Due to the need to harmonize Croatian legislation on unfair commercial practices with the Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair commercial practices in relations between undertakings in the supply chain of agricultural and food products (the “Directive”), the Act Amending the Act on the Prohibition of Unfair Commercial Practices in the Food Supply Chain (the “Act”) was adopted and published in the Official Gazette on 14 May 2021. The Act will enter into force on 1 September 2021 and the deadline for harmonization of contracts between suppliers and buyers with the Act is 6 months from its entry into force, i.e., until 1 March 2022.
The Act harmonizes the terms of the current Act on the Prohibition of Unfair Commercial Practices in the Food Supply Chain with the terminology of the Directive and expands the coverage of unfair commercial practices from previous 33 to 43. The range of addressees of the Act has also been expanded so that it will include all buyers and affiliated companies with a total annual turnover exceeding HRK 15 million. Currently, this threshold is set at significantly higher amount, so the addressees include traders with turnover exceeding HRK 100 million and purchasers and refiners with turnover exceeding HRK 50 million. Another novelty is the legal definition of production and market-sensitive agricultural and food products for which the Act prescribes (i) the final selling price, below which a product may not be sold in retail to the final customer and which is formed by multiplying the purchase price of the product by minimum factor of 1.10 and (ii) a limit of the price of such products on sale, which for the final customer may not be lower than 34% of the final selling price of such product.
In addition, the Act elaborates the conduct of the Croatian Competition Agency, as the body responsible for the implementation of the Act, regarding unannounced controls and mechanisms for protection of the identity of whistle-blowers, so it can be expected that this will lead to further growth of cases before the Croatian Competition Agency due to easier detection of potential unfair commercial practices and a higher number of reports. Entrepreneurs who are considered to be buyers within the meaning of the Act should timely inform themselves of their obligations under the Act and harmonize their business operations and contracts with the provisions of the Act, in order to reduce risks that may arise from violation of the Act due to noncompliance.
