European Commission acts to ban unfair trade practices

Regulations for fair competition in the food supply chain

Source: panthermedia.net / Andreus

The Commission is targeting the most damaging unfair trade practices to grant farmers and small and medium sized businesses greater certainty and less need to manage risks over which they have little or no control.

The Commission proposes today to ban the more damaging unfair trading practices in the food supply chain to ensure fairer treat­ment for small and medium sized food and farming businesses. In addition, the proposal includes effective enforcement provisions: sanctions can be imposed by national authorities where infringements are established.

Smaller operators in the food supply chain, including farmers, are vulnerable to unfair trading practices employed by partners in the chain. They often lack bargaining power and alternatives to get their products to consumers.

Vice-President Jyrki Katainen, responsible for Jobs, Growth Investment and Competitiveness, said: "There are imbalances of bargaining power in the food supply chain and with this proposal the Commission is tackling the unfair trading practices head-on. We act because unfair business conduct undermines the economic viability of operators in the chain. By setting minimum standards and reinforcing the enforcement, the proposal should ensure that these operators are able to compete on fair terms, thereby contributing to the overall efficiency of the chain. This is a clear statement for more fair business conduct."

Agriculture and rural development Commissioner Phil Hogan said: "Any chain is only as strong as its weakest link. An efficient and effective food supply chain is a fair one. Today's proposal is fundamentally about fairness – about giving voice to the voiceless - for those who, through no fault of their own, find themselves the victims of a weak bargaining position. Today's initiative to ban unfair trading practices is about strengthening the position of producers and SMEs in the food supply chain. The initiative is equally about providing strong and effective enforcement. We are looking to eliminate the "fear factor" in the food supply chain, through a confidential complaints procedure."

The unfair trading practices to be banned are late payments for perishable food products, last minute order cancellations, unilateral or retroactive changes to contracts and forcing the supplier to pay for wasted products. Other practices will only be permitted if subject to a clear and unambiguous upfront agreement between the parties: 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; a supplier paying for the promotion or the marketing of food products sold by the buyer.