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Lithuania: Maxima LT to pay 51,600 euros fine for unfair commercial practices to suppliers

Christian Fernsby |
Konkurencijos taryba, Competition Council of the Republic of Lithuania, found that the company Maxima LT infringed the Law on the Prohibition of Unfair Practices of Retailers by setting requirement for food and drink suppliers to pay fees for sales promotion, and by envisaging fines or compensation for failure to comply with the set obligations.

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During the investigation the authority analysed the retailer‘s agreements with the suppliers.

The findings showed that the suppliers were obliged to pay certain fees for sales promotion activities although no specific actions were agreed upon in writing.

Besides, Maxima LT retained the right to make one-sided decisions as to the amount of payable sums and sales promotion activities.

The Law prohibits retailers from requiring the suppliers to pay the costs (or part of them) of sales promotion, except for the cases when there is a written agreement between the retailer and the supplier regarding the amount of such costs and types of sales promotion activities.

According to Konkurencijos taryba, Maxima LT adopted unfair commercial practices and transferred the risk to food and drink suppliers which were not ensured that agreements on sales promotion activities and budget served their interest and goodwill.

The retailer caused financial burden to the suppliers since they had to pay all set fees for sales promotion, irrespective of whether such activities were undertaken or not.

Additionally, the retailer established the right to plan such activities at the suppliers‘ expense in cases when they did not conduct sales promotion in retail stores without a valid reason or did it improperly.

Having evaluated that the infringement lasted for almost 2 years and affected a small number of suppliers, Konkurencijos taryba imposed EUR 51,600 on the retailer.

The authority also obliged Maxima LT to terminate unfair commercial practices should they still be running.

The ruling of the Court is subject to appeal.

The Law sets prohibition for five major retailers, namely MAXIMA, RIMI, IKI, NORFA, LIDL, to require from their suppliers any “entry” fees, ask to buy goods or services from third parties, as well as compensate for smaller-than-expected income, pay any operational costs related to sales promotion, etc.

In case of infringement of the Law, a fine of up to EUR 120,000 may be imposed on the respective retailer.

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