GREEN PAPER ON UNFAIR TRADING PRACTICES IN THE BUSINESS-TO-BUSINESS FOOD AND NON-FOOD SUPPLY CHAIN IN EUROPE
Date: 2013-01-31
Institutions: European Commission
Subjects: agri-foodstuffs, distributor, food industry, industrial product, restriction on competition, retail trade, supply, unfair terms of contract, wholesale trade

EUROPEAN 
COMMISSION 

Brussels, 31.1.2013  
COM(2013) 37 final 

GREEN PAPER 

ON UNFAIR TRADING PRACTICES IN THE BUSINESS-TO-BUSINESS FOOD 
AND NON-FOOD SUPPLY CHAIN IN EUROPE 

(Text with EEA relevance) 

EN 

   EN 

 
 
 
 
  
 
Table of Contents 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

5. 

5.1. 

5.2. 

5.3. 

5.4. 

5.5. 

5.6. 

5.7. 

5.8. 

6. 

7. 

INTRODUCTION........................................................................................................ 3 

DEFINITION OF UNFAIR TRADING PRACTICES................................................ 6 

The Concept of Unfair Trading Practices .................................................................... 6 

Examples of Unfair Trading Practices ......................................................................... 7 

Potential Effects of Unfair Trading Practices .............................................................. 8 

LEGAL FRAMEWORKS ON UNFAIR TRADING PRACTICES ......................... 10 

Fragmented Legal Frameworks at National Level..................................................... 10 

Protection against Unfair Trading Practices at EU Level .......................................... 12 

ENFORCEMENT OF RULES AGAINST UNFAIR TRADING PRACTICES ...... 15 

Enforcement Mechanisms at National Level ............................................................. 15 

Enforcement Mechanisms at EU Level...................................................................... 16 

TYPES OF UNFAIR TRADING PRACTICES ........................................................ 17 

Ambiguous Contract Terms ....................................................................................... 17 

Lack of Written Contracts.......................................................................................... 17 

Retroactive Contract Changes.................................................................................... 18 

Unfair Transfer of Commercial Risk ......................................................................... 18 

Unfair Use of Information.......................................................................................... 18 

Unfair Termination of a Commercial Relationship ................................................... 19 

Territorial Supply Constraints.................................................................................... 19 

Common Characteristics of UTPs.............................................................................. 20 

GENERAL REMARKS............................................................................................. 21 

NEXT STEPS............................................................................................................. 22 

2 

 
 
 
1. 

INTRODUCTION 

The  business-to-business  (B2B)  supply  chain  is  an  important  element  of  the  European 
economy.  It  channels  products  and  services  from  suppliers  to  consumers  and  has  a  direct 
impact  on  economic  growth  and  employment.  Retail  services  represent  4.3 %  of  the  EU’s 
GDP,  18.7  million  (or  8.3 %)  of  the  EU’s  employees  and  17 %  of  the  EU’s  SMEs1.  They 
ensure  the  distribution  to  consumers  of  goods  and  services  stemming  from  other  economic 
sectors, such as agriculture, manufacturing, logistics and IT services. 

This Green Paper addresses the B2B food and non-food supply chain, which is the chain of 
transactions  between undertakings or  between undertakings and public authorities that  leads 
to  the  delivery  of  goods  destined  mainly  to  the  general  public  for  personal  or  household 
consumption  or  utilisation.  The  supply  chain  is  composed  of  a  number  of  actors 
(producers/processors/distributors)  which  all  have  an  impact  on  the  final  price  paid  by  the 
consumer.  This  impact  varies  according  to  the  food  and  non-food  sub-sector  concerned.  A 
well-functioning  B2B  food  and  non-food  supply  chain  is  key  to  achieve  the  maximum 
economic potential of those sectors. 

Over the last two decades, the B2B food and non-food supply chain has changed considerably 
for  economic,  social  and  demographic  reasons.  Increased  concentration  and  vertical 
integration across the EU have led to structural changes in the B2B food and non-food supply 
chain.  Various  international  retailer  buying  alliances  have  emerged  seeking  economies  of 
scale in sourcing through greater buying power. The expansion of retailers’ own brands has 
turned some merchants into direct competitors of their suppliers. A small number of relatively 
strong players in the supply chain appear to have considerable negotiating power. 

These  factors  may,  in  some  cases,  lead  to  unfair  trading  practices  (UTPs)  in  relationships 
along the B2B food and non-food supply chain. UTPs are practices that grossly deviate from 
good commercial conduct and are contrary to good faith and fair dealing. UTPs are typically 
imposed in a situation of imbalance by a stronger party on a weaker one and can exist from 
any side of the B2B relationship and at any stage in the supply chain. 

At EU level, UTPs were first discussed in the EU food sector in 2009 when consumer prices 
rose against the background of the agricultural price spikes. The lack of market transparency, 
inequalities  in  bargaining  power  and  anti-competitive  practices  were  reported  to  lead  to 
market distortions with potentially negative effects on the competitiveness of the food supply 
chain as a whole. This triggered the need to analyse the functioning of the food supply chain. 
The Commission considered that consumers were not offered sufficiently fair deals in terms 
of  product  range  and  prices  and  that  intermediaries  /  food  processing  industrials  /  retailers 
squeezed the margins of agricultural producers2. Indeed, the performance of the food supply 
chain  affects  EU  citizens’  daily  lives,  given  that  approximately  14 %  of  their  household 
expenditure  is  spent  on  food3,  as  well  as  the  functioning  of  economic  sectors  such  as 

1 
2  
3 

Eurostat, 2010. 
A better functioning food supply chain in Europe, (COM(2009) 591, 28 October 2009) 
Eurostat, 2012. 

