Sanctioning of anti-competitive practices in commercial relations with food products

Because the food products market is a subject of major interest for all countries, Romania not being an exception, where the players are often medium/large-scale companies on the one hand, and on the other hand this sector of activity requires the assurance of to the states of consumer protection from all perspectives, starting from purchase prices to the safety of public health, made it necessary to treat the subject separately and in detail with regard to anti-competitive practices committed in commercial relations.

In Romania, the regulation of commercial relations in the food sector from the perspective of sanctioning anti-competitive practices is done by Law 321/2009 amended as a result of the agreement with the provisions of Directive (EU) 2019/633 of the European Parliament and of the Council of April 17, 2019 regarding commercial practices unfair practices between businesses in the agricultural and food supply chain, as well as by Law 81/2022 which transposes into practice the provisions of the same Directive 633/2019 EC.

Law 321/2009 – on the marketing of food products, amended

Law 321/2009 applies to all natural and legal persons carrying out commercial relations with food products and aims to protect against anti-competitive agreements and practices. In this sense, the law provides that the parties cannot oblige each other, directly or indirectly, to buy or sell products or services from or to a third party.

Therefore, what the law has in mind is the prohibition and sanctioning of direct compulsions to buy or sell products, as well as indirect ones, by imposing and assuming additional duties by the party that is not in a dominant contractual position. These agreements are considered indirect constraints, extrinsic to the commercial act. Law 321/2009 mentions the following services considered as indirect anti-competitive practices:

– Services regarding the expansion of the merchant’s distribution network,

– the arrangement of the merchant’s sales premises;

– operations and events to promote the activity and image of the trader

The law prohibits invoicing/re-invoicing and collection from the supplier of taxes and services, other than those related to the commercial act. The services directly related to the commercial act are included in the contract between the parties. I make an exception from the obligations stated above “the services requested by the buyer from the supplier for promotion, marketing and advertising operations if they were previously agreed by the supplier and the buyer through a clear and unambiguous agreement” (in accordance with with the provisions of Article 3 paragraph (2) of Directive (EU) 2019/633 of the European Parliament and of the Council of April 17, 2019 regarding unfair commercial practices between businesses in the agricultural and food supply chain).

Also, Law 321/2009, amended in accordance with Directive 633/2019, establishes limits regarding the assumption of various obligations between the supplier and the buyer, since those obligations are specified as not being part of the commercial act (sale-purchase of products). These limitations are regulated in Law 321/2009, referring to Article 3 of the Directive, namely:

“(2) Member States shall ensure that at least all of the following commercial practices are prohibited, unless they have been previously agreed by clear and unambiguous clauses in the supply agreement or by a subsequent agreement between the supplier and the buyer:

(a) the buyer returns the unsold agricultural and food products to the supplier, without paying for such unsold products, or without paying for the disposal of such products, or both;

(b) the supplier is required to make a payment that is conditional on the storage, display or listing of his agricultural and food products, or making those products available on the market;

(c) the buyer requires the supplier to bear, in whole or in part, the cost of any discounts for agricultural and food products sold by the buyer on a promotional basis;

 (d) the buyer requires the supplier to pay for the buyer’s advertising of agricultural and food products;

(e) the buyer requires the supplier to pay for the marketing services provided by the buyer in relation to agricultural and food products;

 (f) the buyer requires the supplier to pay for the staff responsible for setting up the sales premises used for the sale of the supplier’s products.

Member States shall ensure that the commercial practice referred to in point (c) of the first paragraph is prohibited unless the buyer, before starting a promotional action initiated by the buyer, specifies the period of the promotion and the quantity of agricultural and food products that he expects to order at a reduced price.”

The obligations mentioned above, although they are not contained in the text of Law 321/2009, but are only referred to, are binding for the parties.

In conclusion, Law 321/2009 continues, after its adaptation to the provisions of Directive 633/2019, to regulate contractual relationships between companies that do not meet the financial criteria established by European norms (transposed in L81/2022).

Regarding Law 81/2022 – on unfair commercial practices between enterprises in the agricultural and food supply chain, it also regulates commercial relations between suppliers and buyers in the supply chain, regarding unfair commercial practices committed in connection with the sale of agricultural and/or food products, but it is applicable to medium and large players in the agri-food sector. For this reason, by Law 81/2022, the commercial relations between the parties are more rigorously regulated, taking into account the structural and financial dimension of the businesses.

