Tackling unfair trading practices
To improve farmers’ and small and medium sized businesses’ position in the food supply chain, on 19 December 2018 the European Commission and Council reached political agreement on the proposed new legislation on unfair trading practices.
Commissioner Phil Hogan explains the need for EU level action to tackle unfair trading practices.
What are unfair trading practices?
Unfair trading practices (UTPs) are business-to-business practices that deviate from good commercial conduct and are contrary to good faith and fair dealing. The food supply chain is vulnerable to UTPs due to stark imbalances between small and large operators. Often farmers and small operators in the food supply chain do not have sufficient bargaining power to defend against UTPs.
Although many EU member countries already have different national rules on UTPs, in some countries there is no or only ineffective specific protection against UTPs. The Commission proposal will for the first time ensure a standard level of protection across all EU countries.
The Commission and the Council have reached a political agreement on a new set of rules to improve the role of farmers in the agricultural and food supply chain by banning some of the most common unfair trading practices that they face. These include amongst others
- late payments for perishable food products
- last minute order cancellations
- unilateral changes to contracts
- refusal to enter into a written contract
- returning unsold or wasted products
- payment for buyer’s marketing
In addition, they agreed that each EU Member State designate a competent authority to enforce the new rules and on the minimum enforcement powers of the national authorities.
The Commission legislative proposals was accompanied by an impact assessment report based on a public consultation as well as targeted consultations of stakeholders.
Following the political agreement, the European Parliament and the Council will now formally adopt the Directive. Once fully adopted, Member States will have two years to transpose the Directive into their national laws.
This Directive is part of a wider governance agenda, which aims at achieving a more efficient and fairer food supply chain, and which also includes producer cooperation (addressed in the Omnibus regulation) and measures foreseen with regard to enhanced market transparency. This policy agenda is following up on the proposals made in the November 2016 report of the Agricultural Markets Task Force, a high-level group initiated by Commissioner Hogan.
Agricultural Markets Task Force
The European Commission’s efforts to strengthen farmers’ position in the food supply chain draws on the work of the Agricultural Markets Task Force (AMTF).
This group of 12 experts drawn from across the food supply chain met between January and November 2016 to discuss a wide range of issues affecting agricultural markets and in particular the role of farmers. The AMTF’s report on how to enhance the position of farmers in the food supply chain can be found here:
Other European Commission initiatives designed to improve the functioning of the food supply chain include a high level forum established in 2010, and the Supply Chain Initiative that resulted from it.