Romania transposes EU Directive on unfair trading practices in agriculture and food supply chain

Romania

Romania recently adopted Law no. 81/2021 on unfair trading practices between undertakings in the agricultural and food supply chain, which transposes the EU's Unfair Trading Practices Directive. This Law, which entered into force on 15 April 2022, regulates the commercial relationship between suppliers and buyers within the supply chain regarding unfair trading practices in the sale of agricultural and food products in Romania, irrespective of where the products were originally produced or manufactured.

The Law's application is structured around a progressive scale comparing the relative negotiation or bargaining power of the parties according to their turnover. The Law applies to unfair trading practices performed in relation to the sale of agricultural or food products by:

  • suppliers whose annual turnover does not exceed EUR 2 million to buyers whose annual turnover exceeds EUR 2 million;

  • suppliers with an annual turnover in excess of EUR 2 million but below EUR 10 million, to buyers whose annual turnover exceeds EUR 10 million;

  • suppliers with an annual turnover in excess of EUR 10 million but below EUR 50 million, to buyers whose annual turnover exceeds EUR 50 million;

  • suppliers with an annual turnover in excess of EUR 50 million but below EUR 150 million, to buyers whose annual turnover exceeds EUR 150 million; and

  • suppliers with an annual turnover in excess of EUR 150 million but below EUR 350 million, to buyers whose annual turnover exceeds EUR 350 million.

Where the above conditions are met, the buyer is prohibited from engaging in unfair trading practices, including:

  • exceeding the due payment date by more than 15 calendar days for perishable products, or by more than 30 calendar days for non-perishable products;

  • setting a notice period of less than 30 working days for cancelling orders for agricultural or food products;

  • unilaterally amending the clauses of a commercial contract for agricultural or food products where such clauses refer to the frequency, method, place, calendar, volume of supply, delivery of such products, quality standards, payment conditions or prices;

  • invoicing or requesting payment from the supplier for any costs other than those cited specifically in the contract (keeping in mind that costs associated with extending the buyer’s distribution network or with events for the promotion of the buyer’s activity or image cannot be passed on to suppliers);

  • applying financial and commercial discounts or rebates whose aggregate value exceeds 20% of the value of the invoices between the supplier and the buyer for agricultural or food products;

  • requesting that the supplier bear the cost of loss or deterioration of agricultural or food products, which occurs on the buyer’s premises after reception of the products, unless this loss is due to the supplier’s negligence or default;

  • threatening to  retaliate, or retaliating against the supplier if the supplier exercises its legal or contractual rights;

  • returning any unsold agricultural or food products to the supplier;

  • imposing a fee for listing or placing the supplier’s agricultural and/or food products for sale;

  • delisting, threatening to delist or withdrawing from sale one or more agricultural and/or food products of a supplier for the purposes of applying pressure on the supplier to accept unfavourable contractual clauses.

Generally, we note that the list of prohibited unfair trading practices under the Law is substantially longer than the list provided by the UTP Directive.

Breaches of the Law may be sanctioned by fines ranging from RON 250,000 (EUR 50,000) to RON 600,000 (EUR 120,000) depending on the gravity of the breach. Repeated breaches may potentially entail a fine of 1% of the buyer's turnover for the preceding year. The Romanian Competition Council (RCC), the authority vested with control functions under the Law, may also apply an additional penalty of 1% of the main fine per day of delay in order to compel the defaulting enterprise to cease its unfair trading practices, comply with all RCC obligations, provide complete and accurate information and documents as requested by the RCC or permit the RCC to conduct an investigation in accordance with the Law. Moreover, if the unfair trading practices have generated damages to the supplier, the buyer is obliged to compensate three damages threefold.

The Law applies directly to commercial contracts concluded after their entry into force. Contracts concluded before this date must be amended or adjusted to comply with the provisions of the Law no later than 31 December 2022.

For more information on this law and Unfair Trading Practices in Romania, contact your CMS client partner or CMS expert Cristina Popescu.