FoodBit: Proposal to ban unfair trading practices in the food supply chain
Distribution and marketing
EU Commission proposes measures against unfair trading practices to protect small and medium-sized enterprises in the food supply chain
On 12 April 2018, the European Commission published its proposal for a Directive on unfair trading practices (UTP) in business-to-business relationships in the food supply chain. The aim of the proposal is to reduce the occurrence of UTPs in the food supply chain by introducing a minimum common standard of protection across the EU. The protection covers small and medium-sized agricultural producers (including their producer organisations) and other small and medium-sized enterprises (SMEs) in the chain, insofar as they sell food products to buyers who are not small and medium-sized.
The protection of SMEs consists of a short list of prohibited UTPs considered the most harmful to SMEs. The list includes late payments and/or last minute order cancellations with regard to perishable food products, certain unilateral or retroactive changes to contracts and forcing the supplier to pay for wasted products. Other practices are prohibited unless there is a clear and unambiguous upfront agreement between the parties. Such practices include a buyer returning unsold food products to a supplier, a buyer charging a supplier payment to secure or maintain a supply agreement on food products, and a supplier paying for the promotion or the marketing of food products sold by the buyer.
The proposal requires each Member State to designate a public authority to enforce the prohibitions. In addition, Member States will have to ensure that such enforcement authorities are properly equipped and vested with the necessary powers to start an investigation on their own initiative or based on a complaint, to gather information, to terminate an infringement and to impose fines and publish the decisions taken to achieve a deterrent effect.
The proposed measures are complementary to measures existing in Member States. Member States can adopt further measures that go above and beyond the minimum standard of protection of the proposed Directive, provided that those rules respect the rules on the functioning of the internal market.
The proposal will now be submitted to the two co-legislators, the European Parliament and the Council.
Should you have any questions or remarks, please do not hesitate to contact your Loyens & Loeff adviser Natasja Brusik, Maarten van Laar or Aleksandra Sanak.
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