Poland's competition authority, UOKiK, has announced plans to investigate the implementation of 'retrospective rebates' in negotiations between retailers and suppliers.
The authority said that in cases where such rebates are applied, a supplier is often 'not able to determine' the level of discount that will be offered to the retailer, thereby giving retailers a competitive advantage in contractual agreements.
The investigation follows charges by UOKiK against Jeronimo Martins Polska, operators of the Biedronka chain.
"The suppliers of products to the Biedronka chain did not know at the time of signing the contract whether they would be forced to grant an additional rebate or how big it would be," commented Tomasz Chróstny, president of UOKiK.
As part of its investigation, UOKiK has sent a questionnaire to suppliers asking for information on the types of rebates applied by retailers. This includes suppliers of meat, dairy products and vegetables, UOKiK said.
In some situations, the retrospective rebate mechanism may lead to a situation where suppliers achieve less and less in the way of financial benefit as sales increase, UOKiK said, leading to a situation in which cooperation becomes 'unprofitable'.
At the same time, affected suppliers are often tied into these agreements, UOKiK noted, as withdrawal from specific retailer contracts carries a financial penalty. Therefore, any risk in the agreement is borne by the supplier.
As Chróstny explained, any agreements between retailers and suppliers should be beneficial to both parties, and there cannot be a situation in which the stronger participant, in this case the retailer, exploits its contractual advantage over a supplier.
A penalty of up to 3% of annual turnover could be applied to retailers that are found guilty of unfair use of contractual advantage, UOKiK added.
© 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.