The EU Commission put forward proposals Thursday to ban the most damaging unfair trade practices in the food supply chain, with a view to ensuring fairer treatment for smaller food and farming businesses.
The proposal also includes effective enforcement provisions, allowing national authorities to impose sanctions where infringements are established.
Smaller operators in the food supply chain, including farmers, have a history of being vulnerable to unfair trading practices employed by partners in the chain. They often lack bargaining power and alternatives to get their products to consumers. “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,” said Agriculture Commissioner Phil Hogan.
“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,” he added.
Unfair trading practices set to be banned include 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.
The Commission will only allow other practices 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.
The Commission’s proposal requires European Union member countries to designate a public authority in charge of enforcing the new rules. In case of proven infringement, the responsible body will be competent to impose a proportionate and dissuasive sanction.
This enforcement authority will be able to initiate investigations of its own initiative or based on a complaint. In this case, parties filing a complaint will be allowed to request confidentiality and anonymity to protect their position towards their trading partner. The Commission will set up a coordination mechanism between enforcement authorities to enable the exchange best practices.
The proposed measures are complementary to measures existing in EU Member States and the code of conduct of the voluntary Supply Chain Initiative. Member States are able to take further measures as they see fit.
The Commission’s proposal takes the form of a European Union directives regulations and will now be submitted, together with an impact assessment, to the two co-legislators, the European Parliament and the Council, where Member States’ governments are represented.