EU politicians back rules to ban UTPs: ‘We are arming David, not Goliath’

By Niamh Michail contact

- Last updated on GMT

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European agriculture ministers have approved measures to end unfair trading practices (UTPs), with manufacturers and farmers welcoming the result.

Members of the Committee on Agriculture and Rural Development (AGRI) voted last night in favour of the draft report with 38 votes for and four against, with two abstentions.

The amended draft report (which can be seen here​) aims to put a stop to late payments and cancellation of orders at short notice, as well as broadening the scope of the law to include all food industry players, not only small and medium-sized businesses (SMEs) and big buyers. 

The new rules prohibit payments made later than 30 days for perishable agricultural and food products and later than 60 days for non-perishable products. This is counted from the last day of the month when the invoice was received or the agreed delivery day.

Rapporteur Paolo De Castro, a member of the S&D party, said: “In this battle of David versus Goliath, we are arming the weakest in the food supply chain to ensure fairness, healthier food and social rights. Small producers, workers, consumers, all of us, will soon stop suffering the consequences of unfair trade practices imposed by big players in the food supply chain​.” “

De Castro slammed UTPs as a form of “blackmailing​” that would trigger a dramatic race to the bottom concerning social rights, unemployment and human health. Without measures to rein in UTPs, consumers would pay the final price through “low quality and health-damaging food”, ​he added.

The draft regulation bans unilateral order cancellations for perishable products less than 60 days from the agreed delivery date. MEPs also want to outlaw buyers sharing or misusing confidential information regarding the supply agreement.

According to the text, the terms of any supply agreement must not result from the supplier’s economic dependence on the buyer and, unless previously agreed, buyers will not be able to sell products below the purchase price (sales below cost) and then ask the supplier to bridge the gap.

The politicians also propose to allow producers to lodge complaints where the UTPs are established, even if the practices themselves occurred elsewhere in the EU.

The report will now go before a full plenary session with all MEPs. De Castro called on the Commission and Council to act so it could enter in force “by the end of the year”.

The result was welcomed by the heads of six industry organisations - manufacturers’ trade group FoodDrinkEurope, organic association IFOAM EU, agriculture lobby Copa and Cogeca, the European Council of Young Farmers, CEJA, European brands association AIM and EFFAT, the European Federation of Food, Agriculture and Tourism Trade Unions.

“This historic vote is welcomed by the entire European food supply chain as a key step towards ensuring fairness and certainty for all,"​ they said. "The legislation guarantees that agreed contracts between farmers, producers and retailers are respected and that no party can apply Unfair Trading Practices (UTPs).

The proposal would complement existing legislation against Unfair Trading Practices in 20 member states protecting all actors from the direct or indirect effects of UTPs, and avoid legal fragmentation and forum shopping.”

Europe’s supermarkets condemn “witchhunt”

However, Eurocommerce, the association that represents Europe’s retailers, however, said the amendments to the draft regulation would do nothing for fairness in the supply chain.

“By imposing more restrictions on retailers and their ability to provide services, it will make it more difficult for retailers to negotiate the better prices they pass on to consumers, in particular when negotiating with large suppliers.

“Farmers will gain nothing from legislation allowing large multinational brands to impose higher prices on retailers and consumers.”

Verschueren said the current directive, as voted yesterday, would end up making the strongest players in the market even stronger and the weaker players -  farmers, SMEs, and consumers - even weaker.

“A witch hunt against retail and wholesale to line the pockets of multinational shareholders and do nothing for farmers is surely not what this directive should be about,” ​he added.

According to Eurocommerce, the directive gives rights to sellers but none to buyers, which calls into question the fundamental principles of the EU on equality of treatment and respect of legal base.

Last month, 22 retail and wholesale CEOs wrote a letter to the chair of the EU Agriculture Council to request an opinion on the legality of these changes​.

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