Unfair trading practices – CCA imposes HRK 350,000 fine on FRAGRARIA

The Croatian Competition Agency (CCA) closed the administrative proceeding against the undertaking FRAGRARIA d.o.o. from Zagreb that was initiated ex officio after having received two confidential complaints in July 2018.

In the course of the infringement proceeding the CCA found that FRAGRARIA used its strong bargaining power and imposed unfair trading practices on its suppliers of watermelons particularly by:

  • having concluded the agreements with 38 suppliers of watermelons that did not contain clearly defined price and/or the method of calculation of the price in the period from 10 January 2018 to 31 December 2018;
  • having published the General Terms of Purchase that did not contain clearly defined price and/or method of calculation of the price and as such did not provide for parameters for the calculation of the price of the watermelons depending on their quality in the period from 1 April 2018 to 31 December 2018;
  • having calculated the discount for early payment (cassa sconto) of some of its suppliers in a higher percentage than the figure that had been agreed with the suppliers, which lead to the reduction of payment to the prejudice of the suppliers and caused a non-transparent fall in the value of watermelons in the period from 28 June 2018 to 18 June 2019;
  • having purchased the first-class watermelons for the purchase price of the second-class watermelons in the period from 16 June 2018 to 20 July 2018, that also reduced the value of the watermelons of the standard quality in a non-transparent manner, and
  • having paid for purchases to its suppliers after the deadline of the prescribed 30-day-payment obligation has expired in the period from 16 July 2018 to 4 October 2018.

The duration of the above listed infringements was less than a year.

All the mentioned infringements constitute serious infringements under the UTPs Act that provides for sanctions ranging up to the amount of HRK 3.5 million for a legal person.

When setting the fine in this case the CCA took into account the gravity, scope, duration and the implications of the infringement for the suppliers, bearing in mind the extenuating circumstances, the CCA imposed the fine on FRAGRARIA in the amount of HRK 350,000.

In the opinion of the CCA the fine will have a deterrent effect on FRAGRARIA but also on other re-sellers, buyers and processors in the food supply chain.

The decision of the CCA without the parts covered by confidentiality obligation will be published on the CCA website.