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Office of Competition and Consumer Protection

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Contractual advantage - proceedings of the President of UOKiK against Mlekpol

< previous | next > 15.11.2022

Contractual advantage - proceedings of the President of UOKiK against Mlekpol
  • President of UOKiK Tomasz Chróstny brought charges against Spółdzielnia Mleczarska Mlekpol (Mlekpol Dairy Cooperative).
  • The company is likely to be unfairly abusing its contractual advantage against suppliers.
  • This is subject to a fine of up to 3 percent of the company’s annual turnover.

Spółdzielnia Mleczarska Mlekpol is one of the largest producers of milk and dairy products in Poland. Products of brands such as, inter alia, Łaciate, Milko, Mazurski Smak or Rolmlecz are manufactured at 13 processing plants. Mlekpol purchases milk from agricultural producers who are also members of cooperatives. The cooperation is based on agricultural procurement contracts. The parties operate under a pre-drafted specimen contract, and an individual supplier has no influence over its content. The Office’s findings so far indicate that the terms of this contract may be detrimental to the suppliers.

President of UOKiK Tomasz Chróstny charged Mlekpol with unfair use of contractual advantage. They concern, inter alia, the following practices:

  • Possible unilateral change of the milk buying price list, also with retroactive effect. A change in the price list does not require the consent of cooperative members, or sometimes even their notification.
  • Supplier’s obstructed access to full information on the terms and conditions of the contract. The contract obliges farmers to comply with milk quality requirements set out in the cooperative’s internal acts. These conditions are not attached to the contract, so the supplier does not have full knowledge of the additional parameters, apart from the statutory ones, to be met by the milk produced, nor of the specific terms of deliveries.
  • Ambiguous rules for administering penalties, and their arbitrary application. A supplier, even for a minor breach of contract, is liable for a fine, termination of the contract without notice or other sanctions that the cooperative may apply cumulatively.
  • Reducing the price for full-value milk during the notice period.
  • Lack of possibility to subject the milk to quality assessment in a laboratory independent from Mlekpol. The result of the quality assessment of the milk sold is crucial for the supplier, as it determines the price. If the price of the milk is reduced or the milk is rejected due to Mlekpol’s negative assessment of its quality, the supplier is not able to have the tests verified by a laboratory independent of the cooperative.
  • It is not possible to exempt a producer from the obligation to deliver milk in the event of circumstances beyond their control (e.g. accident, malfunction, difficult weather conditions). Mlekpol, on the other hand, is entitled to refuse collecting the milk in the event of force majeure.

The practices mentioned are also inconsistent with the recommendations contained in the UOKiK’s 2018 report containing specific indications on milk processors’ contracts with suppliers. 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.

- Since the publication of the Office’s 2018 report, it has been clear what proper contracts of dairy processors with suppliers should look like. Unfortunately, the analysis of the practices applied by Mlekpol shows that the cooperative could have been using its contractual advantage against farmers. The agreement drawn up by Mlekpol contained numerous provisions unfavourable to the contractors, which could have disrupted the stability of the conditions of operation of breeders and violated their economic interests - President of UOKiK Tomasz Chróstny says.

The President of UOKiK is also conducting two preliminary investigations concerning District Dairy Cooperatives in Łowicz and in Koło - he verifies the correctness of contracts and practices.

Entrepreneur, farmer, if you operate in the agri-food industry and your major counterparty abuses its competitive advantage by imposing unfavourable conditions of cooperation – report it to UOKiK. We have launched a special form to help you report any irregularities. Click here to fill it out: https://ankieta.uokik.gov.pl/formularz-zgloszenie-przewaga/

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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