HRUŠKA Retail Chain Shall Return CZK 39 Million to Food Suppliers After the Office's Intervention

The Office for the Protection of Competition (hereinafter referred to as “the Office”) has concluded two administrative proceedings in the field of significant market power against the retail chain HRUŠKA, spol. s r.o., after the undertaking proposed commitments to compensate more than seventy suppliers. The decisions are already final.

"The HRUŠKA chain will reimburse small and medium-sized food suppliers with an amount of more than CZK 39 million, which it unjustly obtained due to its position of a stronger contractual party as a fulfilment of the so-called full service," said Petr Mlsna, the Chairman of the Office.

The Office found the HRUŠKA chain's illegal conduct in negotiating and performing full service with food suppliers. Based on these provisions, the chain could return food which was close to the date of expiry to the supplier or reduce its price through an accounting operation, with all costs borne by the supplier. According to the Office, this conduct, which lasted from the second half of 2016 until mid-2021, had the potential to abuse significant market power as the undertaking HRUŠKA completely transferred the business risks and losses associated with the sale of food with an affected expiration period to its food suppliers.

In the administrative proceedings, the undertaking HRUŠKA offered the Office commitments to remedy this defective condition consisting, in particular, in the obligation to reimburse all the payments made, including VAT, to a total of 74 food suppliers under full service agreements within eight months from the decision coming into force. The total amount involved is almost CZK 34 million, excluding VAT, i.e. more than CZK 39 million, including VAT.

Within the commitments, the chain shall also undertake the removal of the full-service clauses from its contracts and shall submit a list of internal measures to the Office in order to ensure that the future contracts with food suppliers will not contain any provisions infringing the Significant Market Power Act. The undertaking HRUŠKA also has to notify its food suppliers of the Office's decision. As the chain's conduct was not qualified as serious, the Office accepted the commitments and, subject to their fulfilment, discontinued the administrative proceedings.

Legislative changes are also currently underway to implement Directive (EU) 2019/633, on unfair trading practices in business-to-business relationships in the agricultural and food supply chain, into Act No. 395/2009, which regulates significant market power and its abuse. Once the Directive is transposed, this Act will affect the entire supply and customer chain in the agricultural and food sector, not only large retailers.

 

Press Unit of the Office of the Protection of Competition

22/094 – S0026/2019, S200/2021