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More obstacles for grocers in Slovakia!

The fight against the market power of food traders goes into the next round.

Since 1 May, new rules have been in force in Slovakia for contracts between food traders and suppliers. The legislator justifies adoption of this law as a reaction to the imbalance between food traders and suppliers and has therefore defined 40 practices as unfair and made them partly sanctionable. The practices are sometimes described in a very broad or misleading manner. All in all, the law is very poorly drafted. The following contract conditions may cause problems in the future:

- arbitrary reduction of the purchase price of a foodstuff during the duration of an agreement on the purchase price;

- lower purchase price than the economically justified costs of the supplier;

- unauthorised or unjustified set-off of outstanding claims;

- acquisition of ownership later than takeover of the food;

- guaranteed fixed prices for a period longer than 60 days, whereby it is unclear what the guaranteed fixed price is;

- payment terms of more than 30 days from delivery.

In addition, at least half of the foodstuffs shown as part of the food chain's marketing campaigns should now be of Slovak origin.

Depending on the seriousness of the infringement, fines of up to €500 000 may be imposed.

The Act applies to all situations which may have an impact on the territory of the Slovak Republic, even if they have been asserted abroad or if contractual relations are governed by a legal system other than the Slovak one.

Existing contracts must be amended by 30 September 2019.

We expect that once again the Slovak and European courts will have the last word on this law.

Objections against the law have already been submitted to the Slovak Constitutional Court as well as to the European Commission.

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