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The Ministry of Economics (EM) has submitted amendments to the Law on the Prohibition of Unfair Trading Practices to the Cabinet of Ministers for consideration. These amendments aim to eliminate discriminatory pricing practices in the retail of food products between goods produced in Latvia and those produced in other countries. The proposed changes also seek to promote fair trading practices and equal competition in the food retail market. The draft law includes several proposals from Minister of Economics Viktors Valainis to balance the relationship between producers and retailers, prevent discriminatory practices by retailers against various suppliers in comparable situations, and promote competition across all stages of the food supply chain, ultimately positively impacting food pricing practices.
The amendments propose requiring retailers to ensure equal and non-discriminatory treatment of agricultural and food product suppliers.
A market surveillance study by the Competition Council (KP) found that 50% of agricultural and food products surveyed had higher markups for domestically produced goods compared to similar foreign goods. The proposed amendments aim to directly address such discriminatory practices by preventing retailers from applying different collaboration and trading terms, including markups, to products from one supplier or group of suppliers compared to equivalent products from other suppliers. The provisions will also extend to non-discriminatory application of logistics fees, volume discounts, and penalties. The EM proposal encourages retailers to source products from a diverse range of suppliers, including small local producers, thereby offering consumers a wider selection of goods.
The draft law refines provisions regarding unfair trading practices related to unilateral contract changes, such as changes to product assortments. Currently, the law prohibits unilateral amendments by retailers to contracts for the supply of agricultural and food products regarding delivery terms, frequency, methods, locations, times, volumes, quality standards, payment conditions, or pricing. However, it does not provide clear regulation concerning unilateral changes to product assortments (reducing the assortment). In practice, retailers sometimes unilaterally decide to exclude certain products from their assortment. Under the proposed amendments, retailers would be prohibited from altering product assortments without giving suppliers written notice at least 30 days in advance, or 10 days in cases where changes are justified by product non-compliance with contract terms.
The amendments also define the concept of agricultural and food product supply forecasts and prohibit unilateral penalties for breaches of contractual terms.
Currently, retailers prepare long-term supply forecasts that are binding for suppliers but not for the retailers themselves. This often results in suppliers producing goods in quantities far exceeding what is eventually ordered, leaving them with excess inventory that cannot be sold within reasonable timeframes. The amendments propose defining supply orders for agricultural and food products to ensure mutual understanding and adherence to agreements. Suppliers will no longer be obligated to maintain inventory for delivery unless the retailer provides notice of the required quantities at least 30 days before the delivery date. Long-term forecast agreements must have a minimum 30-day term to qualify as binding commitments.
The draft law also includes a provision prohibiting unilateral penalties for breaches of contract terms. Currently, penalties are often imposed only on agricultural and food product suppliers, creating an imbalance where retailers can freely violate contractual terms without accountability. The proposed changes stipulate that penalties must apply equally to both parties and align with their respective responsibilities. Additionally, penalties cannot be applied if the value of undelivered goods does not exceed 10% of the forecast value.
The draft law mandates that retailers must settle payments for fresh vegetables and berries supplied at least three times a week within 20 days of delivery. This prevents situations where suppliers are forced to agree to longer payment terms.
Lastly, the amendments propose increasing the maximum financial penalty for violations of the law to 4% of the retailer’s net turnover in the previous financial year, but no less than €700.
Agricultural and food product supplier organizations have noted that unfair trading practices by retailers are often observed, but suppliers hesitate to file complaints with the Competition Council for fear of retaliation, such as revised contract terms or terminated collaborations. In a recent Competition Council survey, 47% of respondents reported feeling unprotected against unfair practices by retailers. Currently, the maximum penalty for violations of unfair trading practices in Latvia is among the lowest in the EU—up to 0.2% of net turnover, but no less than €70.
Minister of Economics Viktors Valainis has proposed several additional measures to reduce food prices, including introducing markup caps for essential food items, setting a minimum price for each product category, implementing a digital tool for price comparison, banning the destruction of unsold food (encouraging donations or discounted sales), and restricting excessive or prolonged discounts to stabilize consumer prices. The minister’s plan also includes balancing retailer-supplier relationships, eliminating discriminatory practices, and increasing the share of locally produced food in retail outlets.