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
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
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 !