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 1991(%) IIQ2011(%) Poland -7.0 4.3 Czech Rep. -11.5 2.2 Slovakia -14.6 3.3 Romania -12.9 0.3 Hungary -11.9 1.5 Bulgaria -11.7 2.0
Inflation rates
Country 1991(%) 2011(%) latest
Poland 70.3 3.9 Czech Rep. 56.6 1.8 Slovakia 61.2 4.3 Romania 170.2 3.4 Hungary 35.0 3.6 Bulgaria 338.5 3.3
Contribution to the economy
FI: 90 b EUR
Sales: 62 b EUR
New jobs: 390 000
New stores: 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
Supply chain
Significant market power
Stores’ establishment Court policy
Code of Conduct
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 Act on unfair form in business
relations between the buyer and relations between the buyer and supplier of goods consisting in foodsupplier of goods consisting in food /Complaint - 15 May 2008Complaint - 15 May 2008
Abolition: 1 April 2011Abolition: 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 Misperceptions of modernmodern retailretail 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 Misperceptions of modernmodern retailretail
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 witherDoes 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 !