The new Law 28/2020, recently promulgated by the President of Romania and pending publication in the Official Gazette, squeezes in several amendments to the Food Trade Law 321/2009.
The key takeaways are below:
More clarity on (re)invoicing of taxes and services
These new provisions bring more context to the general restriction on taxes and services being (re)invoiced to suppliers. Services directly related to the "commercial act" (in Romanian actul comercial), included in the parties' agreement, can be (re)invoiced by the retailer to a supplier, except for the following:
- services related to the extension of the retailer's distribution network;
- the fit-out of the retailer's sales space;
- actions and events aimed to promote the retailer's activity and image.
Services which have been requested by the retailer from the supplier for promotion, marketing and advertising actions can also be (re)invoiced, only if they have been previously and expressly set via the parties' agreement.
Amendment of payment terms
The mandatory 30 calendar day deadline has now been removed, and payment terms remain subject to the parties' negotiations.
The payment term for fresh products has also been amended and extended from seven calendar days to 14 business days as of receipt of the merchandise. A novelty is also the list of main categories of fresh products, included as annex to this new law, and which include different types of meats, bakery products, eggs, milk, fresh fruits and vegetables.
New concept of "direct partnership"
This concept refers to a minimum 12-month commercial agreement between a retailer and a series of agri-food entities, including producers and distributors. These partnerships are aimed at streamlining access to certain categories of fresh products. Specific rules are to be further adopted by the Ministry of Agriculture and Rural Development.
Changes in sanctions
Fines for the breach of the (re)invoicing restriction remain mostly the same (lei 100,000 up to lei 150,000). The operating licence of the retailer can no longer be suspended in case of multiple/repeated breaches.
Tougher sanctions are set for breaches of payment terms, rules on merchandise receipt (lei 150,000 up to lei 200,000) and breaches of the rules on direct partnerships (lei 200,000 up to lei 250,000).
Entry into force/deadlines
This new law will enter into force within 45 days as of publication in the Official Gazette.
Agreements will again need to be amended within a six-month deadline as of its entry into force. Arguably, in practice retailers and suppliers will have a seven and a half month term to negotiate and implement the required amendments.
Detailed implementation norms are also expected, within 30 days as of the entry into force.
Highly anticipated for the last three years, these new rules seem to steer towards a more flexible framework for the stakeholders. However, one can argue that they do not bring full clarity on the scope of the (re)invoicing of taxes and services restriction (e.g., no actual definition of the "commercial act"). Companies will have to assess these new provisions and proceed to amend their agreements accordingly, within the timeframe set by this new law.
By Georgiana Badescu, Partner, and Cristiana Manea, Attorney at Law, Schoenherr