Significant Market Power
REGULATION OF RELATIONS BETWEEN SUPPLIER AND BUYER IN FOOD SECTOR
Food supply chain includes all the entities and activities regarding not only primary agricultural production but also processing of food, distribution, retail and consumption. Activities implemented within food supply chain influence all the consumers on daily basis and expenses in connection to food represent a large proportion of Czech households´ average budget. However, material value in food supply chain is not spread equally into all its levels. This happens as a consequence of different bargaining power between smaller and less powerful entities and their economically larger and in some cases even highly concentrated trade counterparts. If the conduct between trading partners grossly deviates from good commercial conduct, be contrary to good faith and fair dealing or be unilaterally imposed by one trading partner on the other, unfair trading practices are present. The Office for the Protection of Competition (hereinafter referred to as “the Office”) has been dealing with the surveillance of abuse of more significant position in the market in the sector of purchase and sale of food and related services since 2010.
SIGNIFICANT MARKET POWER
- is the position of a buyer (chain store), due to which a buyer may enforce an advantage provided by suppliers in connection to the purchase of food, or receive or provide services related to the purchase or sale of food;
- may be abused in relations between buyers and suppliers in food sector;
- is found out in connection to buyers with turnover exceeding CZK 5 billion;
- its abuse leads to undesirable trading practices in relations between buyers and their suppliers;
- is regulated by the Act. No. 395/2009 Coll., on Significant Market Power in the Sale of Agricultural and Food Products and Abuse Thereof (hereinafter referred to as “the Significant Market Power Act”), which defines obligatory arrangements of the contract between a buyer and a supplier and provides demonstrative list of merits of the abuse of significant market power, as well.
COMPETENCE OF THE OFFICE IN THE AREA OF SIGNIFICANT MARKET POWER
Competences of the Office in the area of significant market power are provided for in the Significant Market Power Act. Competence of the Office consists in surveillance of compliance with this Act and methodological activities. It includes activities and tasks relating to the detection of unfair trading practices and investigation in the area of abuse of significant market power as follows:
- monitoring of all the available sources of information and its registration, which might lead to the detection of particular cases of abuse of significant market power;
- conducting of sector inquiries;
- conducting of administrative proceedings (including issuance of administrative decisions and imposing of fines for infringement of the Significant Market Power Act);
- suitable alternative solutions of cases;
- methodological activities, which consist in issuance of the interpretative opinions in relation to provisions of the Significant Market Power Act, organizing of round tables and conferences.
The Department of Methodology and Supervision of Market Power deals with the abuse of significant market power agenda.