UTPs Directive: EU institutions reached an agreement to protect actors of the food supply chain
Brussels, December 19th
At the end of a sixth and final trilogue procedure, the European Parliament and the Council, on December the 19th reached an agreement on the Directive to combat Unfair Trade Practices in the agri and food supply chain. This is excellent news for all producers and companies in the sector, who have been waiting for a European regulation for more than 15 years, while many self-regulatory initiatives have so far failed to put an end to unfair practices. The news is all the better as the scope and the number of practices, very limited in the original Commission proposal, were extended during the discussions.
The agreement reached today will apply to any actor involved in the food supply chain with a turnover of up to 350 million euros – seven times the threshold originally proposed by the Commission – and differentiated levels of protection are provided below this threshold. The European Parliament’s desire to expand to all companies has not been retained. The new rules will apply to retailers, food processors, wholesalers, cooperatives or producer organizations, or a single producer who engages in any of the unfair trade practices identified.
Prohibited UTPs were initially limited to perishable products only (payment after 60 days). They have been extended to cover: late payments for perishable food products (payment after 30 days), cancellations of last-minute orders, unilateral or retroactive contract amendments, forcing the supplier to pay for wasted products and refusal of written contracts. Other practices will only be permitted if they are subject to a clear and unambiguous prior agreement: a buyer returning unsold food products to a supplier, a buyer charging a supplier to secure or maintain a food supply agreement, a paying provider for a promotional, advertising or marketing campaign of a buyer.
Member States will be able to extend the scope of the Directive into national legislation, in particular by adopting a threshold of more than EUR 350 million, or take additional measures if they so wish. “This is a minimum harmonization, therefore the member states can, or should in my eyes go further to strengthen the device provided by this directive” Parliament’s rapporteur Paolo De Castro noted following the agreement. It will be up to them to designate the authorities responsible for enforcing the new rules, including ability to impose fines and initiate investigations on the basis of complaints. Confidentiality may be requested by the parties filing a complaint to address concerns about possible retaliation.
The Commission will put in place a coordination mechanism between the supervisory authorities to enable the exchange of good practice.
The agreement also includes a review clause set at 4 years, which means that the provisions of the law will have to be evaluated and possibly revised during the next parliamentary term.
It must now be formally approved by Member States in the Special Committee on Agriculture, be submitted then to the plenary and once approved by the Parliament, it will have to be endorsed by the Council and finally transposed into national legislation.