European Franchise & Distribution Newsletter - Slovakia #28

New draft law on minimum fine for repeated infringements committed by sellers of foodstuffs in Slovakia

Background

In Slovakia, the current regulation concerning foodstuffs stipulates that Veterinary and Food Admin-istration Authority (the “Authority”) shall impose the minimum fine in the amount of EUR 1,000,000 on undertaking offering foodstuff (e.g. supermarket retailer) if it commits certain infringement for which it has already been fined twice within specific time periods. Such an infringement might consist for instance in offering rotten pears or other food in the same retail chain for which the fine has already been imposed by the Authority twice.

As to the range of fines for the first and third infringement of the same type, the minimum fine for the third one is thousand times higher than that for the first one which is in the amount of EUR 1,000. Such legislation basically strips the Authority of its discretionary powers to take account of specific circumstances of each infringement such as its gravity, duration and implications; it is obliged to impose the minimum fine of EUR 1,000,000 provided it has proved the third infringement even though the regulation says that the Authority shall consider those variables when imposing the fine.

Since 2014 the Authority has imposed the minimum fine of EUR 1,000,000 in a couple dozen cases which were subsequently challenged before the Slovak courts and most of which are currently sus-pended because the legality of the regulation in question is being reviewed by the Slovak Constitu-tional court. It is argued that the regulation unlawfully intervenes with the constitutional rights of un-dertakings concerned to own property and right to carry out business activity.

 

Proposed changes

The Slovak government has now proposed to amend the regulation in question and lower the mini-mum fine for the infringements described above. According to the proposal, the minimum fine is to be set in the amount of EUR 50,000 and the reduction is substantiated by the fact that the current regime might ruin small and medium-sized entities active in food industry and has led to the factual elimination of the Authority’s discretionary power to impose fine in the amount that would be propor-tional to the nature of the infringement.

The proposed amendment still needs to be approved by the Slovak Parliament and is expected to enter into force as of 1 June 2022. Upon entry into force, it shall also apply to proceedings initiated by the Authority but not closed by 31 May 2022.

Provided the amended is enacted, it remains to be seen whether the new minimum fines will be chal-lenged again for its potential continuing disproportionality to the nature of the infringement commit-ted by small undertakings. As stated above the repeated minor infringement of the same type (e.g. offering pears for sale which got rotten as a result of their handling by the customers and not neces-sarily due to the wrongdoing of the chain itself) will still be caught by the decreased minimum fine threshold proportionality of which might remain questionable.