MARKET POWER: WITCHES’ HAMMER?

Publikováno: 5. 11. 2009

The Czech Confederation of Commerce and Tourism (CCCT) is disappointed with adopting the Act on Significant Market Power when selling agricultural and food products and its abuse, that from the very beginning of negotiations the Confederation considers as unnecessary, discriminatory, legally amateurish and paradoxically damaging to the majority of participants in the food supply chain, though being proclaimed for the benefit of Czech farmers (basic industries). On the contrary, according to the CCCT, this almost theatrical anxiousness of the agro-food complex, being represented by a certain part of processing industry, will make no good. And what is worse is that with its impact, it will damage consumers as well as the position of small and medium-sized Czech producers – food suppliers in trade networks. “To the address of the Agrarian Chamber and the Federation of the Food and Drink Industries, it almost feels like saying: Whoever wants to get somewhere, let’s help him get there”, Zdeněk Juračka, president of the Czech Confederation of Commerce and Tourism, says. He adds: “However, this is not business-like. More likely, we will be concerned with the fact how the Office for the Protection of Competition will manage it when the act parameters are set so unreasonably, and I am really sorry that thus, the entrepreneurial environment will be hit by another useless barrier hindering free competition.” After seven years of patient explanations and proving the absurdity of such act whose draft had been swept aside by several Czech governments and lastly also refused by the president of the Czech Republic with entirely irrefutable arguments, on 3 November 2009, the Parliament of the Czech Republic passed a law, fully tributary to the interests of the part of processing industry regardless the evaluation of its impact both on consumers and on the entrepreneurial environment. Regardless the warning of such independent institution, being indisputably presented by the University of Economics in Prague, which in its evaluation, pointed to the inconsistency with principles of creating the common European economic area as a competitive advantage which in its effects, can result in the growth of grey economy, corruption and bureaucratization of business relations.  The rhetoric pleading this draft act coming out of the mouth of some members of parliament, such as "threat of real European prices” which would result from dishonoring the act, only together with the “threat of foreign capital”, shows evidence of how we (or a certain part of our legislators) perceive the principles of market economy and contractual liberty on which the modification of civil-law relations is based in all developed market economies.   Further, Z. Juračka mentions: “I do not completely understand that arguments resting on the relation between a farmer (basic industries) and retail business have been enforced which is entirely inappropriate and perhaps intentionally misleading. It almost seems that it is all to the benefit of the food processing industry whose position being also economically significant is usually somewhere in the middle of these relations. In the overwhelming majority of cases, a retailer does not actually buy from basic industries.” The inconsistency of this act with the “real” European view is supported by the announcement of the European Commission which has lately suggested a concrete measure to support the functioning of the EU food supply chain (i.e. of all participants and not only in retail). To improve the problems found, the Commission proposes to: a)       promote sustainable and market-based relationships between stakeholders of the food supply chain b)       increase transparency in the food supply chain c)       foster the integration of the internal market for food and the competitiveness of all sectors of the food supply chain. Let’s try to believe that in connection with the fact that on the same day, the Treaty of Lisbon was ratified by the Czech party, we will reach the European perception and cultures of the market-based relationships after all.

  For more information: Zdeněk Juračka, president CCCT, +420 736 624 861

Autor: Hanka Michovska

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