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When the power is with you #I: An important part of the SMPA is about to come into effect

When the power is with you #I: An important part of the SMPA is about to come into effect

Autumn has only just arrived, but shopping centres are already starting to put on their Christmas outfits. As quickly as the end of the year, an important part of the 2022 amendment to the Act on Significant Market Power and Unfair Commercial Practices (SMPA) is coming into force. So, it is really high time to adapt to the new rules. If you’re unsure whether this will also affect your business, or simply don’t have the time to consider what this means for your supplier relationships, we recommend reading the following lines about the regulation with a significant impact on contractual freedom in business relationships.

In particular, any company that buys agricultural or food products, even to a limited extent, should pay attention. The amendment to the SMPA was adopted with effect from 1 January 2023. However, the fundamental obligations, which necessarily require a change in contractual relationships, will come into full effect on 1 January 2024. The time for adaptation will soon be over.

Under the new amendment, obligations will not only apply to retail chains, which have more than 10 years of experience with the SMPA in all its previous forms and are already used to changes. Also other purchasers throughout the supply chain will now have such obligations, provided they meet the relevant turnover criteria. This will apply not only to purchases of food (as was previously the case), but also to purchases of a broader category of agricultural products. For instance, these may include food producers using agricultural products (raw materials) as their inputs, who have been so far protected from the abuse of significant market power by retail chains.

The turnover in question does not have to be generated by food sales alone. Therefore, companies whose core business is in other goods and the purchase of food or agricultural products is only marginal may also be affected. The amended SMPA could therefore affect virtually anyone, from petrol station chains or drugstores to cut flower or pet food shops.

It is not safe to assume that the Office will turn a blind eye to possible violations for some time to come.  It is clear from its actions so far that it is preparing for the full implementation of the amended SMPA. It already conducted a sector inquiry last year, about which we have informed you in our blog  [article in Czech only]. It is an open secret that it is currently conducting another sector inquiry, this time quite targeted.  It can therefore be expected that the Office will begin to investigate specific companies for a breach of the rules. Violations of the SMPA can result in fines of up to 10% of annual turnover of the corporate group (the amendment does not change this).

H&P’s autumn series on the SMPA amendment

We understand that it can be difficult to navigate through the new legislation. For that reason, we have decided to prepare a six-part series on the amendment to the SMPA, in which we would like to present the major changes this November and December. In those series, we will also draw your attention to the obligations that are most likely to cause problems in practice.

So, what will we focus on?

  1. In the next part we will discuss which new entities and products will be affected after the amendment.
  2. The third and fourth parts of the series will focus on the obligation to have contracts in writing and on due dates.
  3. The last two parts of the series will familiarise you with all the essential requirements that every contract under the SMPA must meet from 1 January 2024.

There is not much time for revisions and possible modifications of template customer-supplier contracts. Our entire team of experts will be happy to assist you, whether with contract revisions or just to address questions that may come to your mind while reading our series. We will always be on your side. So, feel free to contact us at any time.

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