CCA response to the query of Zagreb Consumer Association on application of UTPs Act

In response to the query of the Zagreb Consumer Association that has been publicly commenting the application of the Act on the prohibition of unfair trading practices in the business-to-business food supply chain the Croatian Competition Agency reminds the public that after the accession to the EU on 1 July 2013 the Republic of Croatia committed itself to the implementation of the Treaty on the Functioning of the European Union, containing also the provisions on free movement of goods, services, capital and people as the key principles of the internal market.

The Croatian Act on the prohibition of unfair trading practices in the business-to-business food supply chain (UTPs Act) entered into force on 7 December 2017 whereas its full application started on 1 April 2018. Under the UTPs Act the Croatian Competition Agency (CCA) is empowered for its implementation.

As mentioned on several occasions the UTPs Act establishes the rules and effective redress mechanisms to eliminate UTPs being imposed by a trading partner in the food supply chain where a superior bargaining position is abused by the buyer and/or the processor or the re-seller with respect to the supplier. Under Articles 4 – 12 the UTPs Act provides an exhaustive list of trading practices that are regarded as unfair trading practices.

The UTPs Act wants to establish, ensure and promote fair trading practices that would protect the participants in the food supply chain.

Here the CCA notes that it is empowered by law to investigate exclusively the unfair trading practices that are specified by the UTPs Act and not to address the issues or circumstances that fall outside the scope of the provisions in question.

It is essential to stress here that the UTPs Act equally applies to domestic and foreign suppliers and respects the freedom of every re-seller to deal with any supplier depending on its competitiveness and the preferences of the consumers.

There is no such provision under the UTPs that would imply that dealing with foreign, imported products would automatically constitute an unfair trading practice on the account of the fact that the Republic of Croatia in line with the internal market principles cannot ban the freedom of movement of goods and services under the national law.

The CCA informed the Zagreb Consumer Association that it has been carrying out the analysis of dozens of contracts marketing food and agri products that contain provisions that are unclear or contestable. It also started a market inquiry of seasonal food and agri products involving the contracts that have been concluded between the biggest re-tail chains and domestic and foreign suppliers. As soon as the relevant data have been gathered the CCA will be able to publish the data on the share of the foreign suppliers versus domestic suppliers, as requested by the Zagreb Consumer Association in its query. However, at the time being, in line with its confidentiality obligation, the CCA cannot give comments or release details about any ongoing case.

With respect to the concerns publicly expressed by the Zagreb Consumer Association as to the worse quality of imported products that are placed on the Croatian market in comparison with the products that may be found on the markets in other Member States, and concerning the criteria on which the campaign of the undertaking Spar Hrvatska “Da! Domaće je!” (“Yes! It’s domestic!”) is actually based, the CCA can only refer the Zagreb Consumer Association to the Trade Act and the competent Ministry of the Economy, Entrepreneurship and Crafts and the Ministry of Finance who are empowered for its implementation and, respectively, inspections.

Thus, the implementation of the Trade Act, that regulates unfair, deceptive or misleading trade practices in the marketing, advertising or offering of goods or services that damage the company’s reputation and its products or services, especially regarding the misleading information about the origin, quantity, quality and other features of the products, falls outside the scope of the CCA.

Therefore, the CCA will also communicate the query of the Zagreb Consumer Association to the relevant public authorities.

At the same time, it reminds the Zagreb Consumer Association that all information and additional explanations regarding the application of the UTPs Act and the steps taken by the CCA within its jurisdiction in this area may be found in its publicly available monthly e-bulletin AZTN info.