New rules, approved by 589 votes in favour to 72 against, with nine abstentions, blacklist practices, such as late payments for delivered products, late unilateral cancellations or retroactive order changes, refusal by the buyer to sign a written contract with a supplier and the misuse of confidential information. Threats of retaliation against suppliers, for instance delisting their products or delaying payments, to punish them for filing complaints, will also be outlawed.
Buyers will no longer be allowed to request payments from suppliers for deterioration or loss of products at the buyers’ premises, unless caused by the suppliers’ negligence or to make suppliers pay for the cost of examining customer complaints.
Other practices, such as returning unsold products to a supplier without paying for them, forcing suppliers to pay for the advertising of products, charging suppliers for stocking or listing of products, or imposing discount costs onto the supplier, would also be outlawed unless pre-agreed in the supply agreement.
Clear complaints procedure
Food suppliers will be allowed to lodge complaints where they are based, even if unfair trading occurred elsewhere in the EU. National enforcement authorities would handle complaints, conduct investigations and ensure solutions.
Protecting small and mid-range suppliers
New rules will protect small, medium-sized and mid-range suppliers with an annual turnover below €350 million. These suppliers will be divided into five sub-categories, (with turnovers below €2m, €10m, €50m, €150m and €350m), with the most extensive protection given to the smallest ones.
“David has finally defeated Goliath. Fairness, healthier food and social rights have finally prevailed over the unfair trading practices in the food supply chain. For the very first time in the EU history, farmers, food producers and consumers will no longer be bullied by big players”, said rapporteur Paolo De Castro (S&D, IT).
“This is a great success for all Europeans. This is the EU we stand for: the EU that affects people’s daily lives by eradicating inequalities and fighting for citizens’ health, environment and fairness”, he added.
The anti-UTPs directive needs to be formally endorsed by the Council before it can enter into force. EU states will then have 24 months to introduce it to national laws. New rules should be applied 30 months after entering into force.
The European Parliament has repeatedly called for measures to tackle unfair trading practices (UTPs) in the food supply chain, since 2010, after adopting the resolution on fairer revenues for farmers and better functionality of the supply chain.
According to Commission estimates, agriculture and food processing SMEs in the EU lose between €2.5 - €8 billion per year (1% - 2% of their turnover) due to UTPs.
Tuesday March 12, 2019/ EP/ European Union.