Prohibited commercial practices

I. PROHIBITED TRADE PRACTICES WITHIN THE MEANING OF THE LPC

The envisaged prohibitions (Art. 37b - Art. 37f in Chapter Seven “b” of the LPC) aim at overcoming the significant imbalances in the negotiating position between suppliers and buyers of agricultural and food products. To achieve this goal, the law provides for measures aimed at protecting suppliers who are in a weaker bargaining position and apply to the commercial behavior of buyers who are in a stronger position in this chain.
With an amendment to the Law on Protection of Competition (SG, issue 17 of 2021) Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2017 on unfair commercial practices in business relations has been transposed entities in the agri-food supply chain (Directive).
Within the meaning of the LPC:
"Agricultural and food products" means the products listed in Annex I to the Treaty on the Functioning of the European Union and products not listed in that Annex but obtained from the processing of the products listed in the Annex for use as food;
"Non-perishable agricultural and food products" means agricultural and food products which, by their nature or the stage of processing at which they are located, are likely to become unfit for sale within 30 days of harvest, production or processing;
"Buyer of agricultural and foodstuffs" means any natural or legal person, irrespective of his place of establishment, or any public body purchasing agricultural and foodstuffs, including a group of such natural and legal persons;
"Supplier of agricultural and foodstuffs" means any agricultural producer or any natural or legal person, irrespective of their place of establishment, who sells agricultural and foodstuffs. The term "supplier" may include a group of such farmers or a group of such natural and legal persons as producer organizations, supplier organizations and associations of such organizations;
"Public authority" means national, regional or local authorities, bodies governed by public law or associations by one or more such bodies or by one or more such bodies governed by public law.
In Art. 37b and Art. 37c of the LPC introduced prohibitions for certain behavior of buyers in their relations with suppliers of agricultural and food products. The regulations define the most typical and common forms of prohibited behavior.
In order to ensure a higher level of protection for suppliers of agricultural and food products and in view of the possibility provided by the Directive, Chapter Seven "b" of the LPC regulates stricter rules regarding the nature of certain prohibitions - e.g. the same payment term - 30 days after the expiration of the delivery period, respectively after the delivery date or after the date of determining the amount payable under contracts that provide for regular delivery and those that do not provide for regular delivery of agricultural and food products , including volatile. The regulation also includes additional compositions such as the absolute prohibitions under Art. 37b, items 10-12 and the conditional prohibitions under Art. 37c, item 7 and item 8.

II. PROHIBITED TRADE PRACTICES

II.1. ABSOLUTE PROHIBITIONS

The first group of norms concerns the so-called "Absolute prohibitions" for unfair commercial practices (Article 37b of the LPC). These are practices of buyers who, by their nature, are always considered unfair.
1. payment from buyer to supplier:
(a) no later than 30 days after the expiry of the agreed delivery period in which the deliveries were made, or no later than 30 days after the date of determination of the amount payable for that delivery period, whichever is the later, under contracts for regular supply of perishable agricultural and food products and other agricultural and food products;
(b) no later than 30 days after the date of delivery or no later than 30 days after the date on which the amount payable is determined, with effect from a later date, under contracts which do not provide for regular delivery of perishable agricultural and foodstuffs and other agricultural and food products;
2. refusal of the buyer from orders for non-perishable agricultural and food products with less than 30 days notice, so that the supplier cannot reasonably be expected to find another way for commercialization or use of these products;
3. unilateral change by the buyer of conditions under the supply contract, related to the frequency, method, place, time or volume of delivery or supply, quality standards, terms of payment or prices, term, as well as with regard to the provision of services, referred to in Art. 37c;
4. request of the buyer from the supplier of payments, which are not related to the sale of agricultural and food products of the supplier;
5. request from the buyer for payment from the supplier in case of deterioration of quality, scrapping and / or shortages of agricultural and food products, which have occurred on the buyer's premises or after the ownership has been transferred to the buyer, when this is not due to reasons for which the supplier is responsible for;
6. refusal by the buyer to confirm in writing the terms of the contract for which the supplier has requested written confirmation, except in cases where the supply contract relates to the supply of products by a member of a producer organization, including a cooperative, the manufacturer of which the supplier is a member, if the articles of association of that producer organization or the rules and decisions laid down in or resulting from the articles of association contain provisions with effect similar to those of the terms of the supply contract;
7. illegal acquisition, use or disclosure by the buyer of a trade secret of the supplier in the sense of the Law for protection of the trade secret;
8. warning the buyer to take retaliatory commercial action against the supplier or to take such action if the supplier exercises his contractual or legal rights, including by filing a complaint or cooperating in an investigation under this chapter;
9. a request from the buyer to the supplier for compensation for the costs of handling customer complaints related to the sale of the supplier's products, although there is no reason to hold the supplier liable;
10. prohibition or restriction by the buyer of the supplier under the contract to offer or purchase goods or services to or from third parties;
11. prohibition, restriction or imposition of sanctions by the buyer on the supplier under the contract for providing the same or better commercial conditions to third parties;
12. unilateral and unjustified termination of the contract by the buyer or termination without notice within a reasonable time sufficient for the supplier to cover its investment costs and in view of the previous trade relations of the parties to the contract.

