Commission report: EU countries have exceeded expectations on unfair trade practices

The directive aims to redress the imbalances in the EU food supply chain created by large operators against trading partners with weak bargaining power, such as individual farmers and smallholders, in a bid to protect European farmers.  [SHUTTERSTOCK]

Most EU countries have chosen to go beyond the minimum protections set out in the EU rules banning unfair trading practices in the agri sector, a new report has found, but stakeholders warn much work remains to ensure the bloc is on common footing.

The report, released on 27 October by the European Commission, offers an overview of the state of play of the transposition and implementation of the unfair trading practices (UTP) directive in the 16 member states that notified complete transposition to the Commission by July 2021. 

It found that the countries generally followed the approach of the directive, while a majority of these member states had chosen to go above and beyond the minimum protection level for farmers and small agri-food businesses as set out in the directive.

They did this by extending the directive’s list of unfair trading practices (UTPs) or making the prohibitions stricter, the report highlights. 

Battle over unfair trade practices ends, its champion rejoices

On Tuesday (12 March), the European Parliament approved long-awaited legislation on unfair trade practices (UTPs). EURACTIV.com spoke with the lawmaker who shepherded the new rules over the line.

Adopted in 2019, the directive aims to redress the imbalances in the EU food supply chain created by large operators against trading partners with weak bargaining power, such as individual farmers and smallholders, in a bid to protect European farmers. 

It does this by banning certain unfair trading practices imposed unilaterally by one trading partner on another at the EU level in the agricultural and food supply chain. 

This includes late payments and last-minute order cancellations for perishable food products, unilateral or retroactive changes to contracts, or refusal to commit to written contracts.

EU countries were required to transpose the directive, which entered into force on Sunday (1 November), into national law by 1 May 2021 and apply it six months later.

However, the road to implementing the directive has been a bumpy one, resulting in the Commission opening infringement procedures against 12 member states in July after they failed to transpose the EU rules within the allotted time frame.

Four of these have since notified a complete transposition.

Commission moves against EU countries over unfair trading practices

The European Commission has opened infringement procedures against 12 member states after they failed to transpose EU rules banning unfair trading practices in the agri-food sector within the allotted time frame. 

While the report notes that going above and beyond the minimum measures laid out in the directive poses no problem “provided that such national rules are compatible with the rules on the functioning of the internal market,” stakeholders were quick to point out that this runs the risk of fragmenting the single market. 

Noting that some countries have introduced national sourcing obligations that are a “clear infringement” to the single market, EuroCommerce director-general Christian Verschueren warned that the directive left national authorities with “a lot of leeway” in their implementation of the directive.

As such, there is a “real risk of creating further fragmentation in the single market and regulating practices with very little impact on farmers,” he warned, calling on the Commission to take action on incompatible measures.

The association also called for the directive to be assessed against its impact on farmers, noting that many of the provisions adopted by member states have “little relationship to that objective”.

The directive only provides for protection of suppliers but none for buyers, the association pointed out,  highlighting that a number of member states have decided to protect larger suppliers with considerable market power.

Others took the opportunity to criticise the fact that some EU countries have failed to transpose the directive into national legislation within the allotted time frame.

In a joint statement, AIM, the European Brands Association, and FoodDrinkEurope urged all EU member states to properly transpose and effectively enforce this new EU legislation “without undue delay”.

This is even more important, they added, as countries focus on recovery and resilience after the COVID pandemic, which they point out gave rise to an increase of UTPs.

Just under 20% of companies reported that they have experienced more UTPs since the beginning of the crisis, they said. 

Likewise, socialist MEP Paolo de Castro and rapporteur of the UTP directive, told EURACTIV that it is “incredible” that some countries, including his home country, Italy, have not yet transposed the directive.

“We still have a lot of things to do to analyse because many member states are doing it in their own way,” he said, pointing to France and Spain, who he said had an advantage over other member states given they already had existing legislation. 

The rapporteur stressed the importance of creating a common ground and urged member states to learn from one another, but was hopeful that it will be possible to “go faster and get everyone up to speed”.

Lawmakers in the European Parliament’s AGRI Committee are due to discuss the report on UTPs in more detail during next week’s committee meeting, and an evaluation of the directive at the EU level is due at the end of 2025.

[Edited by Zoran Radosavljevic]

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