Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 concerning unfair business-to-consumer trading practices in the agricultural and food supply chain has recently been transposed into Romanian legislation by Law no. 81/2022, in force since 15 April 2022 ("Law no. 81 /2022").
Subject matter and scope
Law no. 81/2022 regulates the commercial relations between suppliers and buyers in the supply chain with respect to unfair trading practices carried out in connection with the sale of agricultural and/or food products (the "Products") in the context of sales with effects on the territory of Romania, regardless of the place the sale took place or the services provided by the buyer to the supplier.
Law no. 81/2022 applies on the basis of a comparative turnover mechanism of the parties involved, which is intended to reflect their bargaining power (e.g. supplier's turnover ≤ EUR 2 million vs. buyer's turnover ≥ EUR 2 million; supplier's turnover between EUR 2 million and EUR 10 million vs. buyer's turnover ≥ EUR 10 million, etc.), but excludes agreements between suppliers and consumers.
Unfair trading practices prohibited
The most important trading practices classified as unfair and thus prohibited for the buyer are:
- exceeding the payment deadline by more than 14 calendar days from the due date in case of perishable Products and by more than 30 days for non-perishable Products (with certain exceptions);
- unilaterally amending a commercial agreement with regard to the frequency, method or place of supply or delivery of the Products, or with regard to the prices/payment terms for the services provided;
- requesting invoicing and/or re-invoicing and charging the supplier for any other costs than those contractually agreed or using self-billing, except in cases provided for by law;
- applying financial and trade discounts in the form of rebates on the Products, with the exception of discounts and rebates with cumulative discounts exceeding 20%;
- returning unsold Products to the supplier, delaying their receipt and preparation of the acceptance documents;
- invoicing the value of certain services rendered in excess of maximum 5% of the amount charged by the supplier under the agreement entered into by the parties;
- asking the supplier to provide certain products, services or a payment for listing or displaying for sale its Products or to buy or sell from a third party;
- charging the supplier fees, regardless of their type and name, in order to oblige the supplier to artificially increase the billing price;
- delisting, threatening to delist or withdrawing from display a Product in order to put pressure on or take commercial retaliation against the supplier for accepting contractual unfavorable terms for the supplier;
- listing and displaying only the buyer's own brand on the shelf;
- applying different commercial conditions to private label products of manufacturers compared to private label products of the trader for listing/display on the shelf.
In addition, the buyer is also prohibited from:
- asking the supplier for payment for advertising of agricultural and/or food products made by the buyer;
- asking the supplier for payment of the marketing services provided by the buyer for agricultural and/or food products;
- refusing to grant the supplier a price renegotiation within a period of more than 10 days from the date of the request; the conditions of the price renegotiation take effect within the period laid down in the agreement;
- asking the supplier to pay for staff who arrange the sales premises used for the sale of the supplier's products or obliging the supplier to provide staff for the sale of the products or any other activity related to the sales-promotion process;
- charging the supplier a fee for the secondary placement of its agricultural and food products for sale;
- asking the supplier to bear all or part of the cost of any discounts for agricultural and/or food products sold by the purchaser as a promotion,
unless they have been agreed in advance at the supplier's request in clear and unambiguous terms in the commercial agreement or in a subsequent addendum.
Authorities designated to enforce Law no. 81/2022 and their powers
The implementing authority of Law no. 81 /2022 is the Ministry of Agriculture and Rural Development, with powers to monitor unfair trading practices and the authority with a role in the enforcement of Law no. 81/2022 is the Competition Council (collectively the "Authorities").
Suppliers and purchasers can complain to the authorities and lodge complaints about suspected unfair trading practices. The regulation on the procedure for registration, investigation and settlement of complaints will be approved by Government Decision within 30 days of the entry into force of the Law no. 81/2022.
Referrals are dealt with within 60 days from the date of the start of the in-depth investigation, with the possibility of extending the time limit in complex situations, not exceeding 90 days from the referral.
In the course of the investigation, the Competition Council may, in principle, adopt any appropriate interim measure. In case of an obligation to cease the prohibited trading practice, the termination decision will apply to all similar commercial agreements entered into by the buyer concerned with all its suppliers.
Before taking a decision, the Competition Council gives the parties the opportunity to express their opinion within 5 working days. Uncontested penalty decisions are enforceable and those ordering measures to prohibit unfair trading practices will be monitored. In the event of infringement of the ordered measures, the main and additional fines provided for in Law no. 81/2022 will be imposed.
The contraventions provided for by Law no. 81/2022 are established and enforced by the Competition Council. Among others, the following acts committed by the buyer or supplier, with the exception of public authorities, constitute contraventions (if they are not offences):
a) supplying incorrect, incomplete or misleading information or incomplete documents or failing to supply the requested documents;
b) unjustified refusal to submit to unannounced inspections;
c) failure to comply with the imposed measures;
d) the commission of an unfair trading practice within 2 years of the first infringement decision.
These contraventions are penalized, as appropriate, by fines ranging from RON 250,000 to RON 600,000, or of 1% of the total turnover achieved in the previous financial year. Additional penalties of 1% of the principal fine per day of delay may also be imposed as of the date set by decision in order to induce them to cease unfair practices, to comply with the obligations imposed, to provide correct and complete information and documents or to submit to unannounced inspection.
In the event of damage to the supplier as a result of the unfair trading practice, the buyer will be liable to pay 3 times the amount of such damage.
The penalty is determined according to the gravity of the offence, the duration and the existence of other contravention penalties applied according to the Law no. 81/2022 in the last 3 years prior to the offence.
In case of certain infringements, if the company expressly acknowledges, when submitting its point of view, that it has carried out the unfair trading practice and proposes measures which lead to the removal of the causes of the infringement, the Competition Council may, at its express request, apply for a reduction of the fine of between 1% and 25% of the final fine, even when it is set at the minimum.
If, before the decision is taken, the company submits a proposal for an acknowledgement, the Competition Council may apply a simplified procedure, but the benefit of the reduction of the fine is lost if an action for annulment of the decision is brought in respect of those recognized.
Right to apply to the courts
On the one hand, actions arising out of an unfair trading practice fall within the jurisdiction of the court where the act was committed or within whose territorial jurisdiction the plaintiff has its registered seat or, failing that, his domicile. On the other hand, decisions finding and penalizing unfair trading practices may be appealed to the Administrative and Fiscal Litigation Section of the Bucharest Court of Appeal within 30 days as of the notification.
Thus, although Law no. 81/2022 does not expressly provide for it, in our interpretation, it gives the persons harmed by an unfair trading practice (i) the possibility of applying to the Competition Council in order to report the anti-competitive conduct, with a view to the competent authority penalizing the actor and putting a stop to the behavior, or (ii) the possibility of applying to a court of law, with a view to obtaining damages for the harm suffered as a result of this infringement.
As a consequence, as regards the remedies available to the injured party, such may apply to the court of appeal from the territorial jurisdiction of the court that issued the decision in the case provided for in point (i) above, or to the Administrative and Fiscal Disputes Section of the Bucharest Court of Appeal in the case provided for in point (ii) above.
Disputes may also be settled amicably through mediation, without prejudice to the right of suppliers to lodge a complaint with the Competition Council and without affecting the rights of the parties to take legal action at any time before, during or after mediation.
Law no. 81/2022 is without prejudice to national regulations aimed at combating unfair trading practices and falls outside their scope.
The new regulation applies only to commercial contracts entered into after 15 April 2022, when it enters into force, and for those entered into before, the parties are obliged to bring them into line with the provisions of this law by 31 December 2022.
By Denisa Loredana Moldovan and Ruxandra Robu, Associates, Noerr