Unfair commercial practices in the agricultural and food supply chain
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COMPETITION • FRENCH LAW • Restrictive practices
Directive No 2019/633 of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain aims to tackle the significant imbalances in bargaining power between suppliers and buyers of agricultural and food products. Within this framework, the directive, which should be transposed on 1 May 2021, introduces a list of practices which prohibited per se or authorized subject to conditions, rather than a general definition of unfair trading practices. The need for harmonization will only concern practices imposed by buyers on suppliers in the agriculture and food supply chain. The directive is of minimum harmonization: Member States may introduce or maintain rules ensuring a higher level of protection for suppliers (Art. 9). It defines several turnover ranges that may reflect a disproportionate bargaining power between buyers and suppliers. The ceiling of protection for the latter is set at EUR 350 million in turnover (Art. 1(2)). To benefit from protection, it is sufficient that at least one of the two parties is established in the Union. The directive establishes a "black" and a "gray" list of unfair commercial practices. The former are automatically prohibited, the latter only if they are not previously stipulated in clear and unambiguous terms in the supply agreement or in any subsequent agreement between the supplier and the purchaser.
Prohibited practices include:
- the prohibition of payment deadlines exceeding 30 days for perishable agricultural or food products or 60 days for non-perishable products;
- the prohibition of the cancellation of orders for agricultural and food products that are perishable at short notice; unilateral modification of contractual conditions; transfer of the risk of loss or deterioration to the supplier; threat of commercial retaliation against a supplier who exercises his contractual or legal rights;
- the imposition of payments that are not related to the sale of the supplier's products.
Prohibited practices, if they are not previously agreed in clear and unambiguous terms in the agreement between the purchaser and the supplier, are requests by the supplier for payment for (i) the stocking, displaying, listing or making available of its products; (ii) advertising by the purchaser for the supplier's products; (iii) the marketing of its products; (iv) staffing costs allocated to the fitting out of premises used for the sale of the supplier's products. Indeed, most of these functions are not distinguishable from buying and selling and should not be billed by the buyer. The EU directive also aims at ensuring the return of unsold goods to the supplier without paying for those product, a practice likely to fall under the prohibition of the subjection of a trading partner to a significant imbalance.
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