On 31 January 2013, the European Commission published a Communication on adopting a European Retail Action Plan and simultaneously adopted a Green Paper on unfair trading practices (UTPs) in the business-to-business (B2B) food and non-food supply chain in Europe.  The European Action Plan sets out the Commission’s strategy to improve the competitiveness of the retail sector and to enhance the sector's economic, environmental and social performance.  The Green Paper is one of the initiatives identified in the Action Plan to address UTPs in the retail supply chain.

The Action Plan and Green Paper are policy and consultation documents respectively, and although they do not introduce any new areas of law as such, they show that the Commission is interested in the retail and food sectors.

European Retail Action Plan

The Commission recognises that the EU retail and wholesale services sector is one of the most important in the EU economy yet two major barriers are hampering the creation of an efficient and competitive single market in retail:  (i) restrictions on establishment; and more generally, (ii) lack of competitiveness in the retail sector, in particular, in some Member States, and a need to reduce barriers and operational restrictions.  The Action Plan aims to address these challenges by setting out a strategy to improve the competitiveness of the retail sector and to enhance the sector’s economic, environmental and social performance.

The Commission believes that a single market in retail has the potential to benefit all relevant stakeholders: (i) Consumers, through improved access to quality retail services and products, more competitive prices and better information on quality and prices, as well as on the environmental characteristics of products; (ii) Businesses (especially SMEs), through the development of a more predictable legal environment, addressing unfairness in the supply chain and the development of e-commerce; and (iii) Employees, through more qualified staff and improved working conditions, leading to higher job satisfaction.

To achieve a single market in retail, the Commission has identified five key priorities:

  • Empowering consumers through better information
  • Improving access to more sustainable and competitive retails services
  • Fairer and more sustainable trading relationships along the retail supply chain
  • Ensuring a better link between retail and innovation
  • Creating a better work environment, for example through better matching the needs of employers and staff skills.

The Commission has proposed a number of actions to address each priority.  It is anticipated that all actions will be implemented by 2014.  The Commission will monitor developments and report on progress in 2015.  Simultaneously, the Commission also intends to set up a permanent Group on Retail Competitiveness involving Member States and all relevant stakeholders to increase awareness of retail issues and concerns, to monitor progress and to ensure full implementation of the Action Plan. 

Green Paper on unfair trading practices in the supply chain

The Green Paper on UTPs in the B2B food and non-food supply chain in Europe is one of the actions identified in the Action Plan to address the Commission’s goal of achieving fairer and more sustainable trading relationships along the retail supply chain.

The Commission notes that UTPs are practices that grossly deviate from good commercial conduct and which are contrary to good faith and fair dealing in B2B relationships.  The Commission is concerned that UTPs, which can occur at any stage of the B2B relationship, may have a detrimental effect on the whole EU economy as they affect companies’ (especially SMEs’) ability to invest and innovate.  They may also constitute an additional obstacle to engaging in cross-border sourcing and distribution in the single market.

The Commission recognises that the issue of UTPs is not a new one.  Different approaches exist to address UTPs at national level.  Where UTPs are addressed, national (regulatory or self regulatory) rules usually differ from Member State to Member State. 

The objective of the Green Paper is therefore to open a consultation on UTPs in the B2B food and non-food supply chain to gather further views on the magnitude of UTPs, the effect on the economy and on cross-border activity, as well as the effectiveness of self-regulatory and national legislative frameworks in addressing such practices and any resulting impact on the single market.

The Commission is seeking responses to the Green Paper by 30 April 2013.  It then intends to announce next steps by mid-2013.  This is an opportunity for producers, suppliers and retailers to make their opinions known to a major regulator.