In Slovakia, a new amendment to Act No. 152/1995 Coll. on foodstuffs has been adopted, introducing new rules on how supermarkets ought to promote grocery products. According to the newly-adopted legislation, supermarkets and other sellers who promote grocery products are required to ensure that at least 50% of these promoted products are of Slovak origin. The new rules apply to online as well as classical forms of marketing.
Grocery stores in Slovakia will need to ensure that they promote at least 50% of products made or produced in Slovakia in each print, electronic, and online advertisement. There are no further restrictions as to the sort of brands or products they can promote with the remainder.
To ensure compliance with these new requirements, supermarkets and other sellers of foodstuff will need to promote Slovak products in all marketing materials such as leaflets, flyers, catalogues, posters, billboards, and magazines regardless of whether the materials are provided in paper or electronic format.
Against the Constitution and Against EU law
It seems that the amendment is designed to support domestic brands and products in Slovakia to the detriment of international brands. Such legislation is, in our opinion, contrary to both the Constitution of the Slovak Republic and to European Union law.
The obligation imposed on grocery stores to advertise at least 50% of local products violates the right to free enterprise and the right to non-discriminatory treatment. The Constitutional Court of the Slovak Republic has stated in multiple rulings that any interference in such right must be neither arbitrary nor discriminatory. Since the new legislation requires that Slovak food brands be represented in all marketing material that is produced, it is discriminatory against international companies. Furthermore, the new legislation does not provide the required objective and reasonable justification for the measure.
In the context of EU law, Article 34 of the Treaty on the Functioning of the European Union prohibits any quantitative restrictions and any other measures having equivalent effect. We believe that the effect of the amendment favoring the purchase of domestic products is equivalent to a quantitative restriction pursuant to the well-known Court of Justice of the European Union’s Dassonville and Keck decisions.
Therefore, we are of the opinion that these legislative measures are contrary to the right of free movement of goods as interpreted by the CJEU in its Buy Irish and Apple and Pear Development Council decisions, in which the court said that a campaign sponsored or supported by the government and encouraging consumers to buy national goods solely by reason of their national origin has a potential effect on imports that is comparable to that resulting from quantitative restrictions limiting the quantity of goods coming into a member state. Unlike in the amendment, acceptable forms of promoting such “national goods” must be related to some specific quality characteristics that are typical for the respective member state.
Therefore, and given the present text of the current amendment, the new rules explicitly support the sale of Slovak domestic products at the expense of products and brands from other EU Member States. As foreign products do not benefit from guaranteed advertising placement in marketing materials, it may ultimately jeopardize the trade between Member States. As mentioned above, this approach has already been criticized by the CJEU in similar cases. Apart from that, it also breaches the constitutional principle prohibiting discrimination in the right to free enterprise.
It remains to be seen whether a legal action challenging these new statutory rules will be filed with the Slovak Constitutional Court or whether the EU Commission will start infringement proceedings against the Slovak Republic.
by Jan Lazur, Partner, and Zoltan Nagy, Associate, Taylor Wessing Bratislava.