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The challenges facing the modern commerce sector in the CEE region Renata Juszkiewicz- Chairman of CEE Commerce Council President of Polish Organsation of Trade and Distribution. Brussels, 8 November 2011. C entral E astern E uropean C ommerce C ouncil.

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The challenges facing the modern commerce sector in the CEE regionRenata Juszkiewicz- Chairman of CEE Commerce CouncilPresident of Polish Organsation of Trade and Distribution

Brussels, 8November 2011

c entral e astern e uropean c ommerce c ouncil
Central Eastern European Commerce Council

Representing commerce in 9 CEE countries:

Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Bulgaria, Estonia.

20 Oct. 2010 Common Communique

c entral e astern e uropean c ommerce c ouncil1
Central Eastern European Commerce Council

To voice common concern about restrictions impairing our industries and the national economies of CEE countries

To prevent the “spillover” effectof harmful laws and restrictive policies

c entral e astern e uropean c ommerce c ouncil2
Central Eastern European Commerce Council

To build a network to object to restrictive laws and polices in the region’s countries.

To carry out advocacy activities towards the EU institutions in particular the Commission and the Parliament.

contribution to the economy
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
GDP growth

Country 1991 (%) IIQ2011(%)

Poland -7.0 4.3

Czech Rep. -11.5 2.2

Slovakia -14.6 3.3

Romania -12.9 0.3

Hungary -11.9 1.5

Bulgaria -11.7 2.0

inflation rates
Inflation rates

Country 1991(%) 2011(%)

latest

Poland 70.3 3.9

Czech Rep. 56.6 1.8

Slovakia 61.2 4.3

Romania 170.2 3.4

Hungary 35.0 3.6

Bulgaria 338.5 3.3

contribution to the economy1
Contribution to the economy

FI: 90 b EUR

Sales: 62 b EUR

New jobs: 390 000

New stores: 8 000

c ontribution to the economy
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

benefits for consumers
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 in the CEE region

Restrictions breachthe 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
Restrictions/Areas

Court policy

Stores’ establishment

Supply chain

Code of Conduct

Significant market power

VAT

types of restrictions
Types of restrictions

Definition of significant market power

Payment terms for some products 30 days, fresh food 14 days

Ban on products audit

Ban on bonus and discount of the private labels

The liberty to terminate the purchase contracts 60 days in advance

types of restrictions1
Types of restrictions

Placing the purchasing conditions on www

Obligations for domestic products quotas

Mandatory reporting of food imports incl. EU products

Exclusive penalization of retailers for quality and safety standards

supply chain restrictions
Supply chain restrictions

Slovakia

Act on unfair form in business relations between the buyer and supplier of goods consisting in food /Complaint - 15 May 2008

Abolition: 1 April 2011

Memorandum of Ethic in Food industry

Amendment to the law on foodstuff

supply chain restrictions1
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 restrictions2
Supply chain restrictions

Romania

Food Trade Law No.321- Oct. 2009

Amended in Dec. 2010

Other proposals:

To show the products purchasing prices to the consumers

To report product prices in a Price Observer database on weekly basis

To allocate sale spaces to national products.

significant market power
Significant market power

Bulgaria

Draft law amending the Act on Protection of Competition

Latvia

Competition Law of Latvia

significant market power1
Significant market power

Czech 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 Competition

A draft amendment to Act No. 526/1990 on Pricing

c ourts policy
Courts policy

Poland

Act on Combating Unfair Competition

Unfavourable Resolutions of the Supreme Court of Poland/ influence guidance on legal consideration

discriminatory tax law
Discriminatory tax law

Hungary

Trade, Energy, Telecommunication

2.5% 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 stores
Hampering the establishmentof stores

Hungary

Amendment proposalin 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
Misperceptions of modernretail

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 retail1
Misperceptions of modernretail

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
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 cee
Consequences for the CEE

Increase in consumer prices

Increase in inflation

Increase in cheap imported products

Decrease in domestic production

Reduced product quality

Barriers for establishment of new stores

Damage of the positive image of our countries within investor community

Weakening of GDP economies based on internal market

The achievment of recent decades will wither

Does anybody benefit from that?

cee cc appeal
CEE CC appeal

European Parliament, the European Commission, member state governments

To closely examine the developments in the commerce sector in allthe 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.