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Ban on unfair retailer practices in relations with suppliers in Latvia

Latvia:Latvian Parliament restricts retail-ers’ ability to transfer risks and duties to suppliers

The Latvian Parliament has passed a Law on Prohibition of Unfair Re-tail Practices (the Law), as well as accompanying amendments to the Competition Law. These newly adopted legislative measures im-pose restrictions upon retailers in their relationships with suppliers, prescribe sanctions for violating those obligations and empower the Latvian Competition Council to supervise compliance with the new regime.

The reasons for passing the Law lie in the widespread practice of food retailers imposing unfair trad-ing conditions upon suppliers (such as “entry payments” or “product placement fees”). The provisions of the Competition Law combating abusive behaviour in the retail sec-tor were insufficient to address this problem due to the rather limited market share of many market par-ticipants.

The Law now imposes restrictions on retailers, prohibiting them from carrying out certain activities with regard to suppliers. Among others, retailers are prohibited from:

  • demanding payment for con-cluding contracts with suppli-ers;
  • charging for placing particular goods on shelves (with the exception of certain contrac-tually agreed promotional ac-tivities);
  • without justification, requiring the supplier to acquire goods, services or property from a third party indicated by the re-tailer;
  • requiring suppliers to take back unsold goods;
  • imposing unjust sanctions up-on suppliers for violating con-tract terms;
  • demanding lowest price commitments;
  • including contract terms with unreasonably long and unjusti-fied payment terms for goods supplied.

For suppliers violating the Law, the Competition Council can impose a fine of up to 0.2 % of their annual turnover but not less than EUR 70.00.

The Law comes into force on 1 January 2016.

Source: Law on Prohibition of Unfair Retail Practices