Crossfire between government agencies has sabotaged the new law aimed at sweeping away the offensive parts of another one restricting competition among shops. And waiting just around the corner is the EU, which has declared the whole package illegal, while, as the Business Journal exclusively reports, the SLD majority partner in the coalition government is trying to extract itself from the mess and leave its PSL partner to take responsibility.
A new draft law was drawn up to excise all the controversial clauses from the act which became valid last November. It was supposed to protect small companies against increasing competition from big food chains, protect suppliers from major distributors and ensure, it was claimed, consumers had access to a wider range of products. From the start it was a populist measure pushed by the junior coalition partner, the PSL. The act discriminates directly against foreign companies and favours the Polish ones since the supermarket chains here are all owned by EU companies. In fact, it also threatens the interests of small suppliers to the major outlets since they have a smaller chance of competing with the big names on the shelves by offering reduced prices. It became clear that many would go out of business. Effectively, the act controls promotions, sales and other lures to attract customers.

The act is not only controversial in the light of the constitution; it is in conflict with the whole thrust of European legislation aimed at encouraging consumer choice, and is therefore specifically contrary to the acquis communautaire (the mass of EU legislation) and the accession agreement treaty. Eurocommerce, the European umbrella organisation for retailers, was informed immediately after the law was enacted that the measure was counter to the acquis communautaire. Francoise Gaudenzi-Aubier, the EU accession director in Brussels, said in a letter dated September 30, 2002, that the EU commission had taken action directly with the Polish authorities. And the issue has awoken fears in EU circles that Poland will adopt a similarly dilatory approach to any Brussels legislation it does not like. Or enforce measures in the courts.
During months of political debate over the law, when the government and MPs from the PSL introduced and defended the controversial articles, the authorities were lobbied by the Polish Organisation of Commerce and Distribution which represents supermarket owners, such as Geant, Tesco, Carrefour and Jeronimo Martins Dystrybucja, the owner of the Biedronka and Metro chains, among others, which have invested more than E8 billion. The organisation sent its critical opinion as early as April last year. It also ordered an explanatory brief from Warsaw lawyers White & Case and provided all interested parties, including the president, with access to this and other documents and opinions. As Andrzej Faliński, director of the organisation, put it: "We spoke to everybody involved in that law. They listened to us, often seemed convinced, but did their own thing in the end."
More remarkable, European affairs minister Danuta Hubner sent a letter to former economy minister Jacek Piechota on September 6, saying that the law ran counter to EU legislation. She was ignored by the government and the parliament. Against all these protests, the bill was signed by the president and not referred to the Constitutional Tribunal, as many had predicted it would.

After the law was passed, the European Commission in its "2002 Regular Report on Poland's Progress towards Accession," published on September 9, stated that "the bill is contrary to the acquis communautaire because it limits a free transfer of goods." Finally, the economy minister at the time publicly admitted the legislation was mistaken and had to be changed.
The task of preparing the new draft was given to the Office for Competition and Consumer Protection. The proposed new version, consisting of just five pages, was ready on November 19 and immediately sent to the prime minister's chancellery, according to Elżbieta Anders, spokesperson for the office. The consumer protection office proposed removing all the intrusive articles and pointed out in its justification that the act in the present form distorted the rules of fair competition and was damaging both for producers and consumers.
The next part of the story explains a lot about the state of the public administration. The draft is now reported as completely lost somewhere between the consumer protection office and the private office of Prime Minister Leszek Miller. No trace of the document can be found, either in the government's information office or in the presidential department of the government, where all correspondence is registered. The office of the prime minister's spokesman insisted: "It is impossible. Someone must not be telling the truth."
The Business Journal has been informed by a reliable source dealing with government affairs that the minority coalition partner, the PSL, wanted to block the revision of the law and certainly did not want it to be presented as the government's own legislative initiative. On the other hand, the necessity to change the law and comply with the EU legislation was becoming immediate. Therefore in February, the parliamentary club of the SLD was going to introduce the draft with changes similar to the ones proposed by the Office for Competition and Consumer Protection as its own parliamentary initiative rather than the government's, as a face-saving exercise.

Unfortunately, just when it seemed the troublesome act would be reviewed, the newly created ministry of economy and labour woke up and announced it had its own ideas and promptly blocked the parliamentary initiative. Since nothing has been prepared in writing by the ministry, the changes to the original act have been postponed yet again. Faliński has issued calls for a dialogue, bringing together three groups interested in the outcome: distributors represented by his organisation, suppliers and the government. But so far, he calls in vain.
It is not certain when the new draft will be ready or what shape the legislation will take during the parliamentary work. And there is one open question yet to find an answer: what is the point of introducing the populist law which, as was widely known at the time, is in conflict with EU law, on the eve of the accession?
Realistically, the provisions of the act are being ignored by the retail industry more or less openly, as a glance at shop windows everywhere shows, and the office for consumer protection has not received any complaints about breaches of the law. According to Anders, it was "no surprise that the office did not undertake any action on its own, either, since it disagreed with and criticised the existing law."
"This law appears to violate EU Directive 1999/44/EC ensuring the free movement of goods, services, people and capital," said Paul Fogo, a senior attorney at Miller, Canfield, Paddock and Stone. "As such, once Poland joins the EU, if a local prosecutor were to attempt to enforce this law against a store owner for committing the 'crime' of selling goods at below cost, the 'guilty storekeeper' will be able to appeal to a higher court, the European Court of Justice."

Some retailers have been quite vocal in their opposition to the act. For instance, Jan Musiolik, the president of furniture retailer IKEA's local operations, sent a letter to the parliament last June, stating that the proposed sales restrictions were in serious conflict with the legal standards of the EU as well as global legal standards. He wrote that the act could force IKEA to withdrawal from the country, terminate its co-operation with domestic producers and cause exports to decrease. Musiolik was not available last week for an update.
And how does the law influence the retailers and distributors? First of all, they all claim to comply with the act, while the shoppers' eyes tell them that absolutely nothing has changed. The majority of fashion retailers said that the limit on two sales a year does not bother them because they would not offer more of them, anyway. The sales are still underway in most cases. Cubus began its sale on January 10 and will probably end it on February 7. Americanos plans to have a longer sale, perhaps until the end of February, while Jackpot and Cottonfield held a sale until the end of January, although this month it began a promotion of 50% off, with additional discounts for students. Kapp Ahn has already completed its sale of winter stock. Terranova is in the final days of its sale, while the store's spring collection is already arriving.

Distributors also insist that they comply with the law. Małgorzata Spychała, spokesperson for Jeronimo Martins Dystrybucja, said: "We have been preparing for this law for a while, and we do comply with it." Similarly Auchan, when organising sales, obeys the law, according to Dorota Patejko, spokesperson. But she added: "The law which limits free trade or tries to regulate it in an artificial way reduces production and has a negative impact on the economy."
Most members of the Polish Organisation of Trade and Distribution prefer to express their doubts about the act via the organisation rather than openly to the media. But Faliński admitted that the law is dead in reality since both distributors and suppliers have developed solutions to avoid any legal snares in the unlikely event they would find themselves prosecuted. Standing agreements were swiftly renegotiated and similar bypasses were constructed, such as repricing and margin adjustments.
As critics warned during the passage of the act, bureaucratic intrusions in the market will always attract solutions. And someone must explain exactly where the missing draft of the new law is, or what would happen if an unwary retailer actually did end up in court?