The criteria on the basis of which the applicability of this law is established are related to the turnover of each participant in the commercial supply of goods, as follows:

a) suppliers whose annual turnover does not exceed 2,000,000 euros to buyers whose annual turnover exceeds 2,000,000 euros;

b) suppliers whose annual turnover exceeds 2,000,000 euros, but is a maximum of 10,000,000 euros, to buyers whose annual turnover exceeds 10,000,000 euros;

c) suppliers whose annual turnover exceeds 10,000,000 euros, but is a maximum of 50,000,000 euros, to buyers whose annual turnover exceeds 50,000,000 euros;

d) suppliers whose annual turnover exceeds 50,000,000 euros, but is a maximum of 150,000,000 euros, to buyers whose annual turnover exceeds 150,000,000 euros;

e) suppliers whose annual turnover exceeds 150,000,000 euros, but is a maximum of 350,000,000 euros, to buyers whose annual turnover exceeds 350,000,000 euros.

In order to establish whether or not a commercial supply of goods falls under the scope of this law, the turnover of each participant will be calculated at the end of the financial year prior to the moment when it is checked whether or not an act is considered an unfair commercial practice.

The annual turnover of suppliers and buyers is interpreted in accordance with the provisions of the annex to Recommendation 2003/361/EC of the Commission and, in particular, art. 3, 4 and 6 hereof, including the definitions of “self-employed”, “partner enterprise” and “associated enterprise”, and other matters relating to annual turnover.

By way of exception, law 81/2022 also applies to sales of agricultural and/or food products by suppliers whose annual turnover is a maximum of 350,000,000 euros, to all buyers who are public authorities.

Observation regarding the two normative acts

The goal pursued by both laws (both based on Directive 633/2019) is, on the one hand, to stabilize the contractual relations between the parties of the distribution chain, making the execution of obligations predictable (especially for the supplier) and, on the other hand, limiting the effects of increase in the prices of products for sale to consumers.

The differences between them concern the regulatory details (such as the values/rates related to turnover mentioned by Law 81/2022), considering the size of the companies involved in the distribution chain and for which the need for firmer intervention in the regulation of commercial relations was felt.

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The main management structure of the company in Romania is the general meeting of associates / shareholders. The constitutive act establishes the rules for convening and adopting decisions and whether the exercise of the vote can be delegated by special mandate by the associate / shareholder who cannot take part in the meeting. In the limited liability company, each shareholder entitles the holder to one vote in the respective meeting. The general meeting of associates has the following main obligations: ✓ to approve the annual financial statement and to establish the distribution of the net profit. ✓ to appoint the administrators and the censors, to revoke / dismiss them and to discharge them, as well as to decide to contract the financial audit, when it is not obligatory, according to the law; ✓ to decide the pursuit of the administrators and censors for the damages caused to the company, designating also the person in charge to exercise it; ✓ to modify the constitutive act.
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The limited liability company is the most common form of company in Romania, being the legal entity that best serves the interests of investors both from the point of view of the reliability of the activity, and from the perspective of its management. The limited liability company is abbreviated "SRL" in Romania and is the equivalent of the American limited liability company Limited Liability Company (abbreviated to LLC) or the German economic structure "Gesellschaft mit beschränkter Haftung" (abbreviated to GmbH), or the structure called "limited" , the structure used in most Latin American states.
The limited liability company is characterized by:
✓ the character intuitu personae, which means that this economic structure is based on the trust between the associates;
✓ the division of the share capital into fractions called shares, which cannot be negotiable securities;
✓ the liability of the associates is limited to their contribution to the share capital.
The limited liability company may also have a single partner, natural or legal person, of Romanian or foreign nationality, who will be the owner of all shares. Instead, the maximum number of associates is 50 people.
At present, the Romanian law no longer conditions the subscription and payment of a certain amount as share capital.
Through registration, the company acquires legal personality, becoming, under the law, a collective subject of law. The conclusion given by the judge is sent, ex officio, to the Official Gazette of Romania for publication at the expense of the company and to the Financial Administration in whose territorial area is the main headquarters of the company for fiscal registration, mentioning the registration number in the Trade Register .

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