by Jeronimo Martins Polska, the owner of the Biedronka chain (decision of December 2020 concerning retroactive discounts not agreed in the contract), and Eurocash (decision of December 2021 concerning unfair fees charged to suppliers). Additionally, in April this year, the Office published a report on discounts, in which it presented, inter alia, the practices that may be considered illegal.

In 2022, a summary of the research on the practices of retail chains related to collecting fees from suppliers (marketing, for the return of unsold goods, for promotional leaflets, etc.) and the publication of a report in this regard is planned.

The second decision on Kaufland Polska Markety – PLN 13.2 million in penalties for incorrect labelling of the country of origin on vegetables

The checks of the Trade Inspection confirmed that Kaufland Polska Markety stores systematically label vegetables with tags containing false information about their geographical origin. The inspectors compared the data on product tags with those on collective or unit packaging and in delivery documents. For example, carrots in a store in Kalisz were to come from Poland, as it was apparent from the tag, but the collective packaging showed the Netherlands as the country of origin; potatoes in an outlet in Brzeg, according to the tag, were to come from Poland, but the collective packaging said Germany; onions in a store in Dębica –  the tag showed the country of origin Poland but the collective packaging – Germany; white cabbage in an outlet in Gdańsk, according to the tag, was to come from Poland, but the collective packaging said that it was from Macedonia.

The President of UOKiK, Tomasz Chróstny, issued a decision in which he considered these practices a breach of collective consumer interests and imposed a penalty of PLN 13.2 million on the company.

- The right to information is a fundamental right of every consumer. At the same time, the product information must be accurate, clear and easy to understand for consumers and must not be misleading in any way. Checks of the Trade Inspection confirmed that consumers regularly received incorrect information about the origin of vegetables in Kaufland stores, which influenced their purchasing decisions, so I initiated proceedings in this matter and issued a decision. I ordered that consumers should not be misled and decided to impose a financial penalty on this retail chain – says Tomasz Chróstny, President of UOKiK.

Trade Inspection checks

From January 2020 to June 2021, the Trade Inspection carried out checks in 71 Kaufland stores throughout Poland (one third of all stores of this chain in Poland): Białystok, Bydgoszcz, Gdańsk, Gorzów Wielkopolski, Katowice, Kielce, Kraków, Lublin , Łódź, Olsztyn, Opole, Poznań, Rzeszów, Szczecin, Warsaw and Wrocław. They checked the labelling, among others, of batches of potatoes, peppers, onions, garlic, cabbage, parsley, carrots, celery, tomatoes, cucumbers.

During the check, irregularities relating to the incorrect indication of the country of origin (placing other information on the tag and still other information on the collective/unit packaging) were revealed in an average of every third store (27 out of 71 checked Kaufland outlets). In all Kaufland stores where irregularities were found, a total of 215 batches of vegetables were examined. The inspectors had objections to 53 batches. In the second quarter of 2021, the Trade Inspection visited 32 Kaufland stores to check whether the irregularities were still present – in 14, the country of origin of the vegetables was stated incorrectly.

- Product tags must not be misleading – not only as to the price but also the country of origin of the vegetables. The consumer should not be obliged to verify where they come from on the collective packaging. It is the seller's job to provide reliable information. As a result, incorrect labelling of the country of origin of vegetables on the tag leads to situations in which the consumers' decision to choose the offer is based on false information – adds the President of UOKiK.

Examples of irregularities revealed by the Trade Inspection:

• green peppers offered in bulk – the label of the collective packaging: Poland, the tag: Spain. Kaufland store in Jelenia Góra on Jana Pawła II 24.

• red onions offered in bulk – the label of the collective packaging: The Netherlands, the tag: Poland. Kaufland store in Nowa Sól on Chałubińskiego 2.
• potatoes offered in bulk – the label of the collective packaging: Germany, the tag: Poland. Kaufland store in Brzeg on Władysława Łokietka 24A.
• a 500g bunch of carrots offered in pieces – the label of the collective packaging: Italy, the tag: Poland. Kaufland store in Dębica on Rzeszowska 116.
• a bunch of radishes offered in bulk – the label of the collective packaging: Poland, the tag: Italy. Kaufland store in Kalisz on Podmiejska 20.
• 150g of habanero pepper offered in unit packages – the unit package label: Morocco, the tag: Spain. Kaufland store in Warsaw on Birżańska 1.

The penalty imposed by the President of UOKiK on Kaufland Polska Markety for misleading consumers amounted to PLN 13.2 million (PLN 13,284,944). Its amount was influenced by the fact that violations occurred regularly and over a long period. Despite the check of the Trade Inspection and irregularities reported by inspectors and complaints filed to the chain, the company did not improve the labelling of vegetables to such an extent that it could be concluded that the cases of misrepresentation are marginal or individual. The decision is not final and may be appealed against in court.

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
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