The challenges facing the modern
commerce sector in the CEE region
Renata Juszkiewicz- Chairman of CEE Commerce Council
President of Polish Organsation of Trade and Distribution
Brussels, 8 November 2011
Central Eastern European
Commerce Council

Representing commerce in 9 CEE
countries:
Czech Republic, Hungary, Latvia,
Lithuania, Poland, Romania, Slovakia,
Bulgaria, Estonia.

20 Oct. 2010 Common Communique
Central Eastern European
Commerce Council

To voice common concern about
restrictions impairing our industries and
the national economies of CEE countries

To prevent the “spillover” effect of
harmful laws and restrictive policies
Central Eastern European
Commerce Council

To build a network to object to restrictive
laws and polices in the region’s
countries.

To carry out advocacy activities towards
the EU institutions in particular the
Commission and the Parliament.
Contribution to the economy

Major impact on the transformation
process in the CEE region

Groundbreaking impact on market
economy

Modernisation of the sector
GDP growth
Country
 Poland
 Czech Rep.
 Slovakia
 Romania
 Hungary
 Bulgaria
1991(%)
-7.0
-11.5
-14.6
-12.9
-11.9
-11.7
IIQ2011(%)
4.3
2.2
3.3
0.3
1.5
2.0
Inflation rates
Country
1991(%)
2011(%)
latest






Poland
Czech Rep.
Slovakia
Romania
Hungary
Bulgaria
70.3
56.6
61.2
170.2
35.0
338.5
3.9
1.8
4.3
3.4
3.6
3.3
Contribution to the economy

FI:
90 b EUR

Sales:
62 b EUR

New jobs:

New stores:
390 000
8 000
Contribution to the economy

Made the region attractive to investors

Contributed to the growth of other sectors

Strengthened export market

Stimulated consumption and production

Breakthrough in food processing
Shopping in 1990’
Shopping at present
Benefits for consumers

Wide range of assortments

Low prices

Different modern commerce formats

Fostering changes in consumer behaviour

Quality and standard inhancement
Restrictions in the CEE region

Restrictions breach the EC Treaty:
 Art. 49 Freedom of establishment
 Art. 56 Freedom to provide services

Obstacles to the integrated internal
European market.

Introducing discriminatory policies largely
imposed upon big international retailers
Restrictions/Areas
Court policy
Stores’ establishment
Supply chain
Code of Conduct
Significant market power
VAT
Types of restrictions
Definition of significant market power
 Payment terms for some products 30
days, fresh food 14 days
 Ban on products audit
 Ban on bonus and discount of the
private labels
 The liberty to terminate the purchase
contracts 60 days in advance

Types of restrictions
Placing the purchasing conditions on
www
 Obligations for domestic products
quotas
 Mandatory reporting of food imports
incl. EU products
 Exclusive penalization of retailers for
quality and safety standards

Supply chain restrictions

Slovakia
 Act on unfair form in business
relations between the buyer and
supplier of goods consisting in food
/Complaint - 15 May 2008
 Abolition: 1 April 2011
 Memorandum of Ethic in Food
industry
 Amendment to the law on foodstuff
Supply chain restrictions

Hungary
 Ban on unfair practices of
distributors in relation to agriculture
products and the food industry
towards suppliers

Poland
 Good Practices Code
Supply chain restrictions

Romania
Food Trade Law No.321- Oct. 2009
Amended in Dec. 2010

Other proposals:

To show the products purchasing prices to the
consumers
To report product prices in a Price Observer
database on weekly basis
To allocate sale spaces to national products.




Significant market power

Bulgaria
 Draft law amending the Act on
Protection of Competition

Latvia
 Competition
Law of Latvia
Significant market power

Czech Rep.
 Act on significant market power in
the sale of agricultural and food
products – lodged to the EC- no
response!
A draft amendment to Act No. 143/2001 on
the Protection of Economic Competition
 A draft amendment to Act No. 526/1990 on
Pricing

Courts policy

Poland
 Act on Combating Unfair Competition
 Unfavourable
Resolutions of the
Supreme Court of Poland/ influence
guidance on legal consideration
Discriminatory tax law

Hungary
Trade, Energy, Telecommunication
2.5% net annual sales

Claims to EU Commission: 17Nov. 2010


Art. 107 ‚Treaty on the Functioning of the EU’
(unlawful state aid)
 Discrimination of foreign investors and Art.
401 EU- Guidelines 2006/112/EC

Hampering the establishment
of stores

Hungary
 Amendment proposal in connection
with Bill “on the Amendments of an
Act Required for Enforcing the
Consideration of Sustainability in the
Operation of Commercial Centres”
Misperceptions of modern retail

Retailers are responsible for price
increases, especially of food products

Retailers restrict the access of national
small and medium producers/suppliers
in the stores, through slotting allowances

Retailers favor imports
Misperceptions of modern retail

Retailers make huge profits while the
national producers are almost driven to
bankruptcy

Retailers’ in-city presence affects traffic
and kills small corner-stores

Retailers are a part of cartel
arrangements and operate on a
monopolistic basis
Government policy

The governmental initiatives based on
protectionism

Short term thinking which inhibits growth
of national economies.

Limit and prevent the capacity for certain
forms of business models.

The governments try to shift the burden for
agriculture to the commerce sector!
Consequences for the CEE








Increase in consumer prices
Increase in inflation
Increase in cheap imported products
Decrease in domestic production
Reduced product quality
Barriers for establishment of new stores
Damage of the positive image of our countries within
investor community
Weakening of GDP economies based on internal market
The achievment of recent decades will wither
Does anybody benefit from that?
CEE CC appeal
European Parliament, the European
Commission, member state governments
 To closely examine the developments in the
commerce sector in all the countries of our region.

To consider what action should be taken to
improve the current situation.

To create effective EU-policy for further
development of the CEE region.
Thank you !