‘An important first step’: Flanagan reacts to retail regulation directive

EU Commissioner for Agriculture, Phil Hogan’s retail regulation directive on unfair trading practices in the food chain has been described as “an important first step” by MEP for Midlands-North West, Luke ‘Ming’ Flanagan.

Commenting, Flanagan added that – in order to protect the viability of farming into the future – this is a vital area to be addressed.

He reiterated his belief that farmers must get a fair price for their produce and must be given the tools and support to take on the ‘goliaths’ they face in other sectors of the food chain.

Article three of the directive sets out some of the core trading practices that are to be prohibited.

These include instances such as:
  • A buyer pays a supplier for perishable food products later than 30 calendar days after the receipt of the supplier’s invoice;
  • A buyer cancels orders of perishable food products at such short notice that a supplier cannot reasonably be expected to find an alternative to commercialise or use these products;
  • A buyer unilaterally and retroactively changes the terms of the supply agreement;
  • A supplier pays for the wastage of food products that occurs on the buyer’s premises and that is not caused by the negligence or fault of the supplier.

In addition, the following trading practices are prohibited if they are not agreed in clear terms at the conclusion of the supply contract:

  • A buyer returns unsold food products to a supplier;
  • A buyer charges a ‘supplier payment’ as a condition for the stocking, displaying or listing food products of the supplier;
  • A supplier pays for the marketing of food products by the buyer.

Equally important, according to the independent MEP, Article six of the directive sets out the powers conferred upon member states to enforce it.

Included here is the power to:

  • Initiate and conduct investigations on its own initiative or based on a complaint;
  • Require buyers and suppliers to provide all necessary information in order to carry out investigations on the prohibited trading practices;
  • Take a decision establishing an infringement of the prohibitions laid down in Article three and require the buyer to terminate the prohibited trading practice;
  • Impose a pecuniary fine on the author of the infringement. The fine shall be effective, proportionate and dissuasive;
  • Inform buyers and suppliers about its activities, by way of annual reports, which shall inter alia describe the number of complaints received and the investigations initiated and closed by it.

‘Time will tell’

While broadly supportive of the initiative, MEP Flanagan raised one fundamental question regarding its implementation: “Why a directive, as opposed to a regulation, which would be much stronger and ensure a level playing field across the EU?

This softer approach, combined with national governments’ traditional unwillingness to take on the vested interests, will allow enough latitude to big multinational to circumvent, obstruct and undermine this directive.

“Time will tell whether it works or not,” he concluded.