New directive against unfair commercial practices in the food supply chain

 

The new EU legislation covers agricultural products and foodstuffs marketed as part of the food supply chain and for the first time forbids up to 16 unfair commercial practices imposed unilaterally by a trading partner. Other practices will only be allowed if they have been agreed in clear and unambiguous terms between the parties concerned.

 

The European Commission presented its legislative proposal in April 2018 to ensure greater equity in the food chain and to ensure a minimum level of protection throughout the Union. This is the first time EU legislation will be implemented in this area. The new framework gives the

 

Member States the power to enforce the new rules and to impose sanctions in case of infringements.

 

It will apply to anyone involved in the food supply chain whose maximum turnover is 350 million euros, with differentiated levels of protection below this threshold. The new rules will cover retailers, food processors, wholesalers, cooperatives or producer organizations, or the isolated producer who would adopt one of the unfair trade practices identified.

 

Unfair trade practices to be prohibited include late payment of perishable foodstuffs, cancellation of last-minute orders, unilateral or retroactive changes to contracts, supplier’s obligation to pay for wasted food, and refusal to establish written contracts.

 

Other practices will only be permitted if they have been agreed in clear and unambiguous terms between the parties, namely: the return to the supplier of the unsold food by the buyer; the fact that a supplier must pay an advance to the buyer to obtain or maintain a supply agreement for foodstuffs; the financing by the supplier of the promotion or marketing of the food products sold by the buyer.

 

The implementation of these practices will not result in price increases for consumers. 

 

In the Commission’s public consultation prior to the submission of the proposal, consumer organizations encouraged the regulation of these practices because of their long-term negative impact on consumers.

 

The fact that Member States may introduce a threshold of over €350 million into their national legislation or adopt other measures if they so wish is an important element of this legislation. The agreement also provides for a four-year review clause; in other words, it means that the provisions of the legislative act will have to be reconsidered during the next parliamentary term.

 

Member States will have to designate authorities to enforce the new rules, including imposing fines and investigating complaints. Complainants may request that confidentiality be respected to prevent possible retaliation. The Commission will set up a coordination mechanism between enforcement authorities to facilitate the exchange of good practice.