On 2 June 2021, the Collection of Laws published under No. 219/2021 Coll. an amendment (the “Amendment”) to Act No. 91/2019 Coll. on Unfair Trade Terms in the Food Trade and on changing and amending certain acts (the “Act”), which deals with B2B relationships between food suppliers and customers at any level of the supply chain (with the exception of the sale of goods to the end customer).
The main objective of the Amendment is to transpose the wording of Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 (the “Directive”), which deals with the protection of small and medium-sized enterprises against stronger trading partners.
Personal scope
The Amendment expands the scope of entities to which the Act is to apply. The term customer will thus also include (i) legal entities that are not entrepreneurs and take food from the supplier (these are in particular public authorities, public institutions or their associations) and (ii) a group of customers formed on the basis of a contract or other legal fact in connection with the purchase of food for the purpose of its resale or provision of services related thereto. A supplier is also a legal entity that is an association of persons, at least one of whom is a supplier.
Unfair trade terms
The Amendment modifies some of the already existing unfair trade terms and at the same time, adds new ones to the list.
In particular, it introduces a new regulation of due dates of payments of the purchase price. According to the Amendment, it is necessary to pay the purchase price within the due date, which is 30 days from the date of delivery of food, provided that the invoice for food is delivered to the customer within 10 days from delivery of the food or 20 days from delivery of the invoice to the customer, if the invoice was delivered to the customer after 10 days from the date of delivery of the food. For selected foods (those currently are bakery products (but not baked refrigerated or frozen semi-finished products) with a date of minimum durability or expiration date of up to 10 days), the Amendment sets the due date within 15 days from the date of delivery of the invoice for delivery of these foods. However, the abovementioned time periods do not apply in case of payments made under the school program pursuant to Regulation (EU) No 1308/2013 of the European Parliament and of the Council and to payments made by public entities providing health care pursuant to Section 340b (5) of the Commercial Code.
The Amendment prohibits an unilateral change of agreed terms, including purchase price, payment terms, volume and quality of the food delivered, specified delivery terms and conditions of service. The Amendment also prohibits monetary payments from the supplier to the customer for loss or spoilage of food at the premises of the customer or after the acquisition of ownership of the food by the customer, which did not arise as a result of fault of the supplier.
New unfair trade terms also include the unauthorized acquisition, use or disclosure of trade secrets to participants in a business relationship. The Amendment also prohibits the contractual partner from threatening with retaliation or its practical execution if the contractual partner exercises its legal or contractual law. The Amendment further prohibits compensation of the supplier to the customer for reviewing the consumer’s submission regarding the supplier’s food, if there has been no breach of the supplier’s obligations.
Although no written form is required for a food supply contract, in case of a written request for a written confirmation of the terms of the food supply contract, a customer must provide such a written confirmation to the supplier.
Supervision
The controls shall be carried out “within a reasonable time”, which is justified by the fact that each control is different, and therefore it is not possible to set a fixed time limit for each and every type of control.
The Amendment adds an obligation for the Ministry of Agriculture of the Slovak Republic (the “Ministry“) to inform the complainant about the manner in which the complaint was handled (if it is not an anonymous complaint), as well as the obligation of the Ministry to keep secret the identity of the complainant and information the disclosure of which could harm his interests, if the complainant so requests. The Ministry may reject the complaint if its investigation or issuance of a decision could reveal the above facts.
Sanctions
The changes will also affect the procedure for imposing sanctions. Under the new regulation, proceedings for the imposition of a fine may be initiated within one year until the date of referral of the protocol (which represents the output of control of the conduct of a given participant in the B2B relationship), but no later than three years from the date of breach of an obligation stipulated by the Act. The time period in which a disciplinary fine for non-compliance with control obligations may be imposed, shall be reduced from the current six months from the date of the breach to three months. Another novelty is the inclusion of the procedure for imposing a fine under the regime of the Administrative Procedure Code.
Transitional provisions
Agreements concluded before 14 June 2021 will have to be harmonized with the Amendment by 31 December 2021 at the latest (with the exception of agreements concluded for a definite period of time until 31 December 2021). Likewise, legal relationships which were contractually established until 14 June 2021 shall be subject to the provisions of those contracts until 31 December 2021 at the longest.
Entry into force
The amendment to the Act shall enter into force on 15 June 2021.
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This information was prepared in June 2021 solely for general information purposes and should not be construed as legal advice. The above overview of the legislation is not comprehensive and only briefly summarizes the planned changes in the legislation. If you have any questions on this subject, please do not hesitate to contact your contact person in our office or any other lawyer.