The European Commission (EC) has proposed to impose a ban on the unfair trading practices in the food supply chain to ensure fair treatment for small and medium-sized food and farming businesses.

According to the new proposal, the EU member states have to appoint a public authority for enforcing the new rules, and will also have the power to impose a proportionate and dissuasive sanction if an infringement has been established.

The commission noted that unfair trading practices promote deviation from good commercial conduct and are contrary to good faith and fair dealing.

EC Jobs, Growth Investment and Competitiveness vice-president Jyrki Katainen said: “There are imbalances of bargaining power in the food supply chain and with this proposal, the commission is tackling the unfair trading practices head-on.

“We act because unfair business conduct undermines the economic viability of operators in the chain.”

“We act because unfair business conduct undermines the economic viability of operators in the chain.

“By setting minimum standards and reinforcing the enforcement, the proposal should ensure that these operators are able to compete on fair terms, thereby contributing to the overall efficiency of the chain. This is a clear statement for more fair business conduct.”

Under the new proposal, the EC intends to ban late payments for perishable food products and last-minute order cancellations, forcing the supplier to pay for wasted products and unilateral or retroactive changes to contracts.

The EC further explained that other practices will only be allowed if a clear and unambiguous upfront agreement has been already established between the parties, including a buyer returning unsold food products to a supplier or a buyer charging a supplier payment to secure or maintain a supply agreement on food products.

Other practices that will be accepted by the EC include a case where a supplier has agreed to pay for the promotion or the marketing of food products sold by the buyer.