We are talking about Act No. 395/2009 Coll., on significant market power in the sale of agricultural and food products and its abuse, as amended and supplemented (also known as "ZVTS" or just "Act").

The subject of the ZVTS legislation is (in the words of § 1 ZVTS) the method of assessing and preventing the abuse of significant market power in connection with the purchase of food for the purpose of resale in the territory of the Czech Republic or the services related to this purchase or sale of food, and the supervision of compliance with the ZVTS.

This Czech legal norm is based on the reasoning that the so-called significant market power (which, according to the law, needs to be combated) can only be exercised by customers (i.e. buyers) within the framework of supplier-customer relations, and not by suppliers (i.e. seller). The one-sided focus of the legislation in question is therefore obvious, the aim of which is to regulate the behavior and actions of only entities in the field of the food and agricultural products market, which in professional circles are generally referred to as "business chains", "retailers", "retail", etc.

However, from this wider group of entities, the ZVTS is primarily focused on the large international business chains that operate on the Czech retail market for food and agricultural products and operate their extensive networks of supermarkets and hypermarkets here, and which, from the point of view of employment they represent the second most important employer segment in the Czech Republic. It is impossible not to see that the ZVTS presumes in this context that the so-called significant market power is (just and only) a customer whose turnover for the sale of food and related services in the territory of the Czech Republic exceeds CZK 5 billion for the last completed accounting period of 12 months; For the purposes of this article, let's leave aside the fact that according to ZVTS (§ 4) this presumption also applies similarly to the customer in connection with its controlling person, or on the so-called purchasing alliance.

The purpose of the ZVTS legislation is then to act in such a way that within the framework of supplier-customer relations there is a "reconciliation" otherwise in favor of important customers of an unbalanced and unbalanced market environment, as at least such a meaning and goal of the ZVTS legal regulation can be inferred from the short web presentation of the Office for protection of economic competition, which is located on its official website2.

For this purpose, the ZVTS currently defines such a degree of legal regulation and interference in the otherwise private law relations of two or more private law entities, which can be considered relatively unique in certain respects. In concrete terms, one could name a number of restrictions that are factually "implemented" in the contractual relationship between the customer (with legally significant market power) and the supplier in a protectionist manner in favor of the supplier, such as (among others): i) prohibition of contractual agreements on the deadline the due date of the supplier's invoice, which would be longer than 30 days from the date of delivery of the invoice to the customer, further ii) the prohibition that all monetary payments by the supplier in favor of the customer (such as various marketing "fees", discounts, bonuses, etc.) must not exceed 3% of the supplier's annual sales for food delivered to the relevant customer, iii) a mandatory contractual agreement on the period of guaranteed validity of the purchase price, which may not be longer than 3 months from the first delivery of the goods, iv) a prohibition (in particular) to receive any payment or discount, the amount of which , the subject and scope of the consideration provided were not agreed in writing before the delivery of the goods, etc.

As is clear, the ZVTS already interferes in the area of ​​contractual freedom of business entities, which is otherwise typical for the relations of such entities, in a very significant way.

Recently, around the beginning of 2018, ideas and opinions calling for an even stronger and deeper regulation of business relations between suppliers and customers on the food market, or calling for stronger and deeper regulation of the position and functioning of customers in the retail food market.
Specifically, it is supposed to limit (very popular among consumers) discount campaigns, to introduce a mandatory minimum margin on food or to ban the sale of goods under shopping or cost price.

Among others, we can name, for example, the statement of the then-resigned Minister of Agriculture, Jiří Milk, as published on 28/02/2018 on the server www.podikatel.cz 3 or on 10/04/2018 on the server www.idnes.cz 4. Let's add to this for illustration that the "French" case mentioned by the outgoing Minister Milk is supposed to consist in the fact that the legal regulation is supposed to prohibit the retail chain from selling food at a price that is lower than the production price, and when in addition to such selling price a minimum ten percent margin must be "added".

It is then beyond doubt that if such topics were to be "materialized" in the form of generally binding legal regulation, it would almost certainly be the ZVTS, into which these regulatory tendencies would be projected.

The truth is that Minister Milk's call for deeper regulation of retail chains was subsequently softened when on 12 April 2018 a statement from the Ministry of Agriculture was published on the server www.aktualne.cz stating that: "The Ministry of Agriculture is primarily not a supporter of extensive regulation in the area of ​​the functioning of the food chain and relies on the constructive straightening of relations between farmers, food producers and traders."5, however, with the arrival of the new Minister of Agriculture Miroslav Toman, it can be observed that considerations of further regulation may not be so much "off the topic of the day".

