UOKiK President’s decision on PLN 723 million fine – legal significance
The decision of UOKiK President Tomasz Chróstny of December 14, 2020, to impose over PLN 723 million in fines on the owner of the Biedronka store chain is undoubtedly a significant event. It is important not only for Biedronka’s contractors who were harmed by unlawful trade practices used – according to UOKiK’s findings – by the Biedronka chain. I would bet significant money that the same or similar practices are or were used by many other retail chains operating on the Polish market. This means that their legal departments are probably now conducting a nervous audit of clauses used in contracts with contractors, and the contractors of these chains – harmed by these practices – have just seen a real possibility of compensating their losses.
What practices did Biedronka use?
In short, the whole matter is that Biedronka demanded from its contractors – primarily food product suppliers (fruits, vegetables) – unlawful rebates. In principle, rebates are of course legal and retail chains often use them. However, regulations set certain limits on their application. Rebates that are unlawful and contrary to fair market practices are those that the contractor grants not in a contract concluded before the start of cooperation (then establishing the rules of these rebates) but those that the retail chain demands during the cooperation when it already has insight into turnovers and financial data for a given cooperation period.
Such arbitrary rebates meant that the contractor never knew how much they would de facto earn on given deliveries, because the retail chain could demand an additional rebate at any time. Refusal threatened financial penalties or termination of cooperation.
Will the decision survive judicial review?
From a legal perspective, the key question is whether the UOKiK decision will withstand review by the Court of Competition and Consumer Protection (SOKiK). History shows that many spectacular UOKiK decisions have been significantly reduced or even overturned by the courts. The burden of proof lies with UOKiK, and the evidentiary standard in court proceedings is rigorous.
For contractors of retail chains who believe they have been subjected to similar unfair practices, this decision is an important signal. It opens the door to potential claims for damages and shows that the regulator is willing to act decisively.
Paweł Osiński
Attorney, expert in business law and white-collar criminal law