On 28 February 2017 the Commission on Protection of Competition (CPC) adopted an advocacy opinion on draft amendments in the Food law.
The CPC reckons that the introduction of provisions that regulate the usage of the word “Bulgarian” with regard to the packaging, labelling and advertising of food is not necessary as these issues are already regulated at EU level.
The draft law envisages obligation for the supermarkets with annual turnover over 2 million Bulgarian leva part of the quantities of certain groups of products to be produced in Bulgaria. The CPC expresses the opinion that this obligation restricts competition in several aspects. The regulation creates geographical barriers to the free movement of goods which is related to a risk of market exit of some foreign suppliers including of some products that are not substitutes with Bulgarian ones. This leads to many unfavourable consequences for the consumers such as limited choice, higher prices, risk of deficit of goods in case the Bulgarian products are not sufficient to cover the minimum percentage, risk of products of poor quality contrary to the motives of the draft concerning the health of the citizens. Besides the provision sets in a privileged position not only the Bulgarian towards the foreign suppliers but also the small towards big retailers. The provision for minimum percentage of Bulgarian products restricts also the ability of the retailers to determine the strategy to attract consumers. The market economy is based on the interaction between demand and supply and hence the natural market mechanisms and not regulations would create supply that would meet the demand. In its opinion the CPC reminds that in the legal framework in force there are envisaged means for protection of the producers from unfair trading practices of the retailers and that’s why it is not necessary to introduce additional measures in this regard that restrict competition.
The CPC opposes also to the definition of fresh fruits and vegetables which excludes those that are not produced in Bulgaria as it could also restrict competition by limiting the free movement of goods creating risk of going back in the times of deficit of fruits and vegetables out of their season which has been typical for the period before the liberalisation of the international trade.
According to the CPC the regulatory determination of shorter term for payment of perishable goods is additional unnecessary interference in the freedom of contract which could turn out to be in detriment of the suppliers it is meant to protect in case of renegotiation of other contract terms.
The CPC points out that the support for the Bulgarian producers should not be made with measures which do not fulfill the aims and restrict competition but instead with measures which comply with state aid rules and within the legal possibilities provided by the Common Agricultural Policy.
The decision in Bulgarian is available here.