Bulgaria: Commission for Protection of Competition Takes a Negative View of COOL Bill
In October 2016, a group of MPs submitted a short draft amendment of the Bulgarian Foodstuffs Act to Parliament. The draft follows the Romanian example of promoting local food by requiring food retailers to stock their shelves with certain percentages of domestic products.
The draft explicitly refers to the following quotas divided by groups:
- up to 75 % of wines and spirits;
- up to 70 % of milk and dairy products;
- up to 51 % of fresh fruits and vegetables;
- up to 50 % of poultry meat and poultry meat products; and
- up to 25 % of meat (other than poultry).
The obligation is aimed at stores and supermarkets with annual turnover of more than BGN 2 million (approx. EUR 1 million), with fines of up to 10 % of the annual turnover generated by the group of foodstuffs in which the quota is not met. The draft stipulates that collected fines will be used to support the production of Bulgarian agricultural products.
Additionally, the draft states that with respect to food labelling the word "Bulgarian" refers to the country of origin of the raw material and indicates that it was produced in Bulgaria.
The draft is currently open for public discussion, within which the Commission for Protection of Competition (the "CPC") rendered its opinion (CPC decision No. 228/28.02.2017). The full text of the decision is available in Bulgarian on the CPC's website (www.cpc.bg).
Here is a brief summary of the main points raised by the CPC:
- The proposed draft provisions introducing the usage of the word "Bulgarian" for the purposes of packaging, labelling and advertising of food do not limit the competition alone. Such usage is unnecessary, however, since these matters are already regulated at the EU level.
- The proposed quotas for stores with turnover above BGN 2 million would limit competition in several ways. For instance, they would create geographic barriers to the free movement of goods, limit consumer choice, lead to higher prices, risks of product shortages due to lack of Bulgarian goods, risks of poor quality products, etc. The provision would also give Bulgarian suppliers priority over foreign suppliers and small traders priority over large chains.
- Quotas would limit retailers' ability to independently choose their strategy to attract consumers. The CPC also points out that the Bulgarian legislation already provides a defence mechanism against unfair competition and, hence, new measures are superfluous.
- The proposed draft definition of fresh food and vegetables, which excludes food and vegetables produced outside Bulgaria, may also potentially limit competition.
- Bulgarian producers must be supported via measures that do not impede competition and that comply with the applicable state aid regulations and European agricultural policy.