3 

 
 
 
                                                 
agriculture,  food  processing  industry  and  retailers.  Moreover,  real  food  prices  increased  by 
over  3%  in  the  year  20084  alone,  leading  to  a  drop  in  purchasing  power  and  consumer 
confidence,  becoming  one  of  the  main  drivers  of  overall  price  inflation.  As  a  response,  an 
Expert  Platform  on  B2B  Contractual  Practices  within  the  High  Level  Forum  for  a  Better 
Functioning  Food  Supply  Chain  was set up in 2010 to work on providing a solution to this 
issue. In 2011, the Expert Platform has delivered a set of principles and examples of fair and 
unfair practices in vertical relations in the food supply chain signed by eleven organisations 
representing different interests across the European food supply chain5. In 2012, the Platform 
worked on an enforcement mechanism. Despite the common effort, the proposed framework 
failed  to  identify  effective  remedies  for  non-compliance  and  did  not  gain  the  support  of 
representatives  from  across  the  entire  supply  chain  by  the  time  of  the  third  meeting  of  the 
High  Level  Forum  on  5  December  2012.  However,  eight  of  the  eleven  organisations  have 
announced their intention to launch the implementation of the principles of fair practice on a 
voluntary basis in early 20136. At the same time, work is on-going among all the stakeholders 
to find a compromise through this sector-specific approach. The Commission encourages all 
stakeholders to come to an agreement within the coming months. The Commission has also 
extended  the  duration  of  the  High  Level  Forum  mandate  until  31  December  20147  and  will 
continue  to  monitor  the  specific  developments  in  the  food  supply  chain  to  follow  up  the 
achievements so far.  

In  parallel,  the  Commission  will  begin  working  on  an  impact  assessment  of  the  different 
options to address the issue of UTPs. The impact assessment will examine also to what extent 
this  problem  could  be  dealt  with  locally  or  whether  an  EU-level  solution  would  be  needed. 
This    approach  will  preserve  the  achievements  of  the  High  Level  Forum  in  the  food  sector 
while considering all possible solutions ranging from self-regulation to legislation. Based on 
this, the Commission will propose appropriate next steps in the second half of 2013. 

UTPs have been the subject of a number of surveys and inquiries in several Member States8. 
A recent report by the European Competition Network (ECN) confirmed that a large number 
of National Competition Authorities identified the existence of UTPs9 as an issue in the food 
sector.  

However,  from  a  wider  perspective,  it  is  argued  that  UTPs  may  occur  not  only  in  the  food 
sector but in other sectors as well. This Green Paper will help gathering information on this 
issue, which could be linked to a number of factors. Firstly, the evolution of the food and non-
food  retail  sector  towards  a  ‘mixed’  format,  whereby  the  vast  majority  of  retailers  supply 
ranges of food, household goods and other products under the same management and under 
the  same  terms  and  conditions.  Secondly,  the  fact  that  some  of  the  largest  manufacturers 

4 
5 

6  
7 

8 

9 

Ibid. 
AIM,  CEJA,  CELCAA,  CLITRAVI,  Copa  Cogeca,  ERRT,  EuroCommerce,  Euro  Coop, 
FoodDrinkEurope, UEAPME and UGAL. 
AIM, CELCAA, ERRT, EuroCommerce, Euro Coop, FoodDrinkEurope, UEAPME and UGAL. 
Commission  Decision  of  19  December  2012  amending  the  Decision  of  30  July  2010  as  regards  its 
applicability and the composition of the High Level Forum for a Better Functioning Food Supply Chain 
(2012/C 396/06), OJ C-396/17, 21.12.2012. 
These include Bulgaria, the Czech Republic, Finland, France, Germany, Ireland, Italy, Lithuania, Poland, 
Portugal, Romania, Slovenia, Spain and the UK. 
ECN Report on competition law enforcement and market monitoring activities by European competition 
authorities in the food sector, May 2012, p. 116-120. 

4 

 
 
                                                 
produce food as well as other types of goods such as detergents, cosmetics, hygiene products, 
etc. combined with the importance of some brands, this may also affect the supplier/retailer 
relationship. Practices were identified in a number of sectors, including furniture or textile10. 
In the clothing sector, a 2007 report on business relations in the EU clothing chain identified 
nine  practices  between  manufacturers  and  retailers  perceived  as  unfair.  Those  include,  inter 
alia: automatic charge of retailer's promotional cost, charge backs, delayed payments, return 
of  unsold  goods,  sudden  termination  of  supply  relationship  and  exploitation  of  innovative 
ideas embodied in the samples11. 

The  Commission  retail  market  monitoring  exercise12  mentioned  the  presence  of  UTPs  in 
various retail sectors. The European Parliament has also acknowledged the need to go beyond 
the agro-food industry and urged the Commission to take action in this regard13. In the Single 
Market Act I14, the Commission expressed its intention to launch an initiative to combat UTPs 
in  business  relations.  Moreover,  a  number  of  recent  consultations  with  businesses  have 
confirmed the existence of this issue15. 

UTPs may have detrimental effects on the EU economy and for the B2B food and non-food 
supply chain in particular. Such practices may affect companies’, including SMEs’, capacity 
to invest and innovate. Moreover, the existence of fragmented national rules may constitute an 
additional obstacle to engaging in cross-border sourcing and distribution in the Single Market. 

