Tackling unfair trading practices
To improve farmers’ and small and medium sized businesses’ position in the food supply chain, on 12 April 2018 the European Commission proposed new legislation on 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 proposal aims to improve the role of farmers in the wider food supply chain by banning some of the most common UTPs that they face. These include:
- late payments for perishable food products
- last minute order cancellations
- unilateral or retroactive changes to contracts
In addition, the European Commission proposes that each EU member state designate a competent authority to enforce the new rules, and sets out the minimum enforcement powers of such authorities.
The legislative proposals come after an inception impact assessment and a public consultation on how to make the EU food supply chain fairer, focusing not only on unfair trading practices but also on other key issues such as market transparency and producer cooperation.
EU legislation has for many years allowed for cooperation between producers of certain products in order to strengthen their bargaining position without breaching EU competition rules, and further improvements were introduced in 2017.
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.