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Another penalty imposed for causing payment gridlock

< previous | next > 05.10.2022

Another penalty imposed for causing payment gridlock
  • Tomasz Chróstny, the President of UOKiK, has issued a series of decisions in payment gridlock cases.
  • The head of the authority imposed over PLN 700,000 in penalties on Farmio, and waived the financial sanctions in the case of three other economic operators.

The Act on counteracting excessive delays in commercial transactions is intended to prevent situations in which a large entrepreneur, entering into a commercial transaction with its business partner, fails to comply with its core contractual obligation, i.e. with the duty to pay, in due time, for the goods or services received. Such a situation was encountered by a company operating on the agricultural market and dealing primarily with processing and preserving poultry meet.

- Farmio was delaying payments towards its suppliers. These included, first and foremost, micro, small and medium enterprises, including local suppliers operating on the food and agricultural produce markets. The situation exposed such smaller economic operators to the risk of insolvency or even bankruptcy, as their financial liquidity was jeopardized or blocked by the lack of payment for the products they had delivered – says Tomasz Chróstny, President of UOKiK.

The largest delayed payment for one invoice exceeded PLN 955,000. The largest amount due to a single contractor equaled over PLN 3 million and pertained to 11 separate invoices. Seven more entities that were disadvantaged by Farmio received overdue payments of more than PLN 2 million each. In most cases, they were Polish entrepreneurs.

- Many companies operating in the SME sector complain of difficulties in receiving money from their business partners in due time. Overdue payments and excessive payment periods exert a highly adverse impact on the financial liquidity of economic operators, increasing their risk of bankruptcy. Such a phenomenon is particularly dangerous for small entrepreneurs who are the first link in the agricultural and food sector’s supply chain, as they are often unable, due to various reasons, to take advantage of solutions boosting their financial liquidity. On-time financial flows between business partners, especially those from the largest to the smallest entrepreneurs, are a must if the latter ones are to survive - stresses the President of UOKiK.

Three penalty waivers

Pursuant to regulations concerned with payment gridlocks, the President of UOKiK automatically waives the penalty if the amount a given entrepreneur has failed to receive or has received with a delay during the period under scrutiny exceeds the sum of the amounts the same entrepreneur has failed to pay or has paid with a delay.

Such a situation was identified in the case of three entrepreneurs: Polmlek Grudzi±dz (operating on the milk processing and cheese market), ABP Poland (foodstuff producer specializing in processing and preserving meat) and Wipasz (operating in the animal feed sector).

The President of UOKiK determined that in the period under review (December 2020 - February 2021), Polmlek Grudzi±dz failed to settle obligations in the amount of more than PLN 51 million, and simultaneously failed to receive, in due time, over PLN 80 million. The value of ABP Poland’s obligations equaled, between July and September 2020, over PLN 29 million, and its overdue accounts receivable amounted to more than PLN 46 million. In the case of Wipasz, the delays in commercial payments during the period under investigation (July - September 2020) exceeded PLN 94 million, while the company’s overdue commercial receivables equaled at least PLN 139 million.

Excessive delays in meeting financial obligations and associated penalties

The President of UOKiK may intervene in cases involving payment gridlocks if, over the period of 3 subsequent months, the sum of all payments that have not been made by a given entrepreneur in due time or have been made after their deadline, exceeds PLN 5 million.

Regulatory amendments

An amendment to the Act on counteracting excessive delays in commercial transactions, worked out by UOKiK in cooperation with the Ministry of Development and Technology, has been submitted to the Sejm. It aims to clarify and simplify specific provisions designed to prevent payment gridlocks. The new solutions are intended to speed up the investigations, thus shortening the lead time required to react to the unfavorable phenomenon of delaying payments, as observed on the market.

The draft amendment introduces, inter alia, the so-called soft summons procedure, allowing a request to be submitted to an entrepreneur without commencing an investigation. This will allow the authorities to quickly react to any gridlocks identified, and will provide entrepreneurs with the ability to settle the overdue payment and to enhance their payment culture. Additionally, the amendment introduces a new formula for calculating the maximum penalty amount. The future penalization model is intended, inter alia, to allow the President of UOKiK to take into consideration any aggravating and/or attenuating circumstances existing in a specific case.

Visit a website devoted to payment gridlocks

Examples of calculations in which penalties are imposed for specific amounts payable, as well as crucial information regarding the competencies of the President of UOKiK in connection with payment gridlocks may be found on a website that has been launched specifically for this purpose. What are payment gridlocks? When can the President of UOKiK investigate them? How can I report a business partner who has failed to make a payment? Who may file such a report? Answers to these and many other questions may be found at www.zatoryplatnicze.uokik.gov.pl

Additional information for the media:

UOKiK Press Office
pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone: 22 55 60 246
Email: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL
You can also follow us on Instagram: @uokikgovpl

Attached files

 

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