The Spanish Agency for Food Information and Control (Agencia de Información y Control Alimentarios), which was created pursuant to the Law 12/2013 of 2 August on Measures to Improve the Functioning of the Food Chain (the “Law”) has initiated a wide reaching investigation of practices in the wine, fruit and vegetable markets.

The investigation aims to verify the extent to which the requirements under the Law regarding the formalization in writing of contracts for the purchase of grapes, fruit and vegetables and the determination of prices and payment terms are being complied with.

It should be noted that the Law, which entered into force at the beginning of this year, requires that food contracts (contratos alimentarios) must be formalized in writing and provides that the breach of such obligation constitutes an administrative offence. It should also be noted that the Agency has recently stated, in response to a consultation made by the Spanish Wine Federation, that the maximum delay for payment of the purchase price for grapes and for fresh fruit and vegetables generally is 30 days (given that they are perishable products), in accordance with the provisions of the Law on Retail Commerce and the Law on Late Payment in Commercial Transactions.

In the event of any failure to execute written contracts with growers, the Law establishes a penalty of up to €3,000 for each case of infringement. The Law also provides for fines of up to €100,000 for non-compliance with the statutory payment deadlines.

In accordance with a presumption under the Law, the entities which will be held liable for any infringement of such requirements (and accordingly exposed to the sanctions) will be the purchasers rather than the growers unless the purchaser can demonstrate that the fault lies with the grower.

Although the inspections are only at a preliminary stage, the affected wineries (more than 100 according to press release) and purchasers of grapes, fruit and vegetables generally could find themselves facing a long process in which they will have to defend themselves from infringement charges made by the Agency and, in those cases where sanctions are imposed, to appeal the same before the relevant administrative authorities and potentially thereafter in contentious proceedings before the relevant Courts.