New EU Rules to Ensure Fairness in the Food Supply Chain
The European Parliament has approved a new set of EU rules that will blacklist practices, such as late payments for delivered products, late unilateral cancellations or retroactive order changes, refusal by the buyer to sign a written contract with a supplier and the misuse of confidential information. Threats of retaliation against suppliers, for instance delisting their products or delaying payments, to punish them for filing complaints, will also be outlawed.
Buyers will no longer be allowed to request payments from suppliers for deterioration or loss of products at the buyers’ premises, unless caused by the suppliers’ negligence or to make suppliers pay for the cost of examining customer complaints.
Other practices, such as returning unsold products to a supplier without paying for them, forcing suppliers to pay for the advertising of products, charging suppliers for stocking or listing of products, or imposing discount costs onto the supplier, would also be outlawed unless pre-agreed in the supply agreement.
Clear Complaints Procedure
Food suppliers will be allowed to lodge complaints where they are based, even if unfair trading occurred elsewhere in the EU. National enforcement authorities would handle complaints, conduct investigations and ensure solutions.
New rules will protect small, medium-sized and mid-range suppliers with an annual turnover below €350 million. These suppliers will be divided into five sub-categories, (with turnovers below €2m, €10m, €50m, €150m and €350m), with the most extensive protection given to the smallest ones.
“David has finally defeated Goliath. Fairness, healthier food and social rights have finally prevailed over the unfair trading practices in the food supply chain. For the very first time in the EU history, farmers, food producers and consumers will no longer be bullied by big players,” says rapporteur Paolo De Castro (S&D, IT).
Next Steps
The anti-UTPs directive needs to be formally endorsed by the Council before it can enter into force. EU states will then have 24 months to introduce it to national laws. New rules should be applied 30 months after entering into force.
