The so-called Supermarket Gondolas Act (N° 27,545, published in the Official Gazette dated March 17, 2020), declares, in its section 1st, that its purposes are the following:
a) Contribute to the transparency and competitiveness of the price of food, beverages, household cleaning products, for the benefit of consumers;
b) Keep harmony and balance among the economic operators reached by the Act, with the purpose of preventing commercial practices that damage or imply a risk for competition or that cause distortions in the market;
c) Offer a wider range of national handcrafted and/or regional products of Micro, Small and Medium Enterprises (MIPYMES) and protect their performance; and
d) Encourage through a special regime, the offer of family agriculture, peasant and indigenous agriculture products), defined by section 5th of Act 27,118, and of the popular economy, defined by section 2nd of the Annex to decree 159 dated March 9, 2017, and of the products generated in cooperatives and/or mutual charter associations under the terms of Acts 20,337 and 20,321.
To achieve the purpose declared in subsection b) of its section 1st, the Supermarket Gondolas Act provides in its section 11, the creation of the “Best Commercial Practices Code for Wholesale and Retail Distribution” (hereinafter referred to as the “Best Commercial Practices Code” or the “Code”), which sets forth that it shall be mandatorily applied to “the subject reached” by the Act; which pursuant to the first paragraph of its section 3rd are “… the establishments defined by section 1st of Act 18,245.[1] and [2]
The drafting of the Best Practices Code was entrusted to the Secretariat of Domestic Trade of the Nation, the enforcement authority of the Supermarket Gondolas Act, that on April 9, 2021, approved its text (Resolution 340/2021, section 1st) by means of its Resolution 340/2021 (published in the Official Gazette on 4/12/21).
Resolution 340 sets forth in its section 2nd, that the Code shall be mandatorily “joined” by the subjects reached by section 3rd of Act 27545 and, in its section 3rd, that its terms shall be applied and considered included in the contracts executed by the subjects that joined the Code.[3]
As regards what concerns us here, in order to try to maintain harmony and balance among the economic operators reached by the Act, the Best Commercial Practices Code provides, in its section 2nd, as a general principle, that hypermarkets, supermarkets, self-service stores and every establishment reached by section 3rd of the Supermarket Gondolas Act (which are defined by it as “Traders”) shall act in their commercial relationships under the principles of good faith, transparency and loyalty, avoiding every behavior that distorts, limits, misrepresents or restricts free competition or access to the market.
In line with the foregoing, its section 3rd obligates Traders to grant an equal commercial treatment and without discrimination among its different suppliers, providing in addition that they may not impose restrictions or conditions upon them, aside from the minimum and usual requirements in trade and the compliance with the regulations in force, to set forth the supply agreements.
In order to maintain harmony and balance among the contracting parties, the regulation of section 8th of the Code obligates Traders to refrain from requiring from the Suppliers the delivery of free goods or with discounts for their “registration for commercialization” in the points of sale (subsection a).
The intent to ensure an equal commercial treatment and without discrimination among its different supplier appears in the regulations of sections 14 to 18 of the Best Commercial Practices Code.
Section 14 obligates Traders to carry out the usual practices of returning or exchanging containers of returnable products in equitable, equal conditions and avoiding any preference or advantage for a supplier over its competitors.
Section 15 forbids Traders to agree with suppliers discriminatory or inequitable conditions for the display of products, obligating Traders to ensure that suppliers of similar characteristics may have access to similar display conditions.
In turn, section 16, forbids Traders that allow their suppliers – hypothetically, with possibilities to do it – intervene, decide or condition the display, stock, prices or any other variable affecting the normal development of their competition.
The regulation of section 17 introduces a kind of “most favored Nation clause” for suppliers that may be considered equivalent, while it sets forth an advantage in the commercial practices or conditions granted by a Trader to a supplier, may be required by its competitors in equal circumstances.
