Poland’s biggest supermarket chain fined €116m for forcing discounts on suppliers

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Notes from Poland is run by a small editorial team and is published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

A court has confirmed a fine of over 500 million zloty (€116 million) imposed on Biedronka, the Portuguese-owned supermarket chain that is Poland’s largest by revenue, for exploiting its market position to force suppliers to provide discounts on their products after delivery.

“The ruling is a very important signal for the market, especially for the largest businesses,” wrote the state Office of Competition and Consumer Protection (UOKiK) after the ruling was issued on Thursday. “Retail chains should pay suppliers the price they have agreed upon for their products.”

UOKiK originally fined Jerónimo Martins, the Portuguese group that owns Biedronka, more than 723 million zloty in 2020, arguing that the company was “making money unfairly at the expense of food suppliers”, particularly on fruits and vegetables.

The agency said at the time that contractors were often informed of the need to grant a discount only at the end of the accounting period after the deliveries had been made. If they refused, they were threatened with a financial penalty.

“Thus, when concluding the contract, they did not know how much they would earn, as at any time the owner of Biedronka could demand a reduction in remuneration by granting an additional discount in an amount known only to the company,” wrote UOKiK in 2020.

“Because of Biedronka’s market power, the suppliers agreed to terms that were unfavourable to them, fearing that the termination of the cooperation could mean even greater financial losses,” it read.

This resulted in the supermarket “unfairly making money at the expense of food suppliers[,]…earning over 600 million zloty through the contested practices”.

On Thursday, UOKiK announced that a court has now confirmed the fine, though has lowered the total to 506 million zloty. In its justification for the decision, the court noted the “huge advantage of the Biedronka chain over suppliers”.

Biedronka, which can still appeal against the ruling, emphasised in a statement to the Polish Press Agency (PAP) that the court had found that only in the case of seven out of 214 suppliers of fruit and vegetables did the supermarket chain have a “contractual advantage”.

It also said that the finding in those cases was still “wrong” in its view. “Biedronka has been building partnership relations with Polish suppliers for almost 30 years and they are built in the long term on the foundation of transparency and honesty,” it added, without confirming whether it will appeal the ruling.

The head of UOKiK, Tomasz Chróstny, however, celebrated the “precedent-setting judgment”, which he said “confirms the course of action we have adopted…[to] stand guard over Polish suppliers and food producers”.

Biedronka, which has over 3,500 stores in Poalnd, was the country’s largest supermarket chain by revenue in 2023, according to data compiled by Forbes magazine. It brought in just over 85 billion zloty, well ahead of German chain Lidl (33.4 billion zloty) in second place, followed by Eurocash (30.9 billion zloty).

Last year, Biedronka became Poland’s largest employer, overtaking the state post office, with over 80,000 staff.

The firm was also punished by UOKiK in 2021, when it was fined 60 million zloty for misleading consumers by labelling foreign products as Polish. This year, it has faced legal action over allegations that it made misleading advertising claims amid a price war with Lidl.

Last year, UOKiK also launched proceedings against two French-owned supermarket chains, Auchan and Intermarché, for allegedly exploiting their contractual advantage against suppliers of agricultural produce.

Notes from Poland is run by a small editorial team and published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Main image credit: DMCGN/WIkimedia Commons (under CC BY 4.0)