Art. 1.
(1) This Act regulates:
(a) the method of assessing and preventing the abuse of significant market power in connection with the purchasing of food for the purpose of its resale in the territory of the Czech Republic or services related to such purchasing or sale of food;
(b) supervision of compliance with this Act.
(2) The abuse of significant market power which has occurred abroad, if its effects have occurred or may occur in the territory of the Czech Republic, is also assessed under this Act.
Art. 2.
For the purposes of this Act:
(a) a supplier means a business entity, if it sells food for the purpose of the resale thereof or receives or provides services related to the sale of food;
(b) a buyer means a business entity or a purchasing alliance as referred to in Letter c) below, if it purchases food for the purpose of the resale thereof or receives or provides services related to the purchase of food; a buyer also means one who ensures such purchase or services for another buyer under a mandate type contract;
(c) a purchasing alliance means a group of buyers, formed under a contract, other legal act, or other legal fact, which carries out co-operation among buyers in connection with the purchasing of food for the purpose of the resale thereof or the receipt or provision of services related thereto, or which has been formed for the purpose of such cooperation, regardless of whether or not the group has legal personality; and
(d) food means a substance or product defined as food in the directly applicable EU regulation1.
1 Regulation (EC) No. 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety.
Art. 3.
(1) Significant market power is the position of a buyer as a result of which the buyer may, without a fair reason, force an advantage from suppliers in connection with the purchasing of food or the receipt or provision of services related to the purchasing or sale of food.
(2) Significant market power is assessed in particular with regard to the market structure, barriers to entry to the market and the financial strength of the buyer.
(3) If the buyer is a business entity which ensures the purchasing of food or services related to the purchasing or sale of food for another buyer under a mandate type contract, its significant market power is assessed together with the position of the buyer for which it ensures such activities.
(4) It is considered that significant market power is held by:
(a) a buyer the turnover of which for the sale of food and services related thereto in the territory of the Czech Republic exceeded CZK 5 billion for the last completed 12 month accounting period;
(b) a buyer which is a controlled person and the turnover of which for the sale of food and services related thereto in the territory of the Czech Republic did not exceed CZK 5 billion for the last completed 12 month accounting period if its turnover for the sale of food and services related thereto in the territory of the Czech Republic together with the turnover of the controlling person for the sale of food and services related thereto in the territory of the Czech Republic exceeded CZK 5 billion for the last completed 12 month accounting period; or
(c) a purchasing alliance if the combined turnover of its members for the sale of food and services related thereto in the territory of the Czech Republic exceeded CZK 5 billion for the last completed 12 month accounting period.
Art. 3a.
A contract between a buyer with significant market power and a supplier must be agreed in writing and, in addition to the essential parts, must also specify:
(a) the method of the payment of the purchase price and the period for its payment, the amount of any discount on the purchase price or the method of the determination thereof, if granted; the maturity period of the purchase price may not exceed 30 days from the invoice delivery date;
(b) the period (or method of the determination thereof) for the delivery of the purchased item(s) and the determination of the quantity thereof for a specified period or the determination of the quantity of an individual supply of the purchased item(s);
(c) in the event that services related to the purchasing or sale of food are received and provided, the method of co-operation in the receipt and provision thereof in terms of the subject matter, scope, method and time of performance, and price (or the method of the determination thereof);
(d) the period of the guaranteed validity of the purchase price, which may not exceed three months from the date of the first supply of the food for which the purchase price was agreed; and
(e) the method of assignment of a claim, which is governed by the relevant provisions of the Civil Code.
Art. 4.
(1) The abuse of significant market power is prohibited.
(2) Abuse of significant market power shall be, in particular:
(a) negotiating or applying contractual terms which create a significant imbalance in the rights and obligations of the parties;
(b) negotiating or obtaining any payment or other performance for which a service or other consideration has not been provided, or is disproportionate to the value of the consideration actually provided;
(c) applying or obtaining any payment or discount where the amount, subject matter and scope of the consideration provided for that payment or discount has not been agreed in writing prior to the delivery of the food or the provision of the services to which the payment or discount relates;
(d) negotiating or applying price terms as a result of which the tax document for payment of the purchase price for the supply of food will not contain the final amount of the purchase price less all agreed discounts on the purchase price, except for pre-agreed quantity discounts;
(e) negotiating or applying payments or other consideration for the acceptance of food for sale;
(f) negotiating or applying the maturity period of the purchase price of food that is longer than the period set out in Section 3a(a);
(g) negotiating or exercising the right to return purchased food, except for a material breach of the contract;
(h) demanding compensation from the supplier for a penalty imposed by the inspection authority without any fault on the supplier’s part;
(i) discriminating against the supplier by negotiating or applying different contractual terms for the purchase or sale of services related to the purchase or sale of food at a comparable performance, without a fair reason;
(j) carrying out an audit or other form of inspection of the supplier by the buyer or a natural person or legal entity authorised by the buyer at the supplier’s expense, including requesting food analyses at the supplier’s expense; or
(k) the buyer not respecting the results of an official food inspection carried out by state supervisory authorities2.
2 Act No. 110/1997 Sb., on Food and Tobacco Products and on Amendments and Supplements to Certain Related Acts, as amended.
Art. 5.
The Office for the Protection of Competition (the “Office”) supervises compliance with the Act. The competence of the Office is established by another Act3.
3 Act No. 273/1996 Sb., on the Competence of the Office for the Protection of Competition, as amended.
Art. 6(1).
If the Office finds in ex-officio proceedings that an abuse of significant market power has occurred, it will state this fact in the decision and prohibit such conduct in the future.
Art. 8.
(1) A buyer with significant market power commits an administrative offence if the buyer
(a) abuses significant market power contrary to Section 4;
(b) fails to fulfil a commitment pursuant to Section 6(2);
(c) fails to fulfil a remedial measure imposed by the Office pursuant to Section 6a or other obligations stated in the Office’s decision, or
(d) fails to arrange a mandatory element of a contract under Section 3a(a) to (e) or fails to arrange a contract in writing.
(2) A legal entity or a natural person-entrepreneur commits an administrative offence by
(a) breaking a seal placed in the course of investigation pursuant to this Act; or
(b) in contradiction to this Act, fails to provide complete, accurate and truthful documents or information to the Office, including business books, other business records or other records that may be relevant to clarify the subject-matter of the proceedings.
(3) The Office may impose a fine of up to CZK 10,000,000 or 10% of the net turnover achieved by the buyer in the last completed accounting period for an administrative offence pursuant to Subsection (1), and a fine of up to CZK 300,000 or 1% of the net turnover achieved by the buyer in the last completed accounting period may be imposed for an administrative offence pursuant to Subsection (2).
(4) If a fine pursuant to Subsection (3) is imposed on
(a) a buyer, who is a controlled person, it is calculated from the aggregate net turnover of the controlled and controlling persons for the last completed accounting period; or
(b) a purchasing alliance or its members, it is calculated from the aggregate net turnover of its members for the last completed accounting period.
(5) If a fine is imposed on a purchasing alliance, its members are jointly and severally liable for payment of the fine imposed.
(6) If the Office finds a buyer guilty of an administrative offence pursuant to Section 8(1), it shall reduce the fine, the amount of which it informed the parties to the proceedings in the statement of objections, by 20%, provided that the buyer pleads guilty to the administrative offence and if the Office considers such sanction sufficient with respect to the nature and gravity of the administrative offence.
