NEWSLETTER 06/2007
HOW SOME SUPERMARKETS INFRINGE THE INTERESTS OF SUPPLIERS
A method which has become commonly used by some supermarkets to exploit their market leverage over suppliers is to charge suppliers fees for "marketing services." The stores impose on suppliers, as promotional services, fees for store openings, advertising flyers, display of goods in specific points of sale, radio and billboard advertising, launch of an new product on the market, and promotional actions for "store birthdays."
Such actions by large chain stores not only represent a clear infringement of good commercial practice, but also hinder suppliers' access to the market.
The true purpose behind the supermarket (buyer) charging fees for "marketing services" is to charge fees to accepting goods for sale. Beyond a commercial margin, other fees for merely accepting goods for sale are prohibited by law.
As a result of these fees charged by supermarkets, the costs of production increase, the supplier's margin is reduced, and suppliers are forced to sell goods at below production cost, and thus at a loss to the supplier.
Fees for accepting goods for sale - labelled by supermarket chains as fees for "marketing services" - pose a real threat of violating the economic interests of suppliers.
The situation of the supplier is made even worse when, as some supermarkets do, the quantity of products is reduced during the course of cooperation, while the sale or supply agreement is being performed, below the quantity originally ordered, while maintaining the marketing fees unchanged. As a result of the supermarket's actions, the suppliers is forced to raise prices for its other goods, which reduces competition on the market.
Finally, when supermarket chains charge fees for marketing services, it has an unfair impact on the price for goods sold by suppliers and on prices for goods sold by sub-suppliers of the unfairly treated supplier. This leads in turn to imposing on sub-suppliers prices that are close to or below production costs.
Such action limits access to the market, and from the perspective of principles for competition among businesses, interferes with free competition, and thus is unlawful.
Supermarkets often do not even conduct advertising campaigns for goods as required according to the contract. They fail to take actions intended to promote the supplier's brand or the supplier's goods. In their marketing services, they advertise their own goods instead, and encourage consumers to shop in their stores. The supermarkets thus advertise their own brand, not the supplier's brand.
The circumstances surrounding these fees for "marketing services", and the effects they cause, lead to the unmistakable conclusion that supermarkets that profit in this way charge unfounded "marketing" fees. These improperly charged fees should be refunded to the injured suppliers.
Małgorzata Majkowska
attorney-at-law
These conclusions were confirmed by a final judgment of the Appellate Court in Cracow dated 23 March 2007, in Case No. I ACa 214/07, which was brought by a supplier against an international chain of hypermarkets operating in Poland. The court awarded the supplier a refund of fees charged for "marketing services". (See Rzeczpospolita daily, 24 July 2007).
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