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Unfair trading practices in the food supply chain

Food Production Print publication

12/06/2019

On 9 April 2019 the EU Council adopted a directive on unfair trading practices in business-to-business relationships in the agricultural and food supply chain. Once in force, the directive will ban the most obvious unfair trading practices and provide Member States with more effective ways of tackling abuses. The directive should help prevent the weaker bargaining position of small and medium-sized food businesses being exploited by larger operators, such as major processors and retailers.

The new rules will cover micro enterprises, small and medium-sized enterprises (SMEs) and mid-range enterprises that have an annual turnover lower than EUR 350 million. In order to do that, the directive adopts a dynamic approach, according to which smaller operators are only protected against unfair trading practices in cases where these originate from larger businesses. This means for instance that micro enterprises will be protected against SME buyers and SME suppliers will be protected against mid-range buyers and buyers larger than that.

Unfair trading practices such as late payments for perishable products, last minute order cancellations, unilateral or retroactive changes to supply agreements, the misuse of confidential information, and the retaliation or threat of retaliation against the supplier will be completely banned, while other practices will only be permitted if they are provided for in a clear and unambiguous previous agreement between the parties.

Member States will have 24 months after the entry into force of the directive to transpose it into national law, and six more months to apply its provisions.

WM Comment

Whether the UK implements the directive will depend on the outcome and timing of Brexit and so we will monitor developments and report on the directive’s progress in a future update.

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