Food groups welcome EC ban on unfair trading practices

Nine food-related organisations have expressed their support for a European Commission (EC) proposal to ban unfair trading practices (UTPs) in the food supply chain.

The new restrictions will prohibit ‘more damaging’ UTPs to ensure small and medium-sized enterprises (SMEs) in the food and agriculture businesses receive fairer opportunities.

The groups include FoodDrinkEurope, Fair Trade Advocacy Office, International Federation of Organic Agriculture EU (IFOAM EU), and the European Association of Craft, Small and Medium-Sized Enterprises (UEAPME), among others. According to the groups, the proposal has the potential to harmonise regulations at European Union (EU) level without disrupting existing national systems.

Despite this, the groups said they were concerned by the scope of the proposal, which only covers SME suppliers.

In a joint press release, they said: “A successful approach to combating UTPs needs to be applicable to all players in the supply chain, regardless of their size, as it would therefore impact all commercial relations.”

The proposal includes the authority of national governments to impose financial sanctions when infringements are committed, requiring EU member states to designate a public body to conduct their own investigations, either on their own initiative or based on a complaint.

Food products covered in the proposal are agricultural products, including fish, and related processed foods.

The EC said that SMEs, including farmers, were vulnerable to UTPs as they often lack bargaining power and alternatives to market products to consumers, but stated that the new legislation would not result in higher prices for consumers.

EC vice-president for jobs, growth investment and competitiveness Jyrki Katainen said: “There are imbalances of bargaining power in the food supply chain and with this proposal the EC is tackling the unfair trading practices head-on. 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.​”​

Certain UTPs include late payments for perishable food products, last minute order cancellations, unilateral or retroactive changes to contracts and forcing payments for wasted products.

Other practices will require multilateral agreement, such as a buyer returning unsold food products to a supplier, charging the supplier to secure a supply agreement on products, or a supplier paying for promotional or marketing services on items sold by the buyer.   These additions will strengthen the current, voluntary Supply Chain Initiative scheme.

European commissioner for agriculture and rural development Phil Hogan said: “[The] 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. ​We are looking to eliminate the ‘fear factor’ in the food supply chain, through a confidential complaints procedure.”

The European Parliament and the European Council will make amendments to the law and the final text is set to be negotiated before the EP elections in May 2019.