Europe: Brussels proposes to ban unfair business practices in the food supply chain

NEW HOLLAND Q4 2018 ENG

The European Commission has proposed on Thursday the ban on unfair commercial practices in the most harmful food supply chain in order to ensure fairer treatment for food and agricultural SMEs. The proposal also includes effective provisions to ensure its application: national authorities may impose sanctions in cases where it is established that there has been an infringement.

The smallest operators in the food supply chain, including farmers, are vulnerable to unfair business practices employed by chain partners. Often, they have no bargaining power or alternative ways to get their products to consumers.

Vice President Jyrki Katainen, responsible for Employment Promotion, Growth, Investment and Competitiveness, said: “In the food supply chain there are imbalances in the bargaining power and with this proposal the Commission addresses unfair commercial practices directly. We act because unfair commercial behavior damages the economic viability of the operators of the chain. By establishing minimum standards and reinforcing their application, the proposal should ensure that these operators can compete on equal terms, thereby contributing to the overall efficiency of the chain. A clear message for more fair commercial behavior. »

For his part, the Commissioner of Agriculture and Rural Development, Phil Hogan, has stated the following: “The strength of any chain is only that of its weakest link. The food supply chain will only be efficient and effective if it is fair. Today’s proposal is, above all, one of equity – of giving a voice to those who do not have it – for whom, without any fault, they are the victims of a weak negotiating position. The initiative to prohibit unfair commercial practices adopted today is aimed at strengthening the position of producers and SMEs in the food supply chain. It is also about guaranteeing compliance with rigorous and effective regulations. We want to eliminate the “fear factor” of the food supply chain through a confidential complaints mechanism”.

The unfair business practices that should be prohibited are delays in the payment of perishable products, last minute cancellations, unilateral or retroactive modifications of the contracts and obliging the supplier to take charge of the expenses of the lost products.

Other practices will only be allowed if they are subject to a clear and unambiguous prior agreement between the parties: a buyer who returns food products not sold to the supplier; A buyer who charges the supplier some expenses for ensuring or maintaining a supply agreement for food products or a supplier that covers the promotion or marketing expenses of the food products sold by the buyer.

The Commission proposal will take the form of European legislation (Directive) and will be presented, together with an impact assessment, to the European Parliament and the Council, the two co-legislators in which the governments of the Member States are represented.

The Commission proposal obliges the Member States to designate a public authority responsible for enforcing the new rules. In the case of proven infringement, the responsible body shall be competent to impose a proportionate and dissuasive sanction. This enforcement authority may initiate investigations on its own initiative or on the basis of a complaint. In this case, the parties that submit a complaint may request confidentiality and anonymity, so that their position with respect to their commercial partners is protected. The Commission will create a coordination mechanism between enforcement authorities in order to facilitate the exchange of good practices.

The proposed measures complement the existing measures in the Member States and the code of conduct of the Supply Chain Initiative, which is voluntary. Member States may take other measures they consider appropriate.

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