On 9 April the EU Council formally approved the directive and the legislative act was signed on 17 April 2019. EU member states will have 24 months to introduce the new rules into national legislation. This will therefore be the next big stage in policing the agricultural and food supply chain; even if Brexit takes place this year then all trade with the EU will be ultimately governed by this for agricultural and food producers.
The Directive 2019/633 highlights the that whilst risk is inherent in all economic activity, agricultural production is particularly fraught with uncertainty due to its reliance on biological processes and that differences in bargaining power means a minimum standard of protection against certain manifestly unfair trading practices should be introduced.
It was agreed that Unfair Trading Practices (UTPs) occur throughout the food supply chain with smaller operators more vulnerable to these practices due to weaker bargaining power compared to larger operators. The Directive distinguishes between two types of trading practices. Those that may be unfair in nature, but may be acceptable if clearly agreed by the parties, and become unfair only when applied without agreement such as: late payment for perishable foods; short notice cancellation of orders of perishable foods, unilaterally and retroactively changing the terms of the supply agreement and having a supplier pay for the wastage of food products on the buyer’s premises not caused by the negligence or fault of the supplier. Further additional trading practices would be prohibited unless agreed in clear and unambiguous terms in the supply agreement; such as, returning unsold food products to the supplier, charging the supplier for stocking, displaying or listing their products by the buyer, charging the supplier for the promotion of products sold by the buyer and charging the supplier for the marketing of products by the buyer.
A directive rather than a regulation provides some discretion for member states whilst providing an EU wide framework.
Member states would be obliged to designate a public authority charged with enforcing the rules. This body would be able to conduct investigations and impose fines in case of proven infringements. The enforcement authorities of member states would have to cooperate with each other and the Commission would facilitate this cooperation and manage a website for the exchange of information. The Directive allows individual Member States to introduce stricter rules designed to combat unfair trading practices than those laid down in the Directive to ensure a higher level of protection.
By Jessica Burt