This  Green  Paper  contains  a  preliminary  assessment  and  seeks  further  evidence  and  views 
relating to the possible issues stemming from UTPs in relationships along the B2B food and 
non-food  supply  chain  and  related  to  the  issue  of  efficient  enforcement  of  existing  national 
rules  aimed  at  combatting  UTPs,  as  well  as  the  resulting  impact  on  the  Single  Market.  The 
objective of the Green Paper is to launch a consultation with stakeholders on this analysis, to 
gather  information  and,  where  appropriate,  to  identify  possible  next  steps  in  addressing  this 
issue. 

Improving the functioning of the supply chain would encourage greater economic integration 
and address significant Single Market deficiencies caused by UTPs and the fragmentation of 
the national rules aimed at combating them. This would contribute to the broader goal of the 
EU to become a smarter, more sustainable and more inclusive economy by 2020. 

10 

11 
12 

13 

14 

15 

Business  relations  in  the  EU  clothing  chain:  from  industry  to  retail  and  distribution.  Bocconi 
University. ESSEC Business School. Baker & McKenzie. 2007, p.124. 
Business relations in the EU clothing chain: from industry to retail and distribution, p.126. 
Retail market monitoring report ‘Towards more efficient and fairer retail services in the internal market 
for 2020’ (COM(2010) 355, 5 July 2010). 
European  Parliament  Resolution  on  a  more  efficient  and  fairer  retail  market  (2010/2109(INI))  5  July 
2011. 
Single  Market  Act.  Twelve  levers  to  boost  growth  and  strengthen  confidence  "Working  together  to 
create new growth" (COM(2011) 206, 13 April 2011). 
Member States’ survey on UTP; ECN Report on competition-law enforcement and market-monitoring 
activities by European competition authorities in the food sector, May 2012, p. 117); European Business 
Test Panel; Consultation on Directive 2006/114/EC concerning misleading and comparative advertising 
and on unfair commercial practices affecting businesses. 

5 

 
 
                                                 
2. 

DEFINITION OF UNFAIR TRADING PRACTICES  

2.1. 

The Concept of Unfair Trading Practices 

Freedom  of  contract  is  a  cornerstone  of  any  B2B  relationship  in  the  market  economy  and 
parties should be able to design contracts that best suit their needs. This concerns especially 
UTPs  in  pre-contractual  negotiations  that  are  subsequently  embedded  in  contract  terms.  In 
order to derive mutual benefits from this freedom to contract, parties must be in a position to 
actually negotiate contract terms. However, in some cases where one of the contracting parties 
has a stronger bargaining position, it may unilaterally impose terms on the weaker counterpart 
-  thus  excessively  shaping  the  business  relationship  to  favour  exclusively  its  own  economic 
interests.  In  particular,  the  contracting  party  may  use  significantly  unbalanced  terms  and 
conditions  and  due  to  its  bargaining  power  will  not  negotiate  them  individually.  In  such 
situations,  the  weaker  party  may  not  be  in  a  position  to  reject  such  unilaterally  imposed 
unfavourable conditions due to fear of not concluding the contract or even of being driven out 
of  business.  Such  unequal  bargaining  positions  can  be  due  to  various  factors,  e.g.,  a 
significant  difference  in  the  relative  size/turnover  of  the  parties,  economic  dependency  or 
significant sunk costs already incurred by one of the parties (e.g., high upfront investments). 

UTPs are typically imposed in a situation of imbalance by a stronger party on a weaker one - 
which  is  often  not  in  a  position  to  abandon  the  unfair  relationship  and  switch  to  another 
business partner due to the costs implied by such change or to the lack of alternatives to the 
contractant. It is important to note that the situation of imbalance can exist from any side of 
the B2B relationship: retailers as well as suppliers can be the victims of UTPs and they can 
occur at any stage of the B2B retail supply chain. Such situations may arise, for instance, for 
agricultural producers, which often have a limited choice of business partners for the take-up 
of  their  production  and  which,  due  to  the  intrinsic  characteristics  of  many  goods,  could  be 
unable to store production for a longer period of time in order to obtain better buying terms.  

Such  practices  include  failure  to  provide  sufficient  information  about  contract  terms, 
demanding payments for goods or services that are of no value to the contractant, unilateral or 
retroactive changes of contract terms, as well as payments for fictitious services, preventing 
contractants from sourcing from other Member States — leading to territorial partitioning of 
the Single Market. 

UTPs can occur at any stage of the B2B relationship. They can be employed when negotiating 
a contract, can be part of the contract itself or can be imposed in the post-contractual phase 
(e.g., retro-active contractual changes). 

After  a  contract  is  concluded,  UTPs  can  merely  consist  in  executing  the  unfair  terms. 
However,  even  where  the  terms  of  a  contract  appear  to  be  acceptable  for  both  parties, 
potential issues may still emerge. Generally, contracts do not cover all aspects of the parties’ 
behaviour in the phase of the execution of the contract or are so complex that the parties do 
not fully understand what the terms imply in practice. Moreover, parties might not have the 
same  level  of  information  about  the  transaction,  which  may  lead  to  unfair  conduct  by  the 
stronger party towards a weaker counterpart. In this regard, SMEs are generally in a weaker 
position compared to larger counterparts, as they may lack the specialist knowledge required 
to appreciate all the implications of the terms agreed. 

6 

 
 
In  a  market  which  functions  optimally,  the  lack  of  trust  between  parties  would  result  in 
switching  to  another  business  partner.  High  switching  costs  or  the  very  lack  of  such  a 
possibility  concretely  translates  into  a  favourable  bargaining  position  which  may  encourage 
the stronger party to behave unfairly. 

