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Tuesday 16.07.2019 | Name days: Hermīne, Estere
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CC punishes Mego and Vesko manager for unfair treatment of suppliers

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe Competition Council has decided to punish Mego and Vesko brand manager SIA Baltstor and its retail trade partner SIA Lenoka for systematically applying unfair and unjustified sanctions on suppliers, as BNN was informed by the council.

The decision was made on 9 March. This is the first decision in accordance with which the council has recorded a violation of the Unfair Retail Trade Practices Prohibition Law.

The law came into force on 1 January 2016. Its goal is limiting the abuse of retail procurement power against suppliers to balance the interests of suppliers and retail traders. To evaluate the law’s introduction process, Competition Council performed market supervision in 2016 and 2017. It is during this period that the council noticed non-compliance from SIA Baltstor and SIA Lenoka.

CC surveyed 30 suppliers that work with Baltstor in five product categories – bread and bakery products, meat and meat products, milk and milk products, grain products and non-alcoholic beverages.

CC found out that both companies in question had applied unfair and unjustified sanctions on their supplied for imprecise prices stated in accompanying documents and partial completion of supply orders. The size of sanctions exceeded 10% and reached more than 400% of the debt amount. At the same time, the companies also failed to perform measures to fix mistakes, creating an environment for repeated application of sanctions.

CC notes that the law states that sanctions have to be reasonable and balanced with the value of undelivered goods. If the size of sanctions exceeds 10% of the base debt, they are to be considered unfair and unjustified.

Companies involved in the violations had applied procurement power over 60% of surveyed suppliers. SIA Baltstor had received more than EUR 3,000 in the form of sanctions from suppliers. SIA Lenoka, on the other hand, received nearly EUR 13,000. Competition Council concluded that the two companies in question had a system in place and would apply sanctions to other suppliers on a regular basis.

CC council member Jānis Račko: «More than two years have passed since Latvia adopted regulations that limit levers of power retail traders have when dealing with suppliers. As the institution responsible for compliance with the law, CC has actively consulted with businessmen all this time. They’ve had enough time to adapt to new regulations. This decision is a signal to other retailers who abuse their power.»

For violating the law, CC applied a fine of EUR 13,533 on SIA Baltstor and EUR 60,487 on SIA Lenoka.


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