Winemaker Iločki podrumi sanctioned HRK 250,000 for imposing unfair trading practices

The Croatian Competition Agency (CCA) opened an ex-officio infringement proceeding against the undertaking Iločki podrumi after having assessed the writing by a supplier of grapes which was communicated to the CCA by the Ministry of Agriculture.

In the course of the proceeding the CCA found that Iločki podrumi imposed unfair trading practices in the form of superior bargaining position with respect to its suppliers of grapes regarding the grape harvest 2018.

Namely, in its published general terms for the purchase of grapes in the grape harvest 2018 Iločki podrumi set the terms of payment later than 30 days in spite of the fact that this contravenes with the provisions of the Act on the prohibition of unfair trading practices in the business-to-business food supply chain (UTPs Act) regarding the payment of fresh agri products and thus is regarded as imposition of unfair trading practices on the suppliers.

The CCA examined the contract that was submitted to it by the complainant, on the basis of which the infringement proceeding was initiated in the first place, and found that Iločki podrumi, as a processor of grapes, actually agreed the terms of payment that were longer than 30 days. Not only was the payment made later than 30 days – the payment deadline that cannot be exceeded as laid down by the UTPs Act – but was even outside the deadline for payment set by the agreement. What is more, the agreement did not contain any essential provision on the duration of the agreement, which also contravenes with the provisions of the UTPs Act.

Iločki podrumi imposed the unfair trading practices on this supplier in the time period from 28 September 2018 to 2 September 2019 on eleven purchase orders.

The above described infringements constitute serious infringements of the UTPs Act that provides fines in such cases in the amount of up to HRK 3.5 million for a legal person.

Taking into account the gravity, the scope and the duration and the consequences of the infringement concerned for the suppliers, as well as the extenuating circumstances, Iločki podrumi was imposed a fine in the amount of HRK 250,000 and also prohibited any further infringement practices.

It is the view of the CCA that the fine is proportional to the gravity, scope and duration of the infringement and that it will have a deterrent effect not only on Iločki podrumi but also on other re-sellers, buyers and/or processors in the food supply chain. In support of this, as early as in the course of the proceeding Iločki podrumi submitted to the CCA new General terms for grape harvest 2019 and a copy of the agreement concluded with one supplier of grapes of the grape harvest 2019, both of which comply with the provisions of the UTPs Act.

The integral text of the CCA non-confidential decision is available on the CCA website

http://www.aztn.hr/ea/wp-content/uploads/2020/02/UPI-034-032019-04005.pdf