The inability to switch to another business partner and to terminate the existing relationship is 
a  key  factor  in  the  development  of  UTPs.  In  addition,  the  weaker  party  often  fears  that  the 
commercial relationship could be terminated in the event of a complaint on its part. This ‘fear 
factor’  makes  such  complaints  significantly  less  likely  to  occur  and  is  therefore  one  of  the 
most important issues to be examined when assessing the appropriateness of an enforcement 
mechanism. For instance, it seems that 87 % of suppliers take no action beyond a discussion 
with their customer. Almost two thirds (65 %) of these take no action due to fear of retaliation 
and  50 %  doubt  the  effectiveness  of  public  remedies16.  Recently,  nearly  all  of  the  suppliers 
and producers invited to appear before the Irish Parliamentary Committee on supplier-retailer 
relationships  in  the  Irish  Grocery  Market  to  discuss  their  links  with  retailers  declined  to  do 
so17. In order to gather the relevant information, the Committee opted for direct contacts, on a 
confidential basis. 

Questions: 

1) 

2) 

3) 

4) 

5) 

Do you agree with the above definition of UTPs? 

Is the concept of UTPs recognised in your Member State? If yes, please explain how.  

In your view, should the concept of UTPs be limited to contractual negotiations or 
should they include the pre- and/or the post-contractual phase as well? 

At what stage in the B2B retail supply chain can UTPs occur? 

What do you think of the concept of "fear factor"? Do you share the assessment made 
above on this issue? Please explain.  

2.2. 

Examples of Unfair Trading Practices 

UTPs have been the subject of a number of surveys and inquiries which have often focused on 
the food sector.  

The 2008 UK Competition Commission’s investigation of the supply of groceries in the UK18 
identified  52  practices,  26  of  which  had  ‘the  potential  to  create  uncertainty  for  suppliers 
regarding their revenues or costs as a result of the transfer of excessive risks or unexpected 
costs to suppliers’. These included retrospective price adjustments, retrospective financing of 

16 

17 

18 

Dedicated  Research,  AIM-CIAA  Survey  on  Unfair  Commercial  Practices  in  Europe,  March  2011, 
available at: http://www.dlf.no/filestore/CIAAAIMSurveyonUCP-Europe.pdf 
Parliamentary  report on  the Supplier-Retailer  relationship  in  the  Irish Grocery  Market,  Committee  on 
Enterprise, Trade and Employment, March 2010, p. 19. 
Competition Commission, Final Report of the supply of groceries in the UK market investigation, 30 
April 2008. 

7 

 
 
 
 
                                                 
promotions,  or  other  practices  that  effectively  led  to  retrospective  adjustment  of  previously 
agreed supply arrangements. 

The Spanish Competition Authority’s report on relationships between suppliers and retailers 
in  the  food  sector19  identified  18  practices  between  manufacturers  and  retailers  and  divided 
them  into  three  categories:  (i)  commercial  payments  (e.g.,  fees  for  carrying  and  placing  of 
products); (ii) contributions to ancillary activities carried out by the retailer (e.g., promotion 
fees);  (iii)  atypical  payments  (e.g.,  those  considered  by  manufacturers  to  fall  under  the 
retailer’s responsibility). 

The  Irish  Parliamentary  Committee  Report  draws  attention  to  assertions  that  some  retailers 
engage  in  ‘serious  misconduct’,  ‘bullying  and  intimidation’  and  even  ‘illegal  practices’ 
against suppliers and goes on to state that many suppliers had been subjected to practices by 
retailers  that  included  unreasonable  demands  for  financial  ‘contributions’  if  they  refused  to 
comply with retailers’ demands20. 

2.3. 

Potential Effects of Unfair Trading Practices 

The imposition of UTPs along the B2B food and non-food supply chain may affect businesses 
which can, in turn, result in economy-wide detrimental effects.  

The  impact  of  UTPs  on  the  B2B  food  and  non-food  supply  chain  is  difficult  to  quantify, 
primarily  due  to  the  nature  of  the  issue  but  also  because  of  measurement  difficulties. 
However,  it  is  alleged  that  the  potential  detrimental  impacts  of  UTPs  in  both  the  short  and 
long term may include effects on investment and innovation21. The Commission has recently 
launched  a  study  on  the  evolution  of  choice  and  innovation  in  food  retail  with  a  view  to 
quantifying  whether  these  have  changed  over  recent  years  following  the  modernisation  and 
concentration of the retail sector in the European Union. 

The  Commission  Staff  Working  document  accompanying  the  Retail  Market  Monitoring 
Report  quoted  as  an  example  the  case  of  UHT  milk  in  France,  where  according  to  the 
Observatoire des prix et des marges administered by FranceAgrimer, the share of producers' 
price  (not  margin)  in  the  final  consumer  price  of  UHT  milk  had  declined  from  32.2 %  to 
25.9 %  in  the  period  2005  -  2009  -  thus,  clearly  damaging  producers’  ability  to  invest. 
Additionally,  the  accompanying  document  "Analysis  on  price  transmission  along  the  food 
chain  in  the  EU"  of  the  Commission  Communication  "A  better  Functioning  Food  Chain  in 
Europe"22 identifies for the period 2007 - 2009 a rather low and asymmetric transmission of 
prices from agricultural producers to consumers in the analysed markets (e.g., pork and dairy), 
which  could  be  due,  in  part,  to  possible  imbalances  in  bargaining  power  and/or  anti-
competitive practices in the food chain. 

