April 7, 2021.
The information was prepared by Paula Pērkone, Communication Specialist of the Competition Council.
On April 7, 2021, the Saeima passed the Unfair Trade Practices Prohibition Law (hereinafter – NTPAL), the purpose of which is to prohibit unfair trade practices throughout the agricultural and food supply chain, as well as to prohibit the use of non-food retailers’ purchasing power against suppliers. Compliance with the law will be supervised and controlled by the Competition Council (hereinafter – the CC), at the same time the previous Law on the Prohibition of Unfair Retail Practices under the supervision of the CP will lose its force.
NTPAL will enter into force and its application will take place from November 1, 2021. It aims to transpose in a single piece of legislation the Directive of the European Parliament and of the Council on unfair business-to-business commercial practices in the agri-food supply chain and the Unfair Retail Practices Prohibition Act, which restricts the use of retailers’ purchasing power against suppliers. The directive provides for the protection of suppliers and aims to protect the smallest players in the market from unfair trading practices by larger companies.
The new law imposes a number of prohibitions on the buyer seeking unilateral amendments to the contract, requests for payment not related to the sale of the goods by the supplier and claims from the supplier for the costs of handling customer complaints, unless the complaints are substantiated. The buyer will also be prohibited from canceling orders for goods with too short a time, changing orders for goods shortly before delivery or providing the lowest price, thus restricting the supplier’s freedom to agree with another retailer on a lower price. In order not to put the smallest suppliers in terms of turnover at a disadvantage compared to the larger ones, KP points out that the requirements of NTPAL will apply to all participants in the trade chain, regardless of their turnover.
Svetlana Sitnikova, Senior Expert of the Analytical Department of the CP: “The most problematic and topical issues in this area that we have observed are returns of goods, non-compliance with payment deadlines for delivered goods and unfair or unreasonable payments or discounts demanded by retailers. or contractual penalties which the trader may impose on the supplier for breach of contract or delay in delivery. “
The CC will control and monitor the implementation of the NTPAL by reviewing applications for violations of the law related to the economic activity of the supplier, buyer or non-food retailer in Latvia. For violations of the law, the CC will be able to initiate investigation cases and, if any of the violations referred to in the law are established, impose a warning or a fine of up to 0.2% of the retailer’s or buyer’s net turnover in the last reporting year, but not less than 70 euros. At the cross-border level, the CC will have the opportunity to cooperate with other enforcement authorities of the EU Member States and the European Commission in the investigation of possible violations. In turn, the compliance of agricultural and food contracts concluded before the publication of the NTPAL with the provisions of the law must be ensured within one year after the date of publication of the law.
Additional information:
Paula Pērkone,
Competition Councils
Communication specialist
Phone: 68206980
E-pasts: [email protected]
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