Unfair trading practices: EU evaluation of current rules

Call for evidence: Agricultural & food supply chain – combating unfair trading practices

Update

The European Commission is evaluating the effectiveness of Directive 2019/633, which establishes unfair trading practices (UTPs) in business-to-business (B2B) relationships in the food supply chain. All stakeholders, including businesses and trade associations in non-EU countries, can provide evidence on whether Directive 2019/633 and related laws implemented by EU Member States have been effective in removing UTPs. Evidence can be provided until 29 November 2023.

What is changing?

The European Commission is evaluating whether the EU UTP Directive has been successful since its application in November 2021. In particular, the Commission will evaluate whether the rules are:

• effective in reducing UTPs
• cost-effective – whether the costs are proportional to the benefits of reducing UTPs
• relevant to today’s supply chain, considering challenges such as sustainability and digitalisation
• in line with other EU policies
• better than initiatives that could be taken by EU Member States on their own.

Timeline

This call for evidence is open until 29 November 2023.

Recommended Actions

If food suppliers in non-EU countries have experienced any of the UTPs listed in the Directive, they are encouraged to provide information, for example through representative trade bodies. See Background for a list of UTPs.

Background

In 2019 the European Parliament and the Council adopted Directive (EU) 2019/633 on UTPs in B2B relationships in the agricultural and food supply chain.

While the main focus is the EU, this Directive also applies to suppliers outside the EU that are selling agricultural and food products direct to an EU buyer. This recognises that non-EU suppliers are equally vulnerable to UTPs. It also aims to prevent UTPs being diverted towards unprotected suppliers outside the EU.

Note that the Directive only applies to suppliers outside the EU that are selling direct to an EU buyer (not via an intermediary).

The UTPs that are prohibited under Directive 2019/633 are:

• Payment later than 30 days for perishable agricultural and food products.
• Payment later than 60 days for other agricultural and food products.
• Short-notice order cancellations (less than 30 days) of perishable agricultural and food products.
• Unilateral contract changes by the buyer.
• Payments requested by the buyer that are not related to sale of the agricultural and food product of the supplier.
• Payment for deterioration and/or loss of agricultural and food products (occurring at the buyer’s premises) unduly transferred from the buyer to the supplier.
• Refusal by the buyer to provide a written confirmation of a supply agreement.
• Misuse of a supplier’s trade secrets by the buyer.
• Commercial retaliation by the buyer.
• Payment of costs for examining customer complaints unduly transferred from the buyer to the supplier.

In addition, the following UTPs are prohibited if they have not been agreed between buyer and supplier before the action is taken:

• The buyer returns unsold agricultural and food products to the supplier without paying for them.
• The buyer requires the supplier to pay for stocking, displaying, and listing of agricultural and food products.
• The buyer requires the supplier to bear costs of discounts for agricultural and food products that are part of a promotion.
• The buyer requires the supplier to pay for advertising.
• The buyer requires the supplier to pay for marketing.
• The buyer requires the supplier to pay for the buyer's staff, or for fitting out the buyer's premises, used to sell the supplier’s agricultural and food products.

Resources

Sources

---

Regulation

Call for evidence: Agricultural & food supply chain – combating unfair trading practices

What is changing and why?

The European Commission is requesting information from businesses in the agriculture and food supply chain in order to learn if unfair trading practices are happening, and to assess if current EU laws to combat unfair practices are effective.

Under Directive 2019/633, the following are unfair practices:

• Late payments: paying the seller for fresh and perishable agricultural and food products more than 30 days after the agreed time; for other agricultural and food products, payment later than 60 days is considered unfair.
• Short-notice order cancellations: cancelling orders for fresh and perishable agricultural and food products with less than 30 days’ notice.
• Unilateral contract changes: if the buyer changes the contract terms without agreement from the seller.
• Unauthorised payments: requesting payments from the seller that are not related to the sale of their agricultural or food products.
• Shifting costs: charging the seller for damage or loss of agricultural and food products that happens at the buyer’s location and is not the fault of the seller.
• Refusal to confirm agreements: if the buyer does not provide written confirmation of the supply agreement.
• Misuse of trade secrets: if the buyer is using the supplier’s confidential business information improperly.
• Commercial retaliation: if the buyer punishes the seller for reasons that are not related to business.
• Unreasonable complaint costs: charging the seller for examining customer complaints when it is not their responsibility.

The following practices are only allowed if both buyer and seller have agreed on them in advance:

• Unpaid returns: the buyer cannot send back unsold agricultural and food products to the seller without paying for them.
• Supplier costs: the buyer cannot make the seller pay for stocking, displaying, and listing agricultural and food products.
• Discount costs: the buyer cannot force the seller to cover the costs of discounts for agricultural and food products used in promotions.
• Advertising expenses: the buyer cannot require the seller to pay for advertising.
• Marketing costs: the buyer cannot make the seller pay for marketing.
• Staff and premises expenses: the buyer cannot make the seller pay for the buyer’s staff, or for setting up the buyer’s place to sell the supplier’s agricultural and food products.

Actions

If food suppliers in non-EU countries have experienced any of the unfair trading practices listed in the Directive, they are encouraged to provide information, for example through representative trade bodies. Note that the Directive only applies to suppliers outside the EU that are selling direct to an EU buyer (not via an intermediary).

Timeline

The Call for evidence is open for feedback until 29 November 2023.

---