19 

20 
21 

22  

Comisión Nacional de la Competencia, Report on the relations between manufacturers and retailers in 
the food sector, October 2011. 
See note 15, above. 
This  is  in  line  with  the  findings  of  the  survey  by  Dedicated  Research  about  suppliers’  perceptions, 
which shows that UTPs had a negative effect on costs, sales and innovation (for 83 %, 77 % and 40 % of 
respondents, respectively). See note 15, above. 
SEC(2009) 1450. 

8 

 
 
                                                 
Many  UTPs  can  be  related  to  payment  issues  that  are  directly  linked  to  the  way  prices 
between suppliers, intermediaries and retailers are structured. For example, the recent Finnish 
competition authority study on daily consumer goods trade shows that 90 % of the respondent 
companies had paid so-called ‘marketing allowances’ linked to unclear benefits. Sometimes, 
such payments were a precondition for trading without any ‘real’ compensation23. 

UTPs  may  adversely  affect  investment  and  innovation  due  to  reduced  revenues  and 
uncertainty. Retrospectively imposed unfair terms, in particular, may give rise to uncertainty 
in terms of business planning and may result in reduced investment. Calculations on return on 
investment include the assessment of potential risks. Retrospective changes or the ‘unfair’ use 
of information may reduce companies’ ability to invest, innovate, expand capacity or develop 
new product lines. This would be the case where unsold goods returned to suppliers are not 
paid  for  even  if  the  contractual  arrangements  were  stating  the  opposite  (e.g.,  seasonal 
household  products  or  products  with  a  limited  shelf  life).  This  forces  suppliers  to  incur 
unnecessary  costs,  may  create  uncertainty  and  have  knock-on  effects  on  investment.  UTPs’ 
possible  detrimental  effects  apply  to  all  players  along  the  B2B  food  and  non-food  supply 
chain but may have disproportionate effects on SMEs, which often lack specialist knowledge 
about complex contracts, have higher switching costs and fewer trading relationships, are less 
willing  to  use  formal  enforcement  mechanisms  and  have  less  countervailing  power  against 
powerful trading partners. 

In  addition,  it  is  argued  that  UTPs  may  have  a  negative  impact  on  cross-border  trade  and 
hinder the proper functioning of the Single Market. For example, suppliers can be reluctant to 
deal  with  foreign  retailers  for  fear  of  being  victims  of  UTPs  in  an  unfamiliar  national  legal 
context. This is of course not the only obstacle: the degree of cross-border contracting within 
the EU supply chain varies from one Member State to another, depending on the presence of 
large vertically integrated retailers, the share of on-line sellers, the retail sub-segment and the 
role  of  wholesalers24.  Irrespective  of  these  factors,  however,  UTPs  may  hinder  the 
development  of  cross-border  relationships,  mainly  because  of  the  difficulty  to  enforce  rules 
addressing them in a cross-border context.  

Questions: 

6) 

7) 

8) 

23 
24  

In your experience, to what extent and how often do UTPs occur in the food sector? 
At  which  stage  of  the  commercial  relationship  do  they  mainly  occur  and  in  what 
way?  

Are UTPs present in non-food retail sectors as well? If so, please provide concrete 
examples. 

Do  UTPs  have  an  adverse  impact  in  particular  as  regards  the  ability  of  your 
company to invest and innovate? Please provide concrete examples and quantify to 
the extent possible. 

Kilpailuviraston Päivittäistavarakauppaa koskeva selvityksiä I/2012, page 119. 
See  "The  functioning  of  the  food  supply  chain  and  its  effect  on  food  prices  in  the  European  Union", 
European Economy, Occasional Papers 47, May 2009 

9 

 
 
 
                                                 
9) 

10) 

Do  UTPs  affect  consumers  (e.g.,  through  influencing  prices,  product  choice  or 
innovation)? Please provide concrete examples and quantify to the extent possible. 

Do  UTPs  have  an  impact  on  EU  cross-border  trade?  Do  UTPs  result  in  a 
fragmentation  of  the  Single  Market?  If  yes,  please  explain  to  what  extent  UTPs 
impact the ability of your company to trade cross-border. 

3. 

LEGAL FRAMEWORKS ON UNFAIR TRADING PRACTICES 

3.1. 

Fragmented Legal Frameworks at National Level 

Over  the  years,  unfair  practices  in  relationships  between  suppliers  and  buyers  have 
increasingly been seen by public authorities as an important political issue. As a result, many 
Member  States  have  taken  actions  to  handle  the  issue  of  UTPs  but  they  have  done  so  in 
different ways. This has led to a high degree of divergence in terms of the level, nature and 
legal form of protection provided against UTPs at national level. 

The starting point has often been the analysis carried out by national competition authorities 
in order to assess competition in the retail sector and the role of commercial practices in the 
retailer-supplier relationship25. 

Relationship of competition law and laws on unfair trading practices 

In this context, one needs to distinguish competition law and laws aimed at preventing unfair 
practices.  Unfair  trading  rules  pursue  predominantly  a  different  objective  from  competition 
law as they regulate contractual relationships between companies by stipulating the terms and 
conditions that, for instance, suppliers must offer to distributors, irrespective of the actual or 
presumed  effects  on  competition  on  the  market.  This  is  particularly  the  case  of  legislation 
which prohibits undertakings from imposing on their trading partners, obtaining or attempting 
to  obtain  from  them  terms  and  conditions  that  are  unjustified,  disproportionate  or  without 
consideration26. 

