September 25, 2019 / 1:54 PM / a month ago

Jeronimo Martins' Polish unit under investigation for unfair practices

WARSAW (Reuters) - The Polish unit of Portuguese retail group Jeronimo Martins (JMT.LS) is under investigation for unfair dealings with suppliers to its discount supermarket chain Biedronka, Poland’s competition watchdog UOKiK said on Wednesday.

Biedronka, the leader in a fragmented Polish market in which it competes with Germany’s Lidl and France’s Carrefour (CARR.PA) and Auchan [AUCH.UL] chains, could face a fine of up to 3% of annual revenue, UOKiK said.

The regulator said Jeronimo Martins Polska used its strong position to negotiate a discount which concerned UOKiK.

“In our opinion the practice of the owner of Biedronka may constitute an infringement of good practices and taking advantage of the weaker party in the contract,” UOKiK head Marek Niechcial said in a statement.

Shares in Jeronimo Martins were down 3% at 1115 GMT.

“We confirm that Biedronka has been notified by UOKiK and will review and clarify any doubts in due course. We are convinced that in developing relationships with its suppliers, Biedronka acts in accordance with Polish law,” a Jeronimo Martins spokesman said.

According to UOKiK, under one of two types of discount Biedronka receives, suppliers, mainly of fruit and vegetables, do not know how much the discount will be and are only informed of this at the end of the month when the delivery has already been made.

“As a result of these activities, the supplier... is not sure whether it will have to grant an additional discount or how big it will be. Thus, when entering into a contract, it does not know how much it will earn,” Niechcial said.

Biedronka, in a statement emailed to Reuters, said it was fully cooperating with UOKiK to clarify the regulator’s doubts.

“We do not comment on the details of the ongoing proceedings. At the same time, we ensure that when developing relationships with trading partners, Jeronimo Martins Polska always strictly complies with the provisions of Polish law,” Biedronka said.

Reporting by Alan Charlish in Warsaw, additional reporting by Patricia Vicente Rua in Lisbon and Joao Mauricio in Gdansk; editing by Emelia Sithole-Matarise

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