The new Law no. 81/2022 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain (“Law no. 81/2022”), which transposes the EU Directive (EU) 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain (the “Directive”) finally enters into force.
Thus, Law no. 81/2022 was just published in the Romanian Official Gazette of 12 April 2022, as the legislative procedure was accelerated after the European Commission decided to send a reasoned opinion to Romania, giving it two months to remedy the failure to transpose the Directive.
The new Law introduces significant fines and specific compliance obligations, aiming to strengthen the farmers’ position in the food supply chain and prohibits certain unfair trading practices such as late payments and last minute order cancellations, as follows:
• it applies to sales conducted in Romania or that have effects in Romania;
• it does not apply to agreements between suppliers and consumers;
• it applies to sales of agricultural or food products between:
– suppliers whose annual turnover does not exceed EUR 2,000,000, to buyers whose annual turnover exceeds EUR 2,000,000;
– suppliers whose annual turnover exceeds EUR 2,000,000, but is less than EUR 10,000,000, to buyers whose annual turnover exceeds EUR 10,000,000;
– suppliers whose annual turnover exceeds EUR 10,000,000, but is less than EUR 50,000,000, to buyers whose annual turnover exceeds EUR 50,000,000;
– suppliers whose annual turnover exceeds EUR 50,000,000, but is less than EUR 150,000,000, to buyers whose annual turnover exceeds EUR 150,000,000;
– suppliers whose annual turnover exceeds EUR 150,000,000, but is less than EUR 350,000,000, to buyers whose annual turnover exceeds EUR 350,000,000;
– suppliers whose annual turnover does not exceed EUR 350,000,000 with all buyers that are public authorities.
• it applies to commercial contracts concluded after the date of its entry into force.
Law no. 81/2022 provides that the contracts concluded before its entry into force should be amended until 31 December 2022, so as to comply with its provisions.
Law no. 81/2022 expressly prohibits 25 main unfair trading practices of buyers, amongst which we mention the following:
a) exceeding the payment deadline by more than:
– 14 calendar days from the due date set by the contract, in case of perishable agricultural and food products;
– 30 calendar days from the due date set by the contract, in case of other agricultural and food products.
Perishable products are defined as products that by their nature or at their stage of processing are liable to become unfit for sale within 30 days after harvest, production or processing.
b) setting a notice term for cancelling orders of products (irrespective if these are perishable or not) of less than 30 days;
c) unilateral changes of the terms of the agreement that concern the frequency, method, place, timing or volume of the supply or delivery, the quality standards, the terms of payment or the prices, or as regards the provision of services;
d) charging the supplier any costs that were not agreed by contract;
e) applying financial and trade price reductions in the form of rebates, with the exception of discounts and refunds, the aggregate of which shall not exceed 20%, applied on the basis of the invoice value between the buyer and the supplier;
f) charging the supplier for the deterioration and/or loss of products that occurs on the buyer’s premises or after ownership has been transferred to the buyer, where such deterioration or loss is not caused by the negligence or fault of the supplier;
g) charging the supplier for the cost of examining customer complaints relating to the sale of the supplier’s products despite the absence of negligence or fault on the part of the supplier;
h) returning unsold products to the supplier.
Law no. 81/2022 provides for certain exceptions to the unfair trading practices, such as in case of:
• public health institutions and public entities providing health services or
• supply agreements concluded between suppliers of grapes or must for wine production and their direct buyers, under certain conditions.
Also by way of exception, certain acts of the buyer will not be qualified as unfair commercial practice, provided that, upon request of the supplier, such was agreed in clear and unambiguous terms in the supply agreement or in a subsequent agreement between the supplier and the buyer. The list is limited and comprises the acts of the buyer to:
a) require the supplier to pay for the advertising and for the marketing by the buyer of agricultural and food products;
b) require the supplier to bear all or part of the cost of any discounts on agricultural and food products that are sold by the buyer as part of a promotion;
c) charge the supplier for staff for fitting-out premises used for the sale of the supplier’s products or oblige the supplier to provide such staff;
d) refuse a price renegotiation within a period of more than 10 days from the date of the request;
e) require the supplier to pay for the secondary placement of its products for sale.
• Ministry of Agriculture and Rural Development – monitoring and reporting duties
• Competition Council – enforcement duties
Companies may address complaints to both authorities.
• fines between RON 250,000 (roughly EUR 50,600) to RON 600,000 (roughly EUR 121,500) for the majority of unfair practices;
• fines of 1% of the total turnover in the previous financial year, for repeated unfair commercial practices.
The competent authority may also impose periodic penalty payments, amounting to 1% of the main fine imposed, for each day of delay, calculated from the date set by decision, to determine the sanctioned persons to:
a) cease certain unfair commercial practices;
b) comply with the obligations imposed by the decision of the Competition Council;
c) provide completely and correctly the requested information and documents;
d) subject to unannounced inspections.
In the event that, as a result of the unfair commercial practice, the supplier has suffered damages, the buyer will be obliged to pay three times the value of such damage.
Overview of the Law no. 81/2022:
In most cases, the Law no. 81/2022 is stricter than the Directive.
The companies mainly concerned by the Law no. 81/2022 are buyers of agricultural and food products. These should:
• take into account the newly transposed legal provisions when drafting and executing contracts concluded after the entry into force of the law, and
• align all previous contracts falling within the scope of the law with the new provisions, until 31 December 2022.