The new law – Act on counteracting the use of unfair contract advantage when trading food and agricultural products dated 15 December 2016 came into force in Poland in July this year.
The purpose of this law is introducing an administrative way of combatting unfair practices (alternative to the private i.e. judicial one). The Act applies to the relationships between the supplier of the agricultural products and their distributors, provided that the total annual turnover between the said contractors exceeds PLN 50,000 (about EUR 12,000) and/or that annual turnover of the entrepreneur, who used unfair contract advantage, or its capital group, exceeds PLN 100 million (about EUR 23 million).
The Act defines “contract advantage” as a situation in which there is no sufficient or actual possibility of selling (or purchasing) food or agricultural products to other buyers (or to other suppliers) and in which there is a significant disproportion in the economic potential of the parties to the sale contract. The Act indicates 4 following examples of practices constituting the unfair use of contract advantage: (1) unjustified termination of the contract or the threat of termination, (2) granting the right to terminate the contract to one party only, (3) making the conclusion of the contract subject to fulfilment of conditions which have no connection with the contract, (4) unjustified extension of the payment terms of products. However, the definition is open and the above list is not exhaustive. The main purpose of the Act is to counteract a situation, when buyers put pressure on the suppliers of the agriculture products in unfair way in order to reach the lowest price; the “use of contract advantage” pursuant to the Act is prohibited.
The President of the Office for Competition and Consumer Protection will be the competent authority to examine the above unfair practices in Poland; the proceedings before the President of the Office seems to be similar to the proceedings on the basis of the Act on the Competition and Consumers Protection. The President of the Office may impose a huge fine on the entrepreneur, who uses the unfair contract advantage; its amount may be up to 3% of its annual turnover.