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New regulations on food marketing

On 15 July 2016, it was published in the Official Gazette Law no. 150/2016 ( "Law no. 150/2016") amending and supplementing Law no. 321/2009 on food marketing ("Law no. 321/2009") The amendments brought by Law no. 150/2016 aim, among others, as further detailed below, to stimulate the increase of the demand of food products of Romanian origin.

What has changed?

More Romanian products on the shelves

Traders authorized to sell food products, with an annual net turnover or total assets value up to 2 million Euro, in Lei equivalent, are obliged with respect to meat, eggs, vegetables, fruits, honey, dairy and bakery products to purchase these products from the short food chain of at least 51% of the volume of shelf merchandise corresponding to each category. The "short food chain" means "the supply chain involving a limited number of economic undertakings engaged in cooperation and local economic development, as well as in geographic and social relations between producers, processors and consumers".

Moreover, traders are required to provide separate spaces for the display and sale of Romanian products and organize promotional events and sales for Romanian food products.

New rules regarding labelling of meat products

The label for meat sold in Romania will include references to the location where the animal comes from, the country where it was born, the country where it was bred, the country where it was slaughtered and the country where it was butchered. Also, for meat products, it is mandatory that the label mentions the percentage of meat from Romania (i.e. derived from animals bred on farms in Romania).

In addition, traders are required to display in a visible place the expression "Romanian meat" for meat sold directly to the final consumer.

New regulations concerning the relationship between retailers and suppliers

As a novelty, Law no. 150/2016 brings the following changes:

●         it is prohibited to any trader to request from suppliers the invoicing/re-invoicing and to cash taxes and service fees;

●         reception refusal is made at the moment of the delivery of the goods, otherwise the goods are deemed accepted;

●         in the case where parties agree the reception to be made at a later date, the reception document will be sent to the supplier within 24 hours from the provision of merchandise, with the exception of fresh food for which reception is made at the delivery;

●         the supplier payment term may not exceed 30 calendar days, excluding fresh food for which the payment term cannot exceed 7 calendar days.

Regulating the definition of “sale price to consumer”

Law no. 150/2016 defines the “sale price to consumer" as "the purchase price increased with the trade margin". However, no other reference is made within the law at this price.

On the other hand, the "purchase price of food product" is defined as "the acquisition price negotiated between retailer and supplier". Opposed to the old form of the law, it is not included in this price import duties and other irrecoverable taxes, shipping costs, handling and other expenses that are directly attributable to the acquisition of goods, elements which are however included in the cost of acquisition under the accounting provisions generally applicable. Therefore, it exists, an apparent legislative discrepancy which could generate certain difficulties with the occasion of an inspection carried out by the competent authorities on the observance of the provisions of Law no. 150/2016.

What sanctions are applied in case of breaching the new regulations?

Law no. 150/2016 provides for fines amounting to up to 150.000 Lei, and even for suspension of the operating license for a period of up to 6 months in case of failure to implement certain provisions concerning the relationship between retailer and supplier.

When do these changes come into effect?

The provisions concerning the percentage of 51% of the volumes of the merchandise coming from short chain will enter into force within 6 months from the date of publication of Law no. 150/2016 in the Official Gazette, respectively on 15 December 2016.

The provisions concerning the meat labelling will enter into force within 90 days as of the date on which the European Commission communicates its decision concerning the imposing of such measures.

The other provisions shall enter into force within 3 days of the publication in the Official Gazette.

What is the likely impact?

This change generated a reaction from the Competition Council, which, in its official position concerning the amendments to Law no. 321/2009, drew attention to the possible discrimination that would be generated by bringing "economic advantages for domestic producers".

Competition Council therefore considers that "state intervention in the work of private enterprises by imposing an obligation to sell a minimum amount of products from national production could lead to supply disruptions, a reduced offer of products, lack of product due to seasonality". Also, it raised the question of a possible breach of the Treaty on the Functioning of the European Union "under which the internal market comprises an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured".

On the other hand, apart from the above, changes in the definitions of prices, as well as changes concerning the prohibition of the recovery by traders of imposed taxes and the services provided by them, and concerning the timing of receipt of the goods and the payment deadlines, it is likely to attract commercial renegotiating of contracts with corresponding consequences in terms of operational, financial, tax and accounting aspects to the parties involved.

This article was written by Cosmin Stăvaru, Adriana Stoian and Luciana Tache.

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