CCA fines Kaufland Hrvatska EUR 300,000 for imposition of unfair trading practices

The Croatian Competition Agency (CCA) fined KAUFLAND HRVATSKA k.d., Zagreb, EUR 300,000 for a serious infringement of the Croatian Act on the prohibition of unfair trading practices in the business-to-business food supply chain (UTPs Act).

The CCA opened ex officio infringement proceeding against the buyer KAUFLAND within the meaning of the UTPs Act with the view to establishing whether it used its strong bargaining power and imposed unfair trading practices on its suppliers of agri- and food products.

Following the administrative proceedings, in the course of which it examined the content and implementation of the contracts under which KAUFLAND conducted business with 10 randomly selected suppliers of agricultural and food products, the CCA found that KAUFLAND had used its strong bargaining power by imposing unfair trading practices on suppliers of agricultural and food products, in that it:

1. conducted business with one of those suppliers on the basis of an agreement requiring payment for a service which would not be provided at the time of payment, and required payment for a service which had not been provided, thereby engaging in an unfair trading practice within the meaning of Article 4(2)(6) of the UTPs Act, in conjunction with Article 11(1)(3) of the UTPs Act;
2. charged one of the suppliers for an advertising service which it carried out itself, without the supplier’s explicit written request and without the payment being based on objective and reasonable criteria, thereby imposing on that supplier an unfair trading practice within the meaning of Article 4(2)(6) of the UTPs Act, in conjunction with Article 12(1)(3) of the UTPs Act;
3. made payments for supplied perishable agricultural and food products after the expiry of the applicable 30-day payment period, thereby engaging in an unfair trading practice within the meaning of Article 4(2)(6) of the UTPs Act, in conjunction with Article 11(1)(1)(b) of the UTPs Act.

In view of the established unfair trading practices, the CCA imposed on KAUFLAND a fine of EUR 300,000 taking into account the gravity, scope, duration and consequences of the infringement for the supplier as well as mitigating and aggravating circumstances.

In particular, the CCA considered as an aggravating circumstance the fact that KAUFLAND had already been fined by a final decision of the CCA in 2020 for the imposition of unfair trading practices. One of those unfair trading practices consisted of charging for a service that had not been provided, in other words, involving the same infringement under the UTPs Act. Apart from the repeated infringement, in these administrative proceedings the CCA established that KAUFLAND had imposed two additional unfair trading practices on its suppliers, which, in the CCA’s assessment, demonstrates that the previously imposed fine did not achieve the intended deterrent effect on KAUFLAND, which, as a repeat offender, again committed several infringements of the UTPs Act.

The purpose if a fine imposed pursuant to the UTPs Act is not merely to penalise the infringer and condemn its unlawful conduct, but also to establish, ensure and protect fair trading practices with respect to all participants in the food supply chain. The fine is therefore intended both to deter the infringer from further unlawful conduct, by making it aware of the necessity to fully align its business conduct with suppliers over which it has significant bargaining power with the provisions of the UTPs Act, and to have a general preventive effect by deterring all other actors in the food supply chain from infringing it.

Therefore, the CCA found that the fine imposed in these proceedings was appropriate for achieving its objective and purpose under the UTPs Act.

The non-confidential version of the decision in the Croatian language is available here