The European Commission adopted a Communication in July encouraging Member States to look for ways to improve protection for small producers and retailers against unfair trading practices (UTPs) in the food supply chain. The food supply chain is not only crucial for the daily life and well-being of consumers but is also important for the economy as a whole, employing more than 47 million people in the EU, many in SMEs, and representing about 7% of the EU gross value added. The total market size of EU retail trade in food-related products is estimated at €1.05 trillion. UTPs can be defined as practices that grossly deviate from good commercial conduct, are contrary to good faith and fair dealing and are unilaterally imposed by one trading partner on the other and include:
- avoiding or refusing to put essential commercial terms in writing;
- retroactive unilateral changes in the cost or price of products or services;
- transfer of unjustified or disproportionate risk to a contracting party;
- deliberately disrupting a delivery or reception schedule to obtain unjustified advantages; or
- unilaterally terminating a commercial relationship without notice, or subject to an unreasonably short notice period and without an objectively justified reason.
The Commission in its Communication does not propose legislation at EU level but suggests a “mixed approach” to dealing with UTPs. The Commission’s approach has three parts:
- It encourages participation in the Supply Chain Initiative which was launched in September 2013;
- It suggests that there should be EU wide standards for principles of good practice; and
- It stresses the importance of ensuring the effectiveness of enforcement mechanisms at national level through the adoption of minimum standards applicable throughout the EU.
The Commission will monitor and assess progress and intends to present a report to the Council and the European Parliament at the end of 2015 which may lead to further action at EU level.