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Nova Poshta in the spotlight of State Service of Ukraine on Food Safety and Consumer Protection

05.08.2021

Complainee: The Main Department of the State Service of Ukraine on Food Safety and Consumer Protection in Kharkiv Oblast (State Food and Consumer Service in Kharkiv Oblast)
 
Complaint in brief:
The Business Ombudsman Council received a complaint from Nova Poshta, a Ukrainian company providing express shipment services. The State Food and Consumer Service in Kharkiv Oblast came to the company's branches in Kharkiv and Chuhuiv with inspections due to a complaint from two customers. For example, one of the customers had his glass aquarium damaged during transportation. In accordance with the position of the State Food and Consumer Service in Kharkiv Oblast, the Complainant neither provided the necessary documents, nor ensured conducting of an unscheduled inspection, thus allegedly creating obstacles for State Food and Consumer Service officials. In this regard, the State Food and Consumer Service in Kharkiv Oblast accrued Nova Poshta the maximum possible fine in the amount of UAH 325 mn calculated from the whole company turnover, not one branch.
 
At the same time, according to the complainant, the inspectors carried out inspections with a number of procedural violations. Considering the decision of the State Food and Consumer Service in Kharkiv Oblast illegal, Nova Poshta turned to the BOC for help.

Actions taken: The investigator examined the circumstances of the case and found the company's complaint substantiated. The Deputy Business Ombudsman represented the BOC during a tripartite meeting with the head of the State Food and Consumer Service  and the Head of Nova Poshta, where they discussed possible violations of the company's legal rights. As a follow-up of this meeting, the BOC prepared and sent a letter to the State Food and Consumer Service, requesting the state body to ensure a comprehensive, objective and impartial consideration of the company's complaint and lift sanctions totaling UAH 325 mn on two episodes of inspections. Based on the BOC position, the State Food and Consumer Service  inspectors committed a number of procedural violations. The BOC also drew attention to the fact that application of maximum sanctions to Nova Poshta LLC violates the requirements of the Law of Ukraine “On Basic Principles of State Supervision (Control) in the Field of Economic Activity”, namely the principle of proportionality of violations and punishment.

The BOC also drew attention to legislative gaps in the field of state supervision and in the sphere of economic activity. The BOC emphasized that the supervisory authority’s unlimited discretion to determine the amount of the sanction from one to ten percent of the value of sold products for the previous calendar month for any violation committed by the business entity does not comply with the good governance principle.
 
Result achieved:
The State Food and Consumer Service  followed the Council’s recommendations and dropped the fine for Nova Poshta. The complainant thanked the Council for assistance. The case was successfully closed.