Farm ministers set store by EU measures against abusive retailers

Photo: archive of Radio Prague

The agriculture ministers of the Visegrad countries, along with Bulgaria, Romania and Slovenia, agreed on Tuesday on a joint statement in which they are calling on the European Commission to take measures to hamper the allegedly excessive economic power of retail chains in relations with their suppliers.

Photo: archive of Radio Prague
The agriculture ministers issued the joint statements at a meeting in Bratislava on Tuesday. The Czech Republic was represented by the Czech Minister of Agriculture Marián Jurečka.

“We are calling on the European Commission to prepare a set of measures to restrict the dominant economic power of retail chains. We want the European Commission to express its preliminary stance by the end of 2015. We believe that a common legislative framework, approved in the entire EU, is the only thing that can solve this problem,” the Slovak Agriculture Minister Lubomír Jahnátek said.

The Slovak agriculture minister also said that the current prices of foodstuff are so low that they are often below the production costs, adding that it is no longer possible to tolerate the current state of affairs when one part of the food supply chain is abusing its power at the expense of the others.

He also said the new measures should include a more even distribution of margins between food suppliers and retailers.

Czech minister Marián Jurečka said he is in favour of fair conditions in the retail sector so that chains do not force small and medium-sized food producers to cut their prices below the costs of production. “We are pumping money into the firms on one side and retail chains are sucking it out on the other side by unfair and unethical behaviour,” he said in a reference to agricultural subsidies.

According to Mr Jurečka, the measures should even out the economic relations between food suppliers and retail chains. He also pointed out that the European Union is already regulating such alleged abuse of dominant position in other sectors, such as telecommunications and energy.

Earlier this year, the Czech Cabinet has moved to restrict retailer’s abuse of their power against suppliers by offering the competition office a more meaningful and workable set of laws.

The office complained that its existing powers could not be used effectively. A new law tackling the abuse of dominant market positions should be discussed by the lower chamber of Czech parliament this week.

Studies have shown that major retailers often push down the prices they offer to suppliers or threaten to go buy goods elsewhere. They also sometimes charge suppliers if the stocks are not sold as fast as they hoped, charge extra for displaying goods prominently on shelves, and force supplier to pay for advertising and marketing campaigns.