Is a volume-related discount an act of unfair competition?

In the judgment of 21 April 2016 the Court of Appeal in Katowice considered the question of qualifying the volume-related discount, i.e. a bonus paid by the supplier of goods to the chain of stores offering goods of this supplier that is tied to the volume agreed by the parties that would be sold as well as fees for unperformed advertising services as the so-called “slotting fee” that constitutes an act of unfair competition defined in art. 15 sec. 1 cl. 4 of the Suppression of Unfair Competition Act. According to this provision, it is prohibited to obstruct market access to other entrepreneurs through collection of fees for accepting goods for sale other than the trade margins.

The Court of Appeal directed the legal question in this scope to the Supreme Court which in its resolution of 18 November 2015 under file ref. no III CZP 73/15 stated that monetary bonuses that are dependent on the turnover in the form of the volume-related discount should not be qualified up front as a prohibited slotting fee. If it does not result from the accompanying circumstances of the reserved amount of bonus which was negotiated by the parties that the rules of social coexistence have been violated or that the discount is only apparent and constituted hidden slotting fee then there is no basis for considering this practice as an act of unfair competition in the meaning of art. 15 sec. 1 cl. 4 of the Suppression of Unfair Competition Act.

The Supreme Court has also defined the conditions to be met in order to treat the volume-related discount as a hidden slotting fee. In particular, the fees must be treated in the mentioned manner if the amount of trade margin for one supplier is significantly different  from trade margins collected on the basis of similar contracts regarding the same goods. The prerequisite for the occurrence of the slotting fee is also no agreed terms under which the buyer would be allowed to reduce the price or no terms relating to the height of price reductions that allowing the buyer to make a unilateral decision.

The facts of the disputed case in the light of art. 15 sec. 1 cl. 4 of the Suppression of Unfair Competition Act and art. 58 § 2 of the Civil Code has led the Court to the conclusion that the discount amount was determined by the parties by way of negotiation through explicit indication of the turnover which was associated to the right of calculating the specific discount amount. The plaintiff has also not showed that the amount of trade margin has been significantly different from the margins collected on the basis of similar contracts.

In reference to the collection of fees for rendering advertising services by the chain of stores the Court of Appeal stated that concluding additional contract accompanying the contract of sale or delivery is admissible. However, the assessment of the text of those contracts in the context of an act of unfair competition defined in art. 15 sec. 1 cl. 4 requires establishing whether the services rendered by the parties are of an equivalent character since an act of unfair competition is collecting fees that are deprived of equivalent for the services that have not been performed and the acquisition of goods dependant on the supplier being bound to pay such fees.

  • Judgment of the Appeals Court in Katowice of 21st April 2016, file reference number V ACa 814/14
  • Resolution of the Supreme Court of 18th November 2015, file reference number III CZP 73/15