Portuguese retailer Jerónimo Martins has said that it plans to challenge a decision by the Polish Office of Competition and Consumer Protection (UOKiK) to fine its Polish operation, over the alleged abuse of bargaining power.
On Monday, UOKiK announced it would be imposing a fine of PLN 723 million (€162.8 million) on Jerónimo Martins Polska, which operates the Biedronka chain, alleging that the business 'unfairly earned money at the expense of food suppliers', chiefly fruit and vegetable suppliers.
UOKiK claims that suppliers were left in the dark as to what they would earn from particular deliveries, 'because at any time, the owner of Biedronka could demand a reduction in remuneration'.
The competition authority claimed that due to Biedronka's market power, suppliers were forced into accepting these unfavourable conditions, 'fearing that the end of cooperation could mean even greater financial losses'.
It alleges that Jerónimo Martins Polska earned more than PLN 600 million from these practices during 2018, 2019 and 2020.
'Unacceptable Use Of Market Power'
"This is an absolutely unacceptable use of market power by the retailer," commented Tomasz Chróstny, President of UOKiK. "Such practices destroy the foundations of fair competition and responsibility for contractors, and are a manifestation of deep dishonesty and disrespect for other entrepreneurs."
The maximum penalty for the unfair use of contractual advantage in the Polish agri-food industry can be up to 3% of a business' annual turnover, UOKiK added.
In a statement, Jerónimo Martins said that it will 'challenge this decision in court since it understands the same lacks any legal and factual grounds, and confident that reason is on its side'.
'Dynamics Of Negotiations'
Elsewhere, in Poland, its Biedronka business also issued a statement, claiming that UOKiK made its decision without observing due legal procedures, or talking to suppliers.
'UOKiK's decision proves that there is a misunderstanding of the nature of running a business and the dynamics of negotiations,' it said. 'The discounts publicly mentioned by the President of UOKiK are in fact agreed in advance by both parties to the contract and apply to the turnover achieved in a specific period.'
It said that the 'aggressiveness of the form and content' of the announcement was 'unfair' at a time when the retailer is seeking to both support its shoppers during the COVID-19 pandemic as well as 'contributing to the strengthening of the Polish economy'.
In closing, it said that it plans to 'pursue our case in court with all our strength and commitment. We strongly believe that Polish courts will investigate this matter comprehensively, objectively and impartially and that justice will be done'.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.