II.2. CONDITIONAL PROHIBITIONS

The second group of norms concerns the so-called "Conditional prohibitions" of unfair commercial practices (Article 37c of the LPC), which are permitted if agreed in advance with clear and unambiguous terms in the supply contract or in a subsequent agreement between the supplier and the buyer.
1. return by the buyer of unsold products without having paid for them and / or for their disposal;
2. payment by the supplier to the buyer as a condition for the storage, display or inclusion in the product range of his products or offering them on the market;
3. request from the buyer for payment by the supplier of all or part of the costs for reduced prices of agricultural and food products sold by the buyer within the promotion, unless before the promotion, which is made at the initiative of the buyer, the buyer specifies the term of the promotion and the expected quantities of agricultural and food products to be ordered at reduced prices;
4. request from the buyer for payment by the supplier of advertising activities to the buyer;
5. request from the buyer for payment by the supplier for marketing activities of the buyer;
6. payment by the supplier to the buyer for equipment and / or maintenance of premises used for the sale of the products;
7. request from the buyer for payment by the supplier of transport and / or logistics costs;
8. request from the buyer for reduction of the prices of the retroactive products directly or by applying unjustified discounts, bonuses and fees or provided services.

III. APPLICABILITY IN RELATION TO ENTITIES

The bans apply to those actors (buyers and suppliers) in the food supply chain who meet legally defined criteria according to their market power. The annual turnover of buyers and suppliers is accepted as a criterion for determining market power. This criterion allows predictability for the parties in terms of their rights and obligations under the law. An upper limit on the turnover of suppliers (BGN 684,540,000) has been set, above which no protection is provided, as it is assumed that the latter are not vulnerable or are significantly less vulnerable compared to their smaller partners or competitors. .
According to Art. 37d, para. 1 of the LPC, the absolute and conditional prohibitions apply to unfair commercial practices related to the sale of agricultural and food products by:
1. a supplier who has an annual turnover of not more than BGN 3,911,000 to a buyer with an annual turnover of more than BGN 3,911,000;
2. a supplier with an annual turnover of more than BGN 3,911,000 and less than BGN 19,558,000 to a buyer with an annual turnover of more than BGN 19,558,000;
3. a supplier who has an annual turnover greater than BGN 19,558,000 and less than BGN 97,791,000 to a buyer who has an annual turnover greater than BGN 97,791,000;
4. a supplier with an annual turnover of more than BGN 97,791,000 and less than BGN 293,374,000 to a buyer with an annual turnover of more than BGN 293,374,000;
5. a supplier with an annual turnover of more than BGN 293,374,000 and less than BGN 684,540,000 to a buyer with an annual turnover of more than BGN 684,540,000;
6. a supplier, whose annual turnover does not exceed BGN 684,540,000, to a buyer who is a public body.
The annual turnover under par. 1 shall be determined in accordance with Art. 4, Art. 4b and Art. 4d of the Law on Small and Medium Enterprises, including according to the definitions of independent enterprise, for partner enterprises and related enterprises and other applicable provisions related to the annual turnover of the same law.
The annual turnover of the enterprise - supplier and buyer, includes the net amount of income from the ordinary activities of the enterprise in the previous financial year.

IV. EXCEPTIONS TO THE IMPLEMENTATION OF PROHIBITIONS FOR UNFAIR TRADING PRACTICES

The LPC provides for exceptions in which the prohibitions do not apply.
IV.1. Absolute and conditional prohibitions do not apply to contracts between suppliers and consumers.
IV.2. The prohibition under Art. 37b, para. 1, item 1 shall not apply to payments:
1. from a buyer to suppliers within the School Fruit and Milk Scheme according to Art. 23 of Regulation (EU) № 1308/2013;
2. from the medical establishments under art. 5, para. 1 of the Law for the medical establishments and the state medical establishments - commercial companies, in respect of which the terms for payment under art. 3, para. 6 of the Medical Establishments Act;
 3. under contracts between suppliers of grapes or grape must for wine production and their direct purchasers, provided that:
a) the specific terms of payment are included in the standard contracts, which are declared mandatory according to art. 164 of Regulation (EU) № 1308/2013 and that this extension of the scope of standard contracts to other operators is renewed from that date without significant changes in the terms of payment to the detriment of suppliers of grapes or grape must, and
(b) contracts are multi-annual or multi-annual.
IV.3. The prohibition under art. 37b, para. 1, item 1 does not affect:
1. the consequences of overdue payments and the means for legal protection, provided in art. 303a and 309a of the Commercial Law;
2. negotiation between a buyer and a supplier of a clause for sharing the value in the sense of art. 172a of Regulation (EU) № 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organization of the markets in agricultural products and repealing Regulations (EEC) № 922/72, (EEC) № 234 / 79, (EC) № 1037/2001 and (EC) № 1234/2007 (OJ L 347/671 of 20 December 2013).

