On 27 July, the European Commission reprimanded twelve Member States because they European directive to combat unfair commercial practices have not yet adopted. With this directive from 2019, the EU wants to protect small farmers and other suppliers to the agri-food sector, mainly from buyers from supermarkets and food groups. Although the list of malpractice is hallucinatory, the Belgian government lacks the will to amend the legislation.
Unfair trade practices agri-food sector
It press release of the European Commission stated that the Commission has issued a formal ‘notice‘ or sent notification. The targeted unfair trading practices concern agricultural and food products and their entire supply chain. The Unfair Commercial Practices Directive in the agricultural and food supply chain bans unfair practices unilaterally imposed by one trading partner on another for the first time at EU level.
In reality, that ‘one trading partner’ is often a company from the agri-food industry or a supermarket. The agri-food sector includes, for example, Raffinerie Tirlemontoise, AB Inbev, Delhaize, Aldi, Lidl, Farm Frites, FrieslandCampina, Greenyard, Puratos, Ardo and numerous members of the federation of the Belgian food industry. fevia. On the site of Flanders Food the reader can get an idea of the companies active in the agro-industry.
Transpose guideline
A European directive is a legal text that must be transposed into the national legislation of the member states. In technical jargon this is called transposing. Because this legislative process differs from Member State to Member State, it can sometimes take years. Because some governments often temporize for electoral opportunities or more mysterious reasons, the European Commission always sets a deadline.
In this case, that deadline expired on 1 May 2021. The Commission now formally sends a letter to Belgium, Cyprus, Estonia, France, Italy, Austria, Poland, Portugal, Romania, Slovenia, Spain and the Czech Republic of their duty to stop procrastinating. If not, fines or other financial sanctions will follow. Member States now have two months to reply.
opposition
This does not mean that the directive has already been transposed into legislation in other Member States. Bulgaria, Denmark, Germany, Finland, Greece, Hungary, Ireland, Croatia, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Slovakia and Sweden informed the Commission that they had taken all necessary measures to transpose the Directive. So there would be no problem in those countries. Real opposition with an open mind only came from France and Estonia. Both countries only wish to partially adopt the directive. Nevertheless, they also received a notification with a slap on the wrist.
The main aim of the ‘Directive on unfair trading practices in the agricultural and food supply chain’ is strengthening the position of (small) farmers or market gardeners in the food supply chain.
Sixteen unfair trading practices
In total, the EU wants to ban 16 unfair trading practices. Article 3 of the Directive lists the main unfair commercial practices from a to i and from a to f.
a) the buyer pays the supplier on time;
b) the buyer cancels an order for perishable agricultural and food products at such short notice that the supplier cannot reasonably be expected to find an alternative to trade or use those products;
c) the buyer unilaterally changes the terms of a supply agreement;
(d) the buyer requires the supplier to make payments that are not related to the sale of the supplier’s agricultural and food products;
(e) the buyer requires the supplier to pay for the spoilage or loss, or both, of agricultural and food products, which occurs at the buyer’s site or after the transfer of ownership to the buyer, and is not due to the negligence or default of the supplier is attributable;
f) the buyer refuses to confirm in writing the terms of a supply agreement between the buyer and the supplier;
g) the buyer refuses to confirm in writing the terms of a supply agreement between the buyer and the supplier;
h) the buyer threatens or takes commercial retaliation against the supplier if the supplier exercises its contractual or legal rights;
(i) the buyer shall require the supplier to reimburse the costs associated with investigating customer complaints in connection with the sale of the supplier’s products, notwithstanding the absence of negligence or fault on the part of the supplier.
The EU wants to explicitly prohibit the following:
a) the buyer returns unsold agricultural and food products to the supplier without payment for those unsold products or without payment for the disposal of those products, or both;
b) the supplier is charged for the storage, display or listing of its agricultural and food products, or for making such products available on the market;
(c) the buyer requires the supplier to bear all or part of the cost of discounts for agricultural and food products sold by the buyer as part of a promotion;
(d) the buyer requires the supplier to pay for the advertising of agricultural and food products by the buyer;
(e) the buyer requires the supplier to pay for the marketing of agricultural and food products by the buyer;
f) the buyer requires the supplier to pay staff for the fitting out of the premises used for the sale of the supplier’s products.
abuse of power
Anyone who reads those lists understands that the buyers (read supermarkets and food companies) abuse their market position or scale. Customers apparently refuse to draw up contracts, cancel orders arbitrarily, charge all kinds of operating costs, adjust agreements unilaterally and, moreover, do not pay on time. If a farmer submits a complaint to the government, revenge actions follow. In itself, the law does not seem that problematic.
For example, of the 16 unfair practices, none could be against a ban on late payments or last minute order cancellations for perishable food products. Nor can the unilateral or retroactive amendment of contracts be a normal practice. However, the law must expressly prohibit this. Apparently these are common practices.
Paying for waste
So the most hallucinatory measure is that the directive should prohibit a supermarket from requiring a farmer to pay for wasted products. So the tons of fruits and vegetables that supermarkets throw away are paid for by the farmer who supplied them. Apparently, the farmer is also allowed to pay for the promotions of the supermarkets.
Why then do Member States fail to transpose this directive into national law? The only logic is that the lobbyists of the supermarket chains and industrial food companies are successfully slowing down legislation at the national level.
In the meantime, there is another matter. Under the directive, farmers and horticulturists and small and medium-sized suppliers as well as the farmers’ unions and dairy cooperatives representing these farmers can file complaints. However, this means that Member States have to organize new or existing competition authorities for this. With, of course, secrecy and confidentiality in order to prevent the reprisals from customers referred to in the directive.
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