EU Commissioner for Agriculture, Phil Hogan, announced last Thursday, 12th April, a legislative proposal to tackle unfair trading practices in business-to-business relationships in the food supply chain, with the aim of improving the position of farmers and smaller operators.
The draft directive proposes a list of unfair trading practices which would be prohibited and lays down minimum rules concerning their enforcement and arrangements for coordination between enforcement authorities.
The proposal was informed by an impact assessment and stakeholder consultation carried out in 2017 and is now in the hands of EU member states and MEPs, who will amend the proposal, with the hopes an agreement on a final text will be reached before May 2019 (when EU Parliament elections will be held).
The prohibited practices listed are late payments for perishable food products, last minute order cancellations, unilateral or retroactive changes to contracts and forcing a supplier to pay for wasted products. However, Commissioner Hogan, when presenting the proposal to MEPs, invited them to add to this list.
ICOS welcomes the proposal, as a first step towards strengthening the position of farmers and their cooperatives. However, we are concerned by the current limitation of the directive to sales by a SME to a buyer that is not a SME. According to the EU definition (currently up for revision), an SME is an enterprise that has less than 250 employees and a turnover of less than € 50m. In order to create a truly level playing field and prevent competition distortions, the legislation must be applicable to all businesses in the food supply chain. Additionally, the proposal is limited to companies that have their base in the EU- this could pose a problem post-Brexit.
By Alison Graham
European Affairs Executive
28 May 2021