CCA fines dairy processing company PIK Rijeka HRK 100,000 for imposing unfair trading practices

The Croatian Competition Agency (CCA) fined PIK Rijeka d.d. HRK 100,000 for the infringement of the Croatian Act on the prohibition of unfair trading practices in the business-to-business food supply chain. The investigation showed that PIK Rijeka used its strong bargaining power and imposed several unfair practices on its raw milk suppliers.

The Croatian Competition Agency (CCA) opened ex officio infringement proceeding against the dairy processing company PIK Rijeka within the meaning of the Act on prohibition of unfair trading practices in the business-to-business food supply chain (UTPs Act) with the view to establishing whether this buyer of raw milk used its strong bargaining power and imposed unfair trading practices on its suppliers.

The investigation found that PIK Rijeka used its strong bargaining power and imposed several unfair trading practices on its raw milk suppliers:

• PIK Rijeka purchased raw milk from its suppliers based on a standard purchase agreement for 2019 and 2020 that did not clearly define the terms and deadlines of the delivery of agri or food products concerned, which contravenes with the UTPs Act regulating that any business deal must be based on an agreement concluded between the processor and the supplier in a written form.
• After the 2019 agreements ceased to be in effect until the conclusion of the subsequent 2020 agreements, PIK Rijeka made business deals with its suppliers without any written agreement, what is more, it even made business transactions before the period concerned without any agreement in a written form, which contravenes with the UTPs Act and constitutes an unfair business practice.
• Some of the suppliers did not get receipts for made deliveries, which also constitutes an infringement of the UTPs Act.
• Furthermore, PIK Rijeka imposed unfair trading practices on the suppliers by calculating the premium according to the volumes specified in kilos of raw milk instead of litres that lead to the reduction of payment to the prejudice of the suppliers and caused a non-transparent fall in the value of the delivered raw milk. PIK Rijeka thereby imposed an unfair trading practice within the meaning of the UTPs Act.
• Finally, CCA found that in the period from January 2020 to May 2020 PIK Rijeka made payments to some of its suppliers over the period exceeding 30 days from the date of the receipt of the invoice i.e., outside the mandatory payment deadline under the UTPs Act, or later than 30 days from the date of the receipt of the lab results of the central quality control laboratory for the suppliers that do not issue an invoice, which contravenes with the provisions of the UTPs Act and constitutes an unfair trading practice.

Considering the gravity, the scope and the duration of the infringement concerned and the consequences for the suppliers, and a number of extenuating circumstances, PIK Rijeka was imposed a fine in the amount of HRK 100,000. The CCA found the fine proportionate to the infringement and that it would have a deterrent effect not only on PIK Rijeka but also on other actors in the food supply chain.

The CCA prohibited PIK Rijeka any further behaviour that constitutes unfair trading practices and also ordered PIK Rijeka to supply evidence on the paid difference for the undervalued premium plus the default interest.

The integral decision of the CCA in this case in the Croatian language is available here