This can be indicated, for example, by an article published on 27/06/2018 on the www.idnes.cz server, in which it was stated (among other things) that: "It is obvious that Miroslav Toman, in the position of minister, will continue the government's policy of their predecessors, who wanted to clip the wings of large retail chains. Toman would not be opposed to setting "fair margins" on goods either. Jiří Milek already wanted to go in this direction."6 Let's add that the quoted article also mentions Minister Toman's interest in setting rules regarding the sale of food within the framework of special offers (so-called promotions), which would, for example, determine in what quantity the products could be sold in the events. Finally, in the cited article, Minister Toman comments (among other things) on the selling prices of food as follows: "Something has to happen. It is not possible for it to be sold below cost prices. In Germany they call it a ban on selling at a loss. It is not at all that we want to make food more expensive. But it is necessary for the consumer to know the real price of the product."

However, as can be read in an article published on 2 August 2018 on the server http://plus.rozhlas.cz 7, the Trade and Tourism Association points out, in the words of its vice-president Pavel Mikoška, ​​that: "(... ) in the field of food retailing, there is strong competition and retailers are trying to win customers with discount events. They also monitor each other's steps and thus prevent the price level from rising." But according to Mikoška, ​​it would increase when discount regulation was introduced, despite competition, as the article below quotes Mikoška as saying: "If, for example, minimum margins were regulated, it would mean an increase price levels. Just like if a maximum of 15 percent of the goods could be on sale."

From the foreshadowed development of the currently very general discussion at the political and professional-business level, it can be assumed that the retail food market, or the position and operation of retail chains on the food market in the area of ​​discount campaigns, minimum margins on food or the prohibition of sales of goods below purchase prices, or cost prices, it will probably not be subject to the introduction of further legal regulation in the sense of the amendment of the ZVTS in the near future. However, in the future, the adoption of such legal regulation cannot be ruled out.

Mgr. Marek Ždímal, lawyer
Mgr. Jaroslav Hroza, lawyer

1. For example, Prof. JUDr. JOSEF BEJČEK, CSc., head of the Department of Business Law at PF MU in Brno, in his review of the Commentary on the Act on Significant Market Power (C.H. Beck, Prague 2017, authors Jiří Kindl and Martin Koudelka) literally stated that: "Its authors especially waited except for the amendments to the original law from 2009, which at least partially removed such shortcomings that pushed the original (and extraordinarily unsuccessful) law to the very edge of applicability (…); BEJČEK, Josef. Jiří Kindl, Martin Koudelka: Act on significant market power. Commentary [online]. 23/05/2018 [cit. 2018-08-10]. Available from: http://www.bulletin-advokacie.cz/jiri-kindl-martin-koudelka-zakon-o-vyznamne-trzni-sile.-komentar
2. Since the 90s of the last century, in connection with the entry of multinational retail companies into the Czech Republic, the issue of unbalanced supplier-customer relations within the food sector has become a topical issue. Thanks to their considerable market power, customers began in many cases to determine almost unlimited terms of their relationship with their suppliers, as until now there was no legal regulation that would penalize these practices; AUTHORITY FOR THE PROTECTION OF ECONOMIC COMPETITION. Significant market power: Regulation of supplier-customer relationships in the food sector [online]. [feeling. 2018-08-10]. Available from: https://www.uohs.cz/cs/vyznamna-trzni-sila.html
3. KNIŽKOVÁ, Jana. The Minister of Agriculture wants to stop the chains. For example, it plans to limit discount events [online]. 28/02/2018 [cit. 2018-08-10]. Available from: https://www.podnikatel.cz/clanky/ministr-zemedelstvi-chce-zavarit-retezcum-planuje-napriklad-omezit-slevove-akce/
4. HORAČEK, Filip. Food may not be sold below cost. Just like in France, says the minister [online]. 10.4.2018 [cit. 2018-08-10]. Available from: https://ekonomika.idnes.cz/jiri-milek-ministr-zemedelstvi-rozhovor-marze-retezce-potraviny-1ca-/ekonomika.aspx?c=A180409_133309_ekonomika_rts
5. CTK. No restrictions on discounts or mandatory share of Czech goods. Minister moderates plans to regulate chains [online]. 12/04/2018 [cit. 2018-08-10]. Available from: https://zpravy.aktualne.cz/finance/nakupovani/zadne-omezeni-slev-ani-minimalni-objem-ceskeho-zbozi-v-regal/r~b86d1e983e5f11e8a79a0cc47ab5f122/
6. HORAČEK, Filip. I will limit discount events in chains, says the new minister Toman [online]. 27/06/2018 [cit. 2018-08-10]. Available from: https://ekonomika.idnes.cz/slevy-promoakce-retezce-ministr-miroslav-toman-ftb-/ekonomika.aspx?c=A180626_104824_ekonomika_fih
7. ERHART, Michael and Veronika SEDLÁČKOVÁ. We are in a discount spiral, people do not know the real price of food, says Koberna from the Food Chamber [online]. 2/8/2018 [cit. 2018-08-10]. Available from: https://plus.rozhlas.cz/jsme-ve-slevove-spirale-lide-neznaji-skutecnou-cenu-potravin-tvrdi-koberna-z-7579040