Competition  law  may  capture  certain  UTPs  in  relations  along  the  B2B  food  and  non-food 
supply  chain.  However,  it  would  not  cover  all  such  practices  as  it  pursues  the  objective  of 
protecting competition on the market and typically addresses situations of market power27. A 

25 

26 

27 

See, inter alia, for Portugal, Autoridade da Concorrência, Report on Commercial Relations between the 
Large  Retail  Groups  and  their  Suppliers,  October  2010;  for  the  UK  Competition  Commission,  The 
supply of groceries in the UK market investigation, 30 April 2008, for Sweden, Konkurrensverket, Mat 
och marknad — från bonde till bord, April 2011; for Spain, Comisión Nacional de la Competencia, of 5 
October 2011, Informe sobre el código de buenas prácticas de distribución del automóvil and Informe 
sobre  el  anteproyecto  de 
ley  de  contratos  de  distribución;  for  Finland,  Kilpailuviraston 
Päivittäistavarakauppaa koskeva selvityksiä. Other studies are mentioned in the ECN Report quoted in 
note 8. 
Recital 9 of Regulation 1/2003 expressly draws a demarcation between competition law (which includes 
national  rules  on  unilateral  conduct  which  are  stricter  than  Article  102)  and  laws  on  unfair  trading 
practices. 
Ibid. 

10 

 
 
 
                                                 
number of Member States have competition rules on unilateral conduct which, for example, 
prohibit  or  impose  sanctions  on  abusive  behaviour  towards  economically  dependent 
undertakings and/or abuse of superior bargaining position. 

The recent report by the European Competition Network, which is composed of the national 
competition  authorities  and  the  European  Commission,  concluded  that  certain  trading 
practices which are considered unfair by many stakeholders 'do not fall within the scope of 
competition rules at the EU level or in most of the Member States’28. 

Civil and commercial law and unfair trading practices 

As  far  as  fairness  in  individual  business  relations  is  concerned,  the  basic  principles  of  civil 
and/or commercial law may offer some level of protection against UTPs. A general notion of 
duty  of  fairness  exists  in  most  Member  States.  It  usually  concerns  concepts  such  as  contra 
bonos  mores  conduct,  performance/negotiations  in  accordance  with  the  principles  of  good 
faith,  good  morals,  fairness  or  loyalty.  Failure  to  comply  with  these  principles  typically 
renders contracts null and void or unenforceable before the courts. 

Specific national frameworks on unfair trading practices 

Some  Member  States  have  extended  the  protection  afforded  under  civil  law  to  address  the 
increasing number of UTP cases29. In doing so, varying national instruments have been used. 
While  the  preferred  option  of  some  Member  States  was  to  adopt  specific  legislation  on  the 
matter30, others put into place or promoted codes of conduct or are considering doing so31. 

Similarly, there are substantial differences in Member States’ approaches to the scope of the 
relevant statutory or self-regulatory instruments. While in some Member States they provide 
protection  against  UTPs  in  the  retail  supply  chain  or  in  a  given  retail  sector,  in  others,  the 
rules apply across the board.  For example, in Portugal,32 Slovenia,33 Spain,34 Belgium35 and 
the United Kingdom36 there are codes of conduct focused on the grocery supply chain37, while 
in the Netherlands and Ireland there are plans to adopt such codes. Czech Republic, Hungary 
and Italy adopted laws that cover UTPs in the agro-food sector. Similarly, in the motor retail 
sector,  self-regulation  has  been  a  preferred  means  to  addressing  UTPs.  On  the  contrary,  the 

28 
29 

30 
31 
32 

33 
34 

35 

36 
37 

See ECN Report, para 26, note 8 above. 
This was done either within the scope of civil law, for example by adopting specific commercial-law 
provisions (e.g., France), or under administrative law. 
E.g., France, Belgium, Italy and Spain. 
E.g., the Netherlands, Portugal, Slovenia and Spain. 
Code of good business practice (1997), drawn up by the Association of Distributors and the Conference 
of Industry. 
Code of good business practice. 
Code  of  good  commercial  practices  in  the  motor  distribution  sector  signed  by  ANFAC,  ANIACAM, 
FACONAUTO y GANVAM on 10.06.2011, agreement of 1.08.2007 between FIAB and ASEDAS on 
the  recommendation  of  good  commercial  practices  to  improve  the  management  through  the  chain  of 
value  and  to  foster  business  cooperation  and  agreement  of  29.07.2011  on  the  commercial  code  of 
conduct along the food chain in Catalonia. 
Code of Conduct for fair relationships between suppliers and purchasers in the Agro-Food Chain of 20 
May 2010. 
Groceries Supply Code of Practices (GSCOP). 
European  Competition  Network,  Report  on  competition  law  enforcement  and  market  monitoring 
activities by European competition authorities in the food sector, May 2012, p. 118. 

11 

 
 
                                                 
French  commercial  law  provisions  addressing  UTPs  apply  across  the  board  to  all  B2B 
relations. 

In addition, problems within the Single Market resulting from divergent laws can be expected 
to  increase  over  time  in  the  light  of  the  greater  use  of  e-commerce  and  globalisation  more 
generally. 

The resulting divergence in protection against UTPs may discourage companies from taking 
up  activities  outside  their  Member  State  of  origin.  The  situation  is  further  aggravated  as 
national legal frameworks are subject to frequent changes, indicating that measures to combat 
UTPs  are  not  always  successful  as  they  have  to  follow  the  development  of  new  UTPs. 
Accordingly, companies affected by UTPs allege it is difficult and costly to keep track of their 
legal rights available in the different Member States, especially when they are SMEs. 

