Delchev & Partners

AMENDMENTS AND SUPPLEMENTS TO THE BULGARIAN PROTECTION OF COMPETITION ACT AND THE FOODS ACT

(effective as of 29.07.2015)

The Act for Amendment and Supplement to the Bulgarian Protection of Competition Act was promulgated in State Gazette No 56 of 24.07.2015. Its Transitional and Final Provisions introduce amendments and supplements also to the Bulgarian Foods Act.
I. GENERAL STANDINGS

The main amendments to the Protection of Competition Act concern the introduction of a new Chapter Seven “a” – “Abuse of a stronger bargaining position”.
Two amendments are also introduced to the Foods Act. The first amendment concerns the establishment of a new Article 19 that sets certain restrictions regarding agreements for purchase of foods for the purposes of further resale. The second amendment establishes a new Chapter Six “a” – “National Council for Better Functioning of the Chain of Offering Foods. Conciliation Commission.”.
II. “ABUSE OF A STRONGER BARGAINING POSITION”

The amendments and supplements to the Protection of Competition Act introduce a new Chapter Seven “a” – “Abuse of a stronger bargaining position”. A new Article 37a provides for a prohibition against any action or inaction of an undertaking with a stronger bargaining position that:
is in contradiction with good faith commercial practices;

• harms or is liable to harm the interests of the weaker bargaining party or the interests of consumers.
  As unfair are deemed those actions and inactions which have no objective economic grounds. The following actions or inactions are listed as examples:
• ungrounded refusal of delivery and/or purchase of goods and services;
• imposing unfairly burdensome or discriminatory conditions;
• ungrounded termination of commercial relations.
  Art. 37a, par. 2 explains the criteria for assessment of whether an undertaking possesses a stronger bargaining position:
• characteristics of the market structure;
• the particular relation between the affected undertakings;
• the level of dependency between the undertakings;
• the character of each undertakings’ activity and the difference in its scale;
• the possibility of finding an alternative trading partner, including the existence of alternative sources of supply, distribution channels and/or clients.

The sanctions which the Commission on Protection of Competition may impose in case of infringement of Art. 37a may amount up to 10% of the undertaking’s turnover of sales of the product, subject of the infringement, for the preceding year but no less than BGN 10,000. When no turnover for the preceding year exists, the sanction may vary between BGN 10,000 and BGN 50,000.
III. AMENDMENTS AND SUPPLEMENTS OT THE FOODS ACT
Restrictions regarding the resale of foods
The amendments and supplements to the Foods Act introduce a new Art. 19 which sets certain restrictions to an agreement for purchase of foods for the purposes of further resale. Such an agreement shall not:
1. contain a prohibition or a restriction for a party to the agreement to offer or purchase goods and services to or from third parties;
2. contain a prohibition or a restriction for a party to the agreement to offer to third parties the same or better terms and conditions;
3. stipulate sanctions for offering to third parties the same or better terms and conditions;
4. be unilaterally amended unless such a right is explicitly agreed in the contract;
5. specify remunerations for services that are not actually provided;
6. transfer unjustified and disproportionate commercial risk to one of the parties;
7. specify a payment term longer than 30 days as of the date of receipt of the invoice for delivery or another payment notification; when the invoice or the payment notification has been received prior to the delivery of the goods, the term begins to run on the day following the day of delivery the goods, notwithstanding the fact that the invoice or the payment notification precedes that moment;
8. contain a prohibition or restriction for a party to the agreement to transfer receivables to third parties.
Arrangements that contradict the aforementioned regulations shall be null and void by law.