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Office of Competition and Consumer Protection

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President of UOKiK examines contracts of diary cooperatives

< previous | next > 16.05.2022

President of UOKiK examines contracts of diary cooperatives
  • The President of UOKiK is investigating whether the contracts of dairy cooperatives comply with the provisions on unfair use of contractual advantage.
  • Currently, the subject of analysis are the contracts and practices of OSM Łowicz and the Mlekpol Dairy Cooperative, among others.
  • The opportunity to examine the relations between a dairy cooperative and its members was provided by an amendment to the Contractual Advantage Act in December 2021.

One of the first proceedings of the President of UOKiK in the field of contractual advantage concerned the relationship between dairy processors and their suppliers. In 2018, the Office investigated some sales, supply and cultivation contracts.  The result was a report in which we showed what fair contracts should look like and which practices may constitute unfair use of contractual advantage. According to the legislation in force at the time, the Office could not interfere with contracts between cooperatives and their members; nevertheless, it also presented these entities with recommendations on the content of their milk supply agreements. As the new Contractual Advantage Act, in force since December 2021, allows for the audit of intra-cooperative relations, the President of UOKiK decided to examine whether cooperatives have been guaranteed fair rules of milk supply.

"For 30 years, dairy cooperatives have excelled in the market enjoying uninterrupted growth. They have achieved success and are stable partners of major retail chains. We also want to ensure that they have a proper relationship with their milk suppliers. We have received complaints from breeders, so we decided to look at whether the agreements used by cooperatives comply with the law," says the President of UOKiK, Tomasz Chróstny.

The dairy cooperative contracts sent by farmers and obtained by the President of UOKiK from other sources included the provisions contested in the 2018 report.

These include:

  • The recipient's ability to freely change the milk price list.
  • Reducing the price for full-value milk during the notice period.
  • Lack of possibility to subject the milk to quality assessment in an independent laboratory at the supplier's request. Contamination of milk with various substances may result in the immediate termination of the contract with the farmer and imposing a contractual penalty or in a price reduction. In view of such severe sanctions, the agreement must provide for a possibility of objective verification of the milk parameters by an independent laboratory.
  • Unclear rules for the application of contractual penalties and the cooperative's ability to easily immediately terminate the contract on unspecified terms.

"Since the publication of the Office's 2018 report, it has been clear what proper contracts of dairy processors with suppliers should look like. Therefore, I encourage cooperatives that have not yet done so to adapt their contracts to our guidelines as soon as possible. At the same time, I ask farmers to inform us about any irregularities detected in contracts with dairies," says the President of UOKiK, Tomasz Chróstny.

Currently, the President of UOKiK is conducting two investigations concerning the Mlekpol and OSM Łowicz dairy cooperatives. As part of his monitoring of the milk market, he also intends to examine the contracts of other dairy processors, not just those operating as cooperatives. Suppliers who wish to verify whether their contracts with dairies contain unfavourable provisions that may constitute a violation of the law are encouraged to read our report.

If you are a farmer or entrepreneur operating in the agri-food industry and your large contracting partner abuses its contractual advantage by imposing unfavourable terms of cooperation, please do not hesitate to notify UOKiK. We have prepared a special form to help you report irregularities. Click here to fill it out: https://ankieta.uokik.gov.pl/formularz-przewaga-kontraktowa.

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL

Attached files

 

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