The challenges facing the modern commerce sector in the CEE region Renata Juszkiewicz- Chairman of CEE Commerce Council President of Polish Organsation

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  • The challenges facing the modern commerce sector in the CEE region

    Renata Juszkiewicz- Chairman of CEE Commerce CouncilPresident of Polish Organsation of Trade and Distribution

    Brussels, 8 November 2011

  • Central Eastern European Commerce CouncilRepresenting commerce in 9 CEE countries: Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Bulgaria, Estonia.

    20 Oct. 2010 Common Communique

  • Central Eastern European Commerce CouncilTo 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 CouncilTo build a network to object to restrictive laws and polices in the regions 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 4.3Czech Rep. -11.5 2.2Slovakia -14.6 3.3Romania-12.9 0.3Hungary -11.9 1.5 Bulgaria-11.7 2.0

  • Inflation rates Country 1991(%) 2011(%) latestPoland 70.33.9Czech Rep. 56.6 1.8Slovakia 61.2 4.3Romania170.2 3.4 Hungary 35.0 3.6 Bulgaria 338.5 3.3

  • Contribution to the economyFI: 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 powerStores 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 daysBan on products auditBan on bonus and discount of the private labels The liberty to terminate the purchase contracts 60 days in advance

  • Types of restrictionsPlacing the purchasing conditions on www Obligations for domestic products quotasMandatory reporting of food imports incl. EU productsExclusive penalization of retailers for quality and safety standards

  • Supply chain restrictions

    Slovakia Act on unfair form in business relations between the buyer and supplier of goods consisting in food /Complaint - 15 May 2008Abolition: 1 April 2011Memorandum of Ethic in Food industryAmendment 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

    RomaniaFood Trade Law No.321- Oct. 2009 Amended in Dec. 2010

    Other proposals:To show the products purchasing prices to the consumersTo report product prices in a Price Observer database on weekly basis To allocate sale spaces to national products.

  • Significant market powerBulgaria Draft law amending the Act on Protection of Competition

    LatviaCompetition Law of Latvia

  • Significant market powerCzech 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 CompetitionA 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, Telecommunication2.5% 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 storesHungary 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 modern retail 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 modern retail

    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 CEEIncrease in consumer pricesIncrease in inflation Increase in cheap imported products Decrease in domestic production Reduced product quality Barriers for establishment of new storesDamage 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 appealEuropean 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 !