The claim of parity in the replacement of products at the places where they are displayed in the points of sale is considered in the Code in section 18. The regulation sets forth on the issue that the replacement of the products at the points of sale by the Trader’s personnel shall be made in an equitable manner, with equal regularity and periodicity with respect to all the suppliers, provided that the consumers’ demand so requires it.
In the case of external replacements said section 18 sets forth that the Trader shall fix the same conditions for the admission, stay and regularity among the different suppliers, ensuring an equal footing in said practice and preventing product shortages in the supermarket gondolas.
Sections 25, 26, 28 and 29 of the Code try to ensure also an equal commercial treatment without discrimination among the different suppliers.
The regulation of section 25 obligates Traders to promote the use of equitable, equal logistics and distribution practices without discrimination[4] and section 26 to facilitate association forms for the replacement, logistics and distribution allowing the establishment of economies of scale for micro, small and medium supplying enterprises (MIPYMES), as well as cooperatives, sectors of popular economy and family, peasant and indigenous agriculture.
When referring to the Traders’ payments to suppliers, section 28 provides that they shall conform to the provisions of the Supermarket Gondolas Act and that they shall be equitable and equal on such respect. And that both, the payment terms and modalities granted by Traders shall be equal for suppliers with similar practical conditions and commercial situations.
Section 29 forbids Traders to enter into supply agreements that impose upon the Supplier insurance or financial advances and that, as a general rule, contain discriminatory financial conditions.
The search of harmony and balance seems to inspire the regulation of section 24, that forbids the Trader to make the Supplier liable for losses, impairment, thefts or flaws of products once they were received in agreement -except for the case of hidden defects, of course – and section 27, that determines that Traders cannot impose upon or transfer to Supplier expenses of their own promotions and/or advertisings.
Also, in its related sections 30, 31 and 32, the first one, with the purchase and supply plans[5], the second one with the reception and return of products[6] and the third one on the prohibition to collect and made debit notes unilaterally for products not included in the supply agreements.
The intention to prevent Traders from performing commercial practices that damage or imply a risk for competition or that cause distortions in the market appears in the regulations of sections 22 and 23, 34 and 35 of the Code.
The first one, that provides that Trader may not use its Suppliers’ information, such as the launch of new products, campaigns for the promotion or development of products, for the sale of their own trademark products.
Section 23 forbids Traders to exchange sensitive or confidential information of third party businesses with its suppliers or other Traders.
In turn, section 34 forbids Traders to subordinate the purchase of a product or the granting of advantages to a supplier subject to the condition of restricting or forbiding its commercial relationship with another Trader.
And section 35, since it forbids Traders to accept the delivery of exclusive freezers or display furniture by a supplier subject to the condition of restricting in any manner whatsoever the way of displaying the competition products.
As regards the contractual relationship between Traders and suppliers, to keep harmony and balance among the economic operators reached by the Act is the purpose of section 19 of the Best Practices Code.
In pursuit of it and repeating what has been set forth in section 8th, subsection g) of the Supermarket Gondolas Act, said section 19 provides that the supply agreements executed by Traders with its suppliers must be formalized in writing, adding that it is for the sake of favoring transparency and predictability between the parties.
And with the same purpose and – almost – in line with the provisions of the regulatory decree of the Supermarket Gondolas Act 991/2021, in section 8th of its Annex, the Code, in its section 19th, sets forth the minimum content of said supply agreements[7], that must regulate, at least, the following concepts:
1.- Prices.
2.- Payment terms and modalities.
3.- Discounts.
4.- Rebates.
5.- Promotions.
6.- Returns.
7.- Rejections.
Another minimum content listed in section 21 of the Code, is:
8. Alternative resolution of conflicts procedure, under the principles of celerity, low transaction costs and equal treatment.[8]
And the last one listed by the Code, in its section 21[9], is:
9. Copy of the Best Commercial Practices Code for Wholesale and Retail Distribution.
As I mentioned before, the minimum contents that provides the Best Practices Code are substantially similar as those set forth by decree 991/2021, in section 8th of its Annex, but not equal. Because the latter includes:
10. Conditions related to logistics, distribution and supply of products.[10]
The omission of the Code, however, cannot be interpreted as a derogation of said requirement, prescribed by a regulation of higher rank.
