Brussels, 8 November 2011

1. The challenges facing the modern commerce sector in the CEE regionRenata Juszkiewicz- Chairman of CEE Commerce CouncilPresident of Polish Organsation of Trade and Distribution Brussels, 8November 2011

2. Central Eastern European Commerce Council Representing commerce in 9 CEE countries: Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Bulgaria, Estonia. 20 Oct. 2010 Common Communique

3. Central Eastern European Commerce Council To voice common concern about restrictions impairing our industries and the national economies of CEE countries To prevent the “spillover” effectof harmful laws and restrictive policies

4. Central Eastern European Commerce Council To build a network to object to restrictive laws and polices in the region’s countries. To carry out advocacy activities towards the EU institutions in particular the Commission and the Parliament.

5. Contribution to the economy Major impact on the transformation process in the CEE region Groundbreaking impact on market economy Modernisation of the sector

6. GDP growth Country 1991 (%) IIQ2011(%) Poland -7.0 4.3 Czech Rep. -11.5 2.2 Slovakia -14.6 3.3 Romania -12.9 0.3 Hungary -11.9 1.5 Bulgaria -11.7 2.0

7. Inflation rates Country 1991(%) 2011(%) latest Poland 70.3 3.9 Czech Rep. 56.6 1.8 Slovakia 61.2 4.3 Romania 170.2 3.4 Hungary 35.0 3.6 Bulgaria 338.5 3.3

8. Contribution to the economy FI: 90 b EUR Sales: 62 b EUR New jobs: 390 000 New stores: 8 000

9. Contribution to the economy Made the region attractive to investors Contributed to the growth of other sectors Strengthened export market Stimulated consumption and production Breakthrough in food processing

10. Shopping in 1990’

11. Shopping at present

12. Benefits for consumers Wide range of assortments Low prices Different modern commerce formats Fostering changes in consumer behaviour Quality and standard inhancement

13. Restrictions in the CEE region Restrictions breachthe EC Treaty: Art. 49 Freedom of establishment Art. 56 Freedom to provide services Obstacles to the integrated internal European market. Introducing discriminatory policies largely imposed upon big international retailers

14. Restrictions/Areas Court policy Stores’ establishment Supply chain Code of Conduct Significant market power VAT

15. Types of restrictions Definition of significant market power Payment terms for some products 30 days, fresh food 14 days Ban on products audit Ban on bonus and discount of the private labels The liberty to terminate the purchase contracts 60 days in advance

16. Types of restrictions Placing the purchasing conditions on www Obligations for domestic products quotas Mandatory reporting of food imports incl. EU products Exclusive penalization of retailers for quality and safety standards

17. Supply chain restrictions Slovakia Act on unfair form in business relations between the buyer and supplier of goods consisting in food /Complaint - 15 May 2008 Abolition: 1 April 2011 Memorandum of Ethic in Food industry Amendment to the law on foodstuff

18. Supply chain restrictions Hungary Ban on unfair practices of distributors in relation to agriculture products and the food industry towards suppliers Poland Good Practices Code

19. Supply chain restrictions Romania Food Trade Law No.321- Oct. 2009 Amended in Dec. 2010 Other proposals: To show the products purchasing prices to the consumers To report product prices in a Price Observer database on weekly basis To allocate sale spaces to national products.

20. Significant market power Bulgaria Draft law amending the Act on Protection of Competition Latvia Competition Law of Latvia

21. Significant market power Czech Rep. Act on significant market power in the sale of agricultural and food products – lodged to the EC- no response! A draft amendment to Act No. 143/2001 on the Protection of Economic Competition A draft amendment to Act No. 526/1990 on Pricing

22. Courts policy Poland Act on Combating Unfair Competition Unfavourable Resolutions of the Supreme Court of Poland/ influence guidance on legal consideration

23. Discriminatory tax law Hungary Trade, Energy, Telecommunication 2.5% net annual sales Claims to EU Commission: 17Nov. 2010 Art. 107 ‚Treaty on the Functioning of the EU’ (unlawful state aid) Discrimination of foreign investors and Art. 401 EU- Guidelines 2006/112/EC

24. Hampering the establishmentof stores Hungary Amendment proposalin connection with Bill “on the Amendments of an Act Required for Enforcing the Consideration of Sustainability in the Operation of Commercial Centres”

25. Misperceptions of modernretail Retailers are responsible for price increases, especially of food products Retailers restrict the access of national small and medium producers/suppliers in the stores, through slotting allowances Retailers favor imports

26. Misperceptions of modernretail Retailers make huge profits while the national producers are almost driven to bankruptcy Retailers’ in-city presence affects traffic and kills small corner-stores Retailers are a part of cartel arrangements and operate on a monopolistic basis

27. Government policy The governmental initiatives based on protectionism Short term thinking which inhibits growth of national economies. Limit and prevent the capacity for certain forms of business models. The governments try to shift the burden for agriculture to the commerce sector!

28. Consequences for the CEE Increase in consumer prices Increase in inflation Increase in cheap imported products Decrease in domestic production Reduced product quality Barriers for establishment of new stores Damage of the positive image of our countries within investor community Weakening of GDP economies based on internal market The achievment of recent decades will wither Does anybody benefit from that?

29. CEE CC appeal European Parliament, the European Commission, member state governments To closely examine the developments in the commerce sector in allthe countries of our region. To consider what action should be taken to improve the current situation. To create effective EU-policy for further development of the CEE region.

30. Thank you !