Protection of (small) companies

1. Against Unfair Commercial Practices:

1. Boycott, refusal to sell, client removal, ... are some examples of unfair commercial practices, which can be dealt with quickly by means of a procedure such as in summary proceedings before the chairman of the Enterprise Court.

Some practices are designated nominatively, such as the prohibition to work with pyramid schemes ("whereby the consumer, in return for payment, has the chance to receive compensation that rather arises from introducing new consumers into the system from the sale or consumption of products"). [1]

As it already exists in the surrounding countries, a law was voted on April 4, part of which was already applicable from 1.9.2019 (unfair market practices), part about abuses of power by (larger) companies against others (the smaller ones as a rule). from June 1, 2020, and unlawful contractual conditions that may be declared null and void ( from 1.12.2020 ).

B. Against Unfair Abuses of Power:

2.There was already the cartel prohibition (unlawful agreements between undertakings against others) and abuse of power, for which the impact of competition on the market had to be demonstrated.

3. From 1.9.2019 there is also protection against abuse of power without having to demonstrate the impact on the market. It mainly concerns protection in vertical relationships. There was already a general prohibition of an act contrary to fair market practices by which one company harms (or may harm the professional interests of another company).

The following 3 specific categories are new :

- misleading market practices, such as misleading omissions. It is accompanied by a lack of information provided by one company, which does not allow another company to make an informed decision on a transaction. That deception must relate to the product, the rights and obligations of the companies, condescending or derogatory marketing. Omission also occurs when a company provides essential information in an unclear, incomprehensible or ambiguous manner. The 2nd requirement for there to be "misleading" is that it can lead the other company to a transactional decision that it would not have taken otherwise.

4. Aggressive market practices: involves the use of intimidation, coercion or undue influence (: the exploitation by one company of a position of power over another company to exert pressure, even without the use of threat or physical force, in a way that impairs its ability to informed decision, considerably limited)

(e.g. exploiting setbacks; the right to terminate a contract or choose another brand's product is hindered by a high cost)

5. The company suffering the damage can file a prohibitory or initiate a liability claim for compensation. There are even criminal penalties.

C. Abuse of dominant positions:

6. Not so much between competitors, but back in vertical relationships, such as farmers as to supermarkets, small garage owners as to large concession holders, both in distribution, production (eg supply of parts), and service contracts (such as subcontracting). This applies from 1 June 2020, but as it is a matter of public policy (1), so it also applies to current contracts.

7. Requirements :

I°. A position of strong economic dependence (the law even speaks of "submission" of an economic nature (when they can only turn to that company for a good or service, without having an alternative available within a reasonable period of time at reasonable conditions and costs, and when that firm can impose performance or conditions that would occur under normal market conditions). The parliamentary proceedings offer a list of criteria: a significant share of the dominant firm in the dependent's turnover, the relative market position of the dominant firm, the supply in the relevant market, the difference in financial resources, the difference in reputation, the length of relationships, the technology or know-how of the dominant firm, the reputation of the brand, the scarcity of the product, the despicable nature of the product or the loyal consumer purchasing behavior, the dominant firm's access to resources, or essential infrastructure, the fear of the dependent firm of a serious economic disadvantage, of reprisals or termination of a contractual relationship, the regular granting of discounts, the obligatory choice of the dependent company to put itself in an economically dependent position [2] . The dominant firm should therefore not necessarily have a dominant position on the market itself.

ii). The existence of abuse. These can arise in both the pre-contractual and contractual phase. eg1. imposing purchase or sale prices or other contractual terms that are unfair. ex.2. applying unequal conditions for equivalent performance. e.g.3 accepting additional services that are not related to the object. e.g.4. limit production, sales or technical development for the benefit of consumers. e.g.5. sales, refusal to purchase or other transaction terms.

iii) Possible distortion of competition as a result. A sufficient degree of probability must be demonstrated and this on the "relevant" Belgian market.

In those circumstances, a case can be brought before the Competition Authority, among other things on the basis of a complaint from a person. The latter can order to terminate that situatio, and a fine of up to 2% of the turnover can be imposed. An order to suspend a specific abuse can be linked to periodic penalty payments. When such a prohibition is imposed, and it is violated, the agreement is subject to nullification, and damages can be claimed. (see also the specific provisions for this in Book XVII.71-91 Code economic law). Claims for collective recovery and prohibitory injunctions are also possible.

D. Prohibited Clauses:

[1] See as example. The Lucky 4 all judgement, note Elisa Paredis,, TBH 2019, 3, pag.438

[2] Parliamentary piece, Chamber  2018-19, nr 54-1451/5,p.31; Claeys en Tanghe, De b2b-law from  04.04.2019: protection of companies against illegal terms,..., RW 2019-20, pg. 365

[SS1]Deel D dient hoogstwaarschijnlijk nog ingevuld/ afgewerkt te worden