An amendment to the Significant Market Power Act (the “Amendment”) has been passed by the Czech parliament. The Amendment, which transposes EU Directive No. 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food products supply chain, will introduce key changes to the concepts of significant market power in the Czech Republic.
Specifically, the Amendment provides a new definition of significant market power by reducing the turnover threshold for the application of a statutory assumption of significant market power to EUR 2 million. In line with the related EU Directive, the amendment is designed to provide better protections for smaller businesses against unfair trading practices via its introduction of the concept of relative bargaining power. As a consequence, the Significant Market Power Act will now apply to many more businesses.
However, the existing presumption that a retailer or a retail alliance with a turnover in the territory of the Czech Republic exceeding CZK 5 billion has significant market power, regardless of its relative bargaining power, has been preserved. This rule will continue to apply irrespective of whether the other party is a small or large undertaking, or whether it has sufficient countervailing bargaining power.
Furthermore, the Amendment introduces a highly detailed and exhaustive list of unfair trading practices, which includes, inter alia, cancellation of perishable product orders at short notice; requesting payments from suppliers that are not related to the sale of the products; requesting payments for the deterioration or loss of products that occur on the buyer's premises or after ownership has been transferred to the buyer; or certain unilateral changes to supply agreements by buyers. Businesses will have one year to adapt existing agreements in order to comply with the Amendment.
The Amendment also prescribes certain provisions that must be included in each agreement between retailers and suppliers. Agreements must also be concluded before the delivery of the respective products or before the acceptance or provision of the related services.
The Amendment comes into effect on 1 January 2023.
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