In  Member  States  where  no  specific  frameworks  on  UTPs  exist,  the  reasoning  usually 
provided is that general competition law is sufficiently effective to address the issue (Czech 
Republic) or that there is a certain reluctance to interfere with the contractual freedom of the 
parties  (UK),  especially  in  the  absence  of  a  breach  of  competition  rules38.  A  more  general 
argument  is  also  sometimes  made  concerning  the  effectiveness  and  need  for  legislation  on 
UTPs and its potential impact, including on prices. 

3.2. 

Protection against Unfair Trading Practices at EU Level 

Even  though  the  issue  of  UTPs  has  been  raised  in  the  context  of  a  number  of  recent 
initiatives39,  for  the  moment,  there  is  no  specific  EU  regulatory  framework  on  the  issue  of 
UTPs in the B2B food and non-food supply chain. 

EU  competition  law  aims  at  contributing  to  the  construction  and  preservation  of  the  Single 
Market  and  enhancing  consumer  welfare40.  It  seeks  to  establish  conditions  under  which  the 
market can function properly and is not per se concerned with fairness in individual business 
relations, unless those entail malfunctioning of the market due to existence of market power. 
As a result, EU competition law could deal with some but not all UTPs. 

Other  cross-sectoral  EU  instruments  also  aim  at  addressing  unfair  practices  in  trading 
relationships.  The  Unfair  Commercial  Practices  Directive41  covers  only  the  business-to-
consumer aspect of the issue, while recognising the need for careful examination of the need 
for  EU-level  action  in  the  B2B  area42.  This  legislation  fully  harmonises  the  protection  of 

38 

39 

40 
41 

42 

See  ICN  Special  Program  for  Kyoto  Annual  Conference.  Report  on  Abuse  of  Superior  Bargaining 
Position 2008. 
A better functioning food supply chain in Europe, (COM(2009) 591, 28 October 2009); A Single Market 
for 21st century Europe, COM(2007) 725, 20 November 2007), Retail Market Monitoring Report (see 
note 11 above), Single Market Act (see note 13 above). 
See Report on Competition Policy 2010, COM(2011) 328 final, para. 9. 
Directive  2005/29/EC  concerning  unfair  business-to-consumer  commercial  practices  in  the  Single 
market. 
Ibid.,  Recital  8  that  ‘directly  protects  consumer  economic  interests  from  unfair  business-to-consumer 
commercial  practices.  […]  There  are  other  commercial  practices  which,  although  not  harming 
consumers,  may  hurt  competitors  and  business  customers.  The  Commission  should  carefully  examine 
the need for Community action in the field of unfair competition beyond the remit of this Directive and, 
if necessary, make a legislative proposal to cover these other aspects of unfair competition’. 

12 

 
 
                                                 
consumers  before,  during  and  after  a  commercial  transactions  against  practices  that  are 
contrary  to  requirements  of  professional  diligence  and  can  affect  their  economic  behaviour. 
Member States are free to extend those rules to business-to-business practices, which some of 
them have done. The Directive is without prejudice to contract law, in particular, to the rules 
on the validity, formation or effect of a contract. In the field of marketing, the Misleading and 
Comparative  Advertising  Directive43  already  provides  minimum  protection  rules  across 
Europe and protects traders, both customers and competitors, against misleading advertising. 
Recently,  the  Commission  outlined  future  actions  in  the  field  of  business-to-business 
misleading  marketing  practices44  that  will  include  strengthening  of  the  enforcement  and 
substantive  rules  protecting  businesses  against  misleading  schemes  in  Europe.  In  particular, 
the Commission intends to present a legislative revision of the Misleading and Comparative 
Advertising Directive. 

Additionally,  the  Late  Payments  Directive45  concerns  the  specific  issue  of  payment  terms. 
Regulations  593/2008  and  864/2007  on  the  law  applicable  to,  respectively,  contractual  and 
non-contractual  obligations,  on  the  other  hand,  provide  a  comprehensive  set  of  rules  to 
determine  which  law  applies  to  disputes  involving  unfair  trading  practices  insofar  as  these 
involve contractual or non-contractual obligations between the parties. 

In terms of sectors, principles of fairness in contractual relations have been introduced in the 
milk/dairy sector46. These include,  inter alia, compulsory  written contracts between farmers 
and processors and an obligation for purchasers to offer farmers minimum contract duration. 
Some  self-regulatory  sectoral  solutions  have  also  been  explored  at  EU  level.  It  should  be 
noted that only consumers are protected against unfair terms in contracts by the Unfair Terms 
Directive47.  According  to  this  legislation  a  contractual  term  which  has  not  been  negotiated 
individually will be regarded as unfair if, contrary to the requirements of good faith, it causes 
a significant imbalance in the parties' rights and obligations arising under the contract, to the 
detriment  of  the  consumer.  In  the  context  of  the  legislative  proposals  of  the  reform  of  the 
Common Fisheries Policies, the Commission has also taken a series of sectorial initiatives to 
promote a fair dealing in B2B relationships in the fishery and aquaculture area48. 

Some legal provisions at EU level may partially address UTPs in business relations. However, 
this  may  create  a  patchwork  of  rules  which  may  come  into  play  depending  on  the  specific 
practices concerned or where the company using the practices possesses market power. Still, 
on the whole, a company confronted with UTPs by a business partner is not  able to benefit 
from  consistent  protection  across  the  EU.  This  legal  fragmentation  throughout  the  Single 
Market may discourage or prevent companies from taking up activities outside their Member 
State of origin. 

