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Legislation: Amendments regarding Prohibition of Unfair Competition

27 Jan 2016

On 17 December 2015 the new wording of the Law on the Prohibition of Unfair Practices of Retailers was passed. The new wording shall come into force on 1 May 2016. Major changes in the legal regulations are as follows:

- the legal protection of suppliers, whose aggregate income in the last financial year is more than 40 million euros, from unfair practices of retailers having significant market power shall be abolished, meaning that the provisions of the Law will not be applicable in their relationship;

- retailers shall be banned from requiring suppliers to supply goods on the same terms and for the same price as the goods are being supplied to third parties. It should be noted that such contractual obligations so far have been fairly common in Lithuania;

- a new additional prohibition is set for retailers having significant market power - if the supplier and the retailer agree on commercial fixed-amount discounts for food products and the retailer requires the supplier to accept such unsold food products, the retailer shall not have the right to refuse to return to the supplier the share of commercial discounts pro rata to the food products returned;

- the procedure for investigating and examining the infringement of the law shall be regulated in more detail;

- the threshold of income applied in assessing whether a retail company has significant market power was increased, meaning that there will be less market players falling within the scope of regulations of the law;

- longer terms are established for appealing to court against the rulings of the Competition Council of Lithuania;

- the penalties imposed for infringements of the law were increased;

- Competition Council's ruling on the imposition of a penalty shall also constitute an executive document, meaning that no additional procedures will be needed in order to submit the ruling for execution to the bailiff’s office;

- the identity of suppliers shall be protected in case the supplier reasons his request to protect his identity while filing a report on the alleged infringement of the law to the Competition Council. In such cases it will be considered that the investigation was initiated by the Competition Council itself, and the retailer will not be able to find out who informed the Competition Council of the alleged infringement and thus suppliers will be better protected against possible negative consequences of informing state institutions of alleged infringements of the law.

The purpose of the new wording of the Law on the Prohibition of Unfair Practices of Retailers is to reach a more efficient limitation of use of market power by retailers having significant market power and ensuring a better balance of interests between suppliers and retailers. 

It is recommended for the retailers and suppliers in Lithuania to review their contracts in order to guarantee compliance with the new requirements of the law.

The new version of the law in Lithuanian can be found here.

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