EU proposes new rules to tame unfair trading practices in food supply chain

EUROPE – The EU has come up with a number of proposals that aims to tackle unfair trading practices and ensure small and medium-sized food and farming businesses are treated fairly.

The food supply chain has been marred with unfair trading practices especially against smaller food operators and farmers who are said to lack bargaining power and alternatives to take their products to consumers.

“Today’s initiative to ban unfair trading practices is about strengthening the position of producers and SMEs in the food supply chain.

The initiative is equally about providing strong and effective enforcement.

We are looking to eliminate the fear factor in the food supply chain, through a confidential complaints procedure,” said Phil Hogan, commissioner Agriculture and rural development.

Unfair business, spearheaded by imbalances of bargaining power in the food supply chain has reportedly undermined the economic viability of operators in the chain.

EC vice-president for jobs, growth investment and competitiveness, Jyrki Katainen said that setting minimum standards together with the proposal will ensure operators are able to compete on fair terms, thereby contributing to the overall efficiency of the chain.

Those violating the trading practices will be subject to sanctions imposed by national authorities where infringements are established.

According to EU, member states will be required to establish a public authority in charge of the new rules, establish infringements and impose a proportionate and dissuasive sanction.

The body will also be responsible for initiating investigations on a particular party or based on a complaint.

The EC will also set up a coordination mechanism between enforcement authorities to enable the exchange best practices.

Among other practices, it seeks to ban late payments for perishable food products, last minute order cancellations, unilateral or retroactive changes to contracts and forcing the supplier to pay for wasted products.

Practices that would only be permitted subject to a clear agreement between parties include a buyer returning unsold food products to a supplier; a buyer charging a supplier payment to secure or maintain a supply agreement on food products; a supplier paying for the promotion or the marketing of food products sold by the buyer.

Those violating the trading practices will be subject to sanctions imposed by national authorities where infringements are established.

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