Unfair trading practices in the agricultural and food supply chain in Romania

Currently, Romania does not have a specific law regulating unfair trading practices in the agricultural and food supply chain.

However, the following should be considered:

a) General rules regarding unfair trading practices (also applicable to the agricultural and food supply chain) are contained in:

• Law No. 321/2009 regarding the trade of food products, last amended in April 2020 (“Law 321”);
• Law No. 21/1996 on competition law, last amended in April 2021 (“Law 21”);
• Law No. 11/1991 on unfair competition, last amended in April 2019 (“Law 11”), 

and collectively referred to as the “General Law on unfair trading practices”.

b) A draft law (the “Draft”) aimed to transpose locally Directive (EU) 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain (the “Directive”) was approved by the Senate (first chamber of the Parliament) in March 2021 and is currently pending approval by the second parliamentary chamber in Romania (the Chamber of Deputies). While several parliamentary commissions favourably endorsed the Draft, the Romanian Competition Council (the “RCC”) and the Government have submitted additional proposals to amend it. Considering the amendments under debate, the legislative process may be extensive. 

This guide addresses the questions below based on the law in force (i.e. the General Law on unfair trading practices), and only where relevant refers to the provisions of the Draft as adopted by the Senate (noting that part of the Draft may be subject to further amendments in the ongoing legislative process).

The General Law on unfair trading practices provides protection to all legal entities involved in food trading (as per Law 321), and to any legal entity which provides goods and services on a specific market as part of its economic activity (as per Law 21 and Law 11). Usually, suppliers fall more often under the scope of the mentioned laws.

As the Draft transposes to a large extent the content of the Directive, it provides protection to agricultural producers/suppliers and buyers of agricultural and food products within the meaning of the Directive. The Draft includes the same annual turnover thresholds which are provided under the Directive, as criteria based on which the individual persons and legal entities fall under the scope of this legislation. 

As mentioned at Q1, the Romanian legislator did not dedicate a special section in the law addressing unfair trading practices in the agricultural and food supply chain.

However, under the General Law on unfair trading practices there are a few legal provisions which apply directly to legal entities involved in the agricultural and food supply chain. In this respect, the specific type of actions qualified as unfair practices are banned, and include:

• The buyer requesting that the supplier does not sell to others the same products at the same price or for a lower price than the price agreed between buyer and supplier.
• The buyer requesting that supplier pays fees which are not related to their contractual arrangement.
• Engaging in any commercial practices which are contrary to fair business conduct and the general principle of good faith, if they result or are likely to result in damages to market participants.
•  Applying unequal conditions between trading partners for the same performance, thus creating a competitive disadvantage between them.

We note that the Draft varies from the Directive in terms of the unfair trading practices regulated in it, e.g. there are shorter payment periods applicable to buyers of fresh products specifically defined by the law. It is uncertain whether these legal provisions will be enacted into the final law due to wide criticism from other authorities and stakeholders as well as intense lobbying for removal from the Draft.

Unfair trading practices captured in Law 321 are sanctioned by fines ranging from RON 100,000 to RON 250,000 (approx. EUR 20,500 to EUR 51,000) and enforced by the tax authorities.

Unfair trading practices which are subject to Law 21 fall under a broader sanctioning regime. In principle, the alleged non-compliance will be subject to an investigation carried out by the RCC, e.g. dawn raids, inspection and seizure of documents, requests for statements from the persons involved.

In this context, the RCC has the power to:

• order the cessation of the anti-competitive practices;
• order interim measures;
• apply fines of up to 10% of the total turnover registered in the year before the RCC’s sanctioning decision; 
• formulate recommendations, impose conditions for business conduct in the future, and impose other obligations.

Similarly, the RCC has the power to investigate unfair trading practices pursuant to the provisions of Law 11, including dawn raids where necessary. Where the unfair practices fall under Law 11, the RCC can:

• apply fines up to EUR 10,000 on legal entities and up to EUR 2,000 on individual persons;
• order the termination of the unfair practices.

Under the Draft, unfair trading practices in the agricultural and food supply chain are sanctioned by fines of up to RON 500,000 (approx. EUR 100,000). Also, penalty payments apply per day of delay of 1% of the main fine. As a novelty, in addition to the fines provided by the Draft, if the unfair trading practice results in damages incurred by the supplier, the buyer will be obliged to pay three times the value of the damages caused.

Please note that the sanctioning regime provided in the current version of the Draft may be further amended and take a different form in the ultimately adopted version.

Once the final version of the Draft is adopted, we can expect rigorous inspections from the authorities. In this respect, under the current form of the Draft the RCC is designated as the competent regulatory authority for the sanctioning of unfair trading practices in agricultural and food supply chain. The RCC’s enforcement activity in the competition area is known as one of the most active and severe on the Romanian market. Thus, the same approach can reasonably be expected in the area of unfair practices in business-to-business relationships once the relevant Romanian legal framework has been finalised.

Considering the current law in force, which provides a rather limited regulation regime regarding unfair trading practices between commercial partners (see Q1), there are no notable cases available from public sources.

As results from the above, transposing the Directive at the local level will take the form of a separate law, i.e. the Draft (not amendments to existing laws).

This is especially pertinent because Romania does not have special regulations in place on unfair trading practices in the agriculture and food supply chain. The Draft transposes almost the entire content of the Directive (with additional provisions to reflect certain particularities). The prospects are that the existing law (i.e. General Law on unfair trading practices) will supplement the adopted version of the Draft unless expressly repealed. Notably, the Draft currently provides that Law 321 will be repealed once the envisaged new legislation becomes effective.

As a rule, however, under Law 321 the buyer must pay for the fresh foods listed in the annex of this law within 14 business days from their receipt.

The Draft transposes the unfair trading practices provided in Directive and stipulates further restrictions applicable to buyers. Also, as the Draft will repeal Law 321 it appears that the Draft also seeks to integrate provisions from the latter piece of legislation. Considering these aspects, it can be considered that the Romanian legislator aims to regulate locally a more restrictive legal regime than provided in the Directive. Here are several examples of additional restrictions:

• withdraw products from the shelf as a form of pressure over suppliers during negotiations;
• delay in receiving products or preparing receipt documentation, without justified reasons;
• refusal to negotiate the price of the contract after ten days from the supplier’s request;
• establishing different price mechanisms/standards for similar products.

The Draft also provides tighter payment terms, i.e. for the perishable (fresh) products set forth in the annex of the Draft (meat, fish, milk, eggs, etc.), payments should not exceed 14 days from the receipt date. For perishable products not listed in the Draft’s annex, the cap is 30 days from the receipt date. For all other products, payment should be made within 60 days from the receipt date.