What unfair trading practices will be stopped by Brussels?

New draft rules to better protect farmers against buyers’ unfair trading practices were agreed by the European Parliament and Council’s negotiators on Wednesday.

The provisional deal, in line with parliament’s demands, broadens the scope of the proposed draft law to cover trade of agricultural products and ancillary services, on top of foodstuffs

The measures aim to: support food producers against unfair trade practices imposed by big players; put a stop to late payments and short-notice cancellations of orders; and safeguarding the right of food producers to request a written supply contract.

New rules should protect micro to mid-range suppliers – producers with an annual turnover below €350 million – from bigger buyers, according to the commission.

Taking account of the particular nature of agricultural businesses, which regularly require a higher number of employees compared to other types of business, it was agreed that the relevant EU provisions on the maximum number of employees for micro, small and medium-sized enterprises will not apply for this directive.

The provisionally agreed blacklist of unfair trading practices (UTPs) includes a range of offences.

Payments made later than 30 days for perishable agricultural and food products and later than 60 days for non-perishable products will be banned.

Unilateral cancellation of an order of perishable products less than 30 days from the agreed delivery date and unilateral and retroactive changes of the supply agreement terms imposed by a buyer concerning a number of terms of sale will also be prohibited.

Instances will now be blacklisted where a buyer:
  • Requires the supplier to pay for deterioration or loss of a product that occurs on the buyer’s premises or in the buyer’s ownership and that is not caused by the negligence or fault of the supplier;
  • Refuses to confirm in writing the terms of a supply agreement agreed with the supplier, who would now have a newly established right to request it;
  • Shares or misuses confidential information, relating to the supply agreement;
  • Attempts to obtain from a supplier some kind of benefit without providing any compensation or service in return and if this benefit is clearly disproportionate to the value of the compensation or service provided;
  • In order to obtain better delivery conditions or to punish a supplier – for example, filing a complaint, retaliates or threatens to retaliate commercially against the supplier – by, for instance, delisting of products, delaying payments, unilateral deductions or blocking promotions;
  • Obliges a supplier to pay for storage of or manipulation with the products or for the cost of examining customer complaints.

The new law would also outlaw practices unless pre-agreed in the supply agreement, including: the return of unsold products from buyer to the supplier without paying for them or for their disposal; charging a supplier for stocking, displaying or listing of products; imposing part or all of the costs of discount as a way of promotion on the supplier; or making a supplier pay for marketing or advertising of supplied products.

Clear complaints procedure

To make life easier for food producers, they could lodge complaints where they are established, even if UTPs occurred elsewhere in the EU.

National enforcement authorities would be handling complaints and, following an investigation, imposing penalties.

“This agreement empowers our farmers and food producers against their buyers,” said rapporteur Paolo De Castro.

“While it outlaws the worst unfair trading practices, it also gives member states powers to go further if need be, to make sure that no unfairly treated farmer in any corner of our union is left behind.”

Next steps

The provisionally-agreed text now needs to be confirmed by the Agriculture Committee before it can be submitted to the plenary to seek parliament’s green light.

Once approved by the parliament, it will have to be formally rubberstamped by the council too.

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