V. PROTECTION OF IDENTITY

The LPC provides for the possibility for the Commission to take measures to keep secret the identity of the sender of the request or of the supplier, at whose request the proceedings under Art. 38, para. 1, item 9 of the LPC.
According to Art. 94, para. 10 of the LPC when the persons, who have submitted a request under art. 38, para. 1, item 9 of the LPC, indicate that the disclosure of the identity / identification of the applicant or of the supplier on whose request the proceedings are initiated would harm their interests, the Commission may take protection measures, keeping the identity / identification secret. according to the rules adopted by it - Internal rules for preserving the identity of persons who gave explanations or provided data on violations of the LPC, and persons whose identity is requested to be kept secret in proceedings for violations of Chapter Seven "b" from the LPC.
In case of danger of disclosure of the identity / identification of the persons, who have submitted a request under art. 38, para. 1, item 9, the proceedings may be terminated at the discretion of the Commission (Art. 98, para. 1, item 4 of the LPC).
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Актове, които се прилагат в производствата на КЗК с предмет забранени търговски практики:

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1. Закон за защита на конкуренцията; ( Обн., ДВ, бр. 102 от 28.11.2008 г./ изм. и доп., бр. 17 от 26.02.2021 г., в сила от 26.02.2021 г.) Глава седма „б“ влиза в сила на 01.11.2021 г.
Published: 25-05-2022
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2. Тарифа за таксите, одобрена с ПМС № 180 от 10.08.1998 г. (изм. бр. 70 от 2016).
Published: 25-05-2022
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3. Методика за определяне на санкциите и глобите, налагани по Закона за защита на конкуренцията, приета с Решение № 607 на КЗК от 10.06.2021 г., Обн. ДВ, бр.51 от 18.06.2021.
Published: 25-05-2022
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4. Вътрешни правила за запазване самоличността на лица, дали обяснения или предоставили данни за извършени нарушения по Закона за защита на конкуренцията, и на лицата, чиято самоличност се иска да бъде запазена в тайна в производства за установяване на нарушения по Глава седма „б“ от ЗЗК, приети с Решение № 113/10.02.2009 г. на КЗК, изм. и доп. с Решение №119/17.02.2022 г., в сила от 17.02.2022 г.
Published: 25-05-2022
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5. Правила за достъп, използване и съхраняване на документи, представляващи производствена, търговска или друга защитена от закон тайна, приети с Решение № 161/19.02.2009 г. на КЗК, изм. и доп. с Решение на КЗК 246/13.03.2013г.
Published: 25-05-2022
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6. Правила за приоритизиране на искания за образуване на производства по глава девета и глава дванадесета от Закона за защита на конкуренцията, приети с Решение № 606 на КЗК от 10.06.2021 г., в сила от обнародването им в „Държавен вестник“ (Обн. ДВ, бр.51 от 18.06.2021). По отношение на искания, подадени по чл. 38, ал. 1, т. 9, правилата влизат в сила на 1 ноември 2021 г.
Published: 25-05-2022

Protection of the identity / identification of persons in proceedings under Chapter Seven "B"

For information and for submitting requests for initiating proceedings under Art. 38, para. 1, item 9 of the LPC you can contact the contact persons:

Stamen Garbelov - tel. + 359 2 9356 165

Veselina Tsankova - tel. + 359 2 9356 124

Lilia Shopova - tel. + 359 2 9356 212

e-mail: [email protected]


І. Purpose of the measures to protect the identity of persons whose interests may be affected.
The introduction of the procedure ensures the necessary transparency of the work of the Commission and guarantees the legal certainty in protecting the identity of the persons who have submitted a request under Art. 38, para. 1, item 9 of the LPC for instituting proceedings before the CPC.
In the usual case, this may be a supplier who submits a request under Art. 38, para. 1, item 9, or a supplier whose interests are harmed by the alleged violation, in the cases when the request is submitted by organizations of agricultural producers, by organizations of suppliers or associations of such organizations at the request of one or more of their members or to one or more of the members of their member organizations, including from other organizations with a legal interest, to represent suppliers at the request of and in the interest of a supplier, provided that such organizations are non-profit legal entities.
ІІ. Procedure
The initiative for application of the Rules for preservation of the identity belongs entirely to the persons, who have submitted a request under art. 38, para. 1, item 9, who consider that the disclosure of their identity would harm their interests. In this case, they can contact the designated contact persons for detailed explanations on the terms and conditions of the procedure.
In order for this possibility to be realized, simultaneously with the request for initiating proceedings on the grounds of Art. 38, para. 1, item 9, it is necessary to submit a request for preservation of the identity / identification, accompanied by appropriate evidence and appendices. Both requests are submitted to the CPC through the contact persons and a special register is kept for them, outside the general office of the Commission.
In case of danger of disclosure of the identity / identification of the persons, who have submitted a request under art. 38, para. 1, item 9, the proceedings may be terminated at the discretion of the Commission (Art. 98, para. 1, item 4 of the LPC).
III. For contact with CPC
For more information on the retention procedure, as well as to submit requests for retention of identity / identification, you can contact the contact persons mentioned above.
Year
Year
2022