Buenos Aires, July 24, 2021.
[1] In spite of the provision of section 3rd of Act 27,545, the definition of “subject reached” that must comply with the provisions of the Supermarket Gondolas Act was – let’s say – regulated by the Resolution issued by the Secretariat of Domestic Trade 110/2021 (published in the Official Gazette on 1/28/21), that restricted it. Pursuant to Resolution 110/2021, the “subjects reached” are on-site sales spaces with a commercialization surface area equal or bigger than EIGHT HUNDRED (800 m2) square meters. The regulation provides that the on-site sales space of the products included from the checkout line for the display in gondolas, display stands, display shelves next to the checkout lines and exclusive freezers, as well as the space for the circulation and access of consumers shall be considered the commercialization surface area. The spaces for the exclusive use of the establishment’s personnel, warehouses of goods, gondolas and display stands that contain products not included in Section 3rd of the resolution and every space forbidden to the access of consumers are exempted from the commercialization surface area.
[2] The foregoing, according to the provisions of section 1st of said Resolution 110, “SECTION 1ST.- It is set forth that the subjects reached by Section 3rd of Act N° 27,545 of Supermarket Gondolas, that own on-site sales spaces with a commercialization surface area equal or bigger than EIGHT HUNDRED (800 m2) square meters, for the products included in Section 3rd of this resolution, are obligated to the comply with the provisions contained in said Act. The on-site sales space of the products included in Section 3rd of this measure, included from the checkout line for the display in gondolas, display stands, display shelves next to the checkout lines and exclusive freezers, as well as the space for the circulation and access of consumers shall be considered the commercialization surface area. The spaces for the exclusive use of the establishment’s personnel, warehouses of goods, gondolas and display stands that contain products not included in Section 3rd of the resolution and every space forbidden to the access of consumers are exempted from the commercialization surface area.”
[3] Section 20 of the Code sets forth as an additional obligation – in spite of declaring that its terms shall be considered included by operation of law in the supply agreements executed by hypermarkets, supermarkets, self-service stores and every establishment reached by section 3rd of the Supermarket Gondolas Act – the inclusion of a copy thereof to the documentation that formalizes the supply agreements with their suppliers.
[4] And to coordinate with suppliers the business hours and reception, storage, display and conditions of products that allow more predictability, planning and possible lower costs, under conditions of equality and cooperation.
[5] “SECTION 30.- The purchase and supply plans of Trader shall be made and informed to Supplier with due diligence and anticipation, so as to allow Supplier to plan its production.”
[6] SECTION 31.- The Trader’s changes in the products delivery-reception and return procedures in the supply agreements shall be informed to Suppliers with due anticipation.
[7] On this issue section 19 of the Best Practices Code reads as follows: “Particularly, the Trader shall clearly and precisely anticipate in the supply agreements, at least, the following items: prices, payment terms and modalities, discounts, rebates, promotions, returns and rejections of goods.”
[8] The regulation is a consequence of what is provided for in section 12, subsection b) of the Supermarkets Gondolas Act, that sets forth that the Code must provide that the contracts should order an alternative resolution of conflicts procedure “that could be private mediation or arbitration”.
[9] SECTION 20.- The terms of the Best Commercial Practices Code for Wholesale and Retail Distribution shall be considered included by operation of law in the supply agreements executed by Traders, for which purpose a copy thereof shall be included in the respective documentation.
[10] On such respect section 8th of the Annex to the regulatory decree provides that: The subjects reached by section 3rd of Act N° 27,545 may not require special or different conditions as regards logistics, distribution and supply of products generating inequitable, discriminatory behaviors or that affect equal treatment with different suppliers. Said conditions must be agreed upon in writing between the parties.