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SPCG Wins Arbitration for Leroy Merlin Polska Concerning Use in Trade of Turnover-Based Bonuses

SPCG Wins Arbitration for Leroy Merlin Polska Concerning Use in Trade of Turnover-Based Bonuses

Poland
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SPCG has represented the Leroy Merlin Polska retail chain in an arbitration dispute before the Court of Arbitration at the Confederation of Lewiatan with a former supplier concerning the admissibility of use in trade of turnover-based bonuses by the retail chains.

The former supplier sued the Leroy Merlin Polska retail chain for reimbursement of the parties' annual and monthly turnover-based bonuses. According to SPCG, "the supplier claimed that the [cash premium nature] of the bonuses are deprived [sic] of any actual equivalent and in fact constitute fees for admission of the supplier's goods for sale within the meaning of provisions of the Act on suppression of unfair competition (so-called 'shelf fees'). At the same time, their collection obstructs the supplier’s access to the market within the meaning of art. 15 sec. 1 point 4 and art. 3 of the Act on suppression of unfair competition."

In return, according to SPCG, "the Leroy Merlin Polska retail chain claimed that any discounts granted by the supplier, including bonuses (annual premium) which depend on the value of turnover between the parties in a given period, are commonly known in turnover as price-setting factors, determined by the parties during the price negotiations, which constitute a component of the trade margin for each party. They reduce the supplier’s margin and at the same time increase the margin of the retail chain as a buyer. The trade margin, according to the express wording of art. 15 sec. 1 point 4 of the Act on suppression of unfair competition does not constitute a fee for admission goods for sale. In addition, obtainment of discounts and bonuses depending on a certain level of turnover in a given settlement period by the recipient of the goods is fully compliant with the market customs established in this regard."

The Court of Arbitration at the Confederation of Lewiatan agreed with the arguments made by Leroy-Merlin Poland that a cash premium bonus tied to achieving a set level of sales, constitutes, in essence, a discount, as a component of a trade margin within the meaning of art. 15 sec. 1 point 4 of the Act on suppression of unfair competition. As a consequence, the Court of Arbitration dismissed the supplier’s claim for reimbursement of the turnover-based bonuses.

The Leroy Merlin Polska retail chain was represented by SPCG Partner Jakub Gorski and Senior Associate Pawel Wec.

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