43 

44  

45 
46 
47 
48  

Directive  2006/114/EC  of  the  European  Parliament  and  of  the  Council  of  12  December  2006 
concerning misleading and comparative advertising. 
Protecting  businesses  against  misleading  marketing  practices  and  ensuring  effective  enforcement. 
Review  of  Directive  2006/114/EC  concerning  misleading  and  comparative  advertising  (COM(2012) 
702). 
Directive 2011/7/EU on combating late payment in commercial transactions. 
Regulation (EU) No 261/2012 as regards contractual relations in the milk and milk-products sector. 
Directive 93/13/EEC on unfair terms in consumer contracts. 
COM (2011) 416 final of 13 July 2011. 

13 

 
 
                                                 
In 2011, the European Commission  proposed a uniform set of sales law rules which can be 
used for cross-border sales of tangible movable goods and of digital content49. This Common 
European Sales Law (CESL) will be optional: Parties to a contract may choose to use it, but 
will not be obliged to do so. In order to be applicable in B2B relations, at least one party will 
have  to  be  an  SME.  It  particularly  addresses  SMEs  in  order  to  protect  them  against 
unilaterally imposed unfavourable conditions. Some rules will be default rules: for example, 
the  CESL  states  that  if  the  price  has  not  been  explicitly  agreed  upon,  the  price  normally 
charged in comparable situations is payable or that a contract of indeterminate duration may 
be terminated by either party only by giving a reasonable period of notice. Some provisions 
guaranteeing a fair balance between the interests of both sides are so important that they will 
be mandatory: 

• 

• 

Each party has a duty to act in accordance with good faith and fair dealing. 

Not individually negotiated contract terms in B2B contracts are considered to be unfair 
if their use grossly deviates from good commercial practice, contrary to good faith and 
fair dealing. They may only be invoked against the other party if the other party knew 
them or if the party took reasonable steps to draw the other’s party attention to them. 

•  Where  one  party  is  entitled  to  unilaterally  determine  the  price  and  this  party’s 

determination is grossly unreasonable the price normally charged is payable. 

• 

A  contract  can  be  avoided  if  a  party  was  unfairly  exploited,  for  example,  is 
inexperienced  and  the  other  party  knew  or  could  be  expected  to  have  known  this  and 
exploited the first party’s situation by taking excessive benefit or unfair advantage of it. 
The  parties  may  not  shorten  the  prescription  period  based  on  the  actual  or  presumed 
knowledge of the facts to less than one year and not extend it to more than ten years.  

Questions: 

11) 

12) 

13) 

Do  the  national  regulatory/self-regulatory  frameworks  in  place  sufficiently  address 
UTPs in some Member States? If not, why?  

Is  the  lack  of  specific  national  regulatory/self-regulatory  frameworks  addressing 
UTPs a problem in jurisdictions where they do not exist? 

Do  measures  that  seek  to  address  UTPs  have  effects  only  on  domestic  markets  or 
also on cross-border trade/provision of services? If so, please explain the impact on 
the  ability  of  your  company  to  trade  cross-border.  Do  the  differences  between 
national  regulatory/self-regulatory  frameworks  in  place  result  in  fragmentation  of 
the Single Market?  

14) 

Do you consider further action should be taken at EU level? 

49  

Proposal for a Regulation on a Common European Sales Law COM (2011) 635. 

14 

 
 
 
                                                 
15) 

Where  it  exists,  does  UTP  regulation  have  a  positive  impact?  Are  there  possible 
drawbacks/concerns linked to introducing UTP regulation, for example by imposing 
unjustified restrictions to contractual freedom? Please explain. 

4. 

ENFORCEMENT OF RULES AGAINST UNFAIR TRADING PRACTICES 

4.1. 

Enforcement Mechanisms at National Level 

The  level  of  protection  of  the  weaker  contracting  party  in  a  B2B  relationship  varies  across 
Member States. Various enforcement mechanisms are used at national level to address UTPs. 
These  include,  inter  alia,  judicial  redress  (in  most  Member  States),  possible  actions  by 
competition authorities under national rules on unilateral conduct (e.g., Spain), administrative 
redress (e.g., France) and ombudsmen (e.g., the UK). 

Empowerment  of  enforcement  authorities  varies  depending  on  the  enforcement  instrument 
used by each Member State. Some bodies are unable to accept anonymous complaints (e.g., 
courts), others cannot protect the anonymity of complainants throughout the full proceedings 
(e.g., competition authorities in certain Member States), while a third category are allowed to 
launch investigations only on the basis of credible evidence (e.g., the UK adjudicator under 
the Groceries Supply Code of Practice or the French Ministry of Economy).  

The variety of approaches adopted by Member States to address the issue of UTPs may result 
in a significant Single Market fragmentation. Companies, in particular SMEs, find it difficult 
to identify remedies available in the different Member States. 

Finally,  in  addition  to  the  divergent  approaches  employed  by  Member  States,  a  recent 
consultation of business shows that the existing enforcement mechanisms are considered to be 
insufficient (see Figure 1, below). 

Figure  1:  Perceived  sufficiency  of  existing  enforcement  mechanisms  by  Member  State  of 
operation (EBTP, 2012)  

15 

 
 
 
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

28%

36%

56%

65%

72%

64%

75%

42%

53%52%

58%

41%48%

58%

35%

60%

51%

63%

72%

47%50%

54%

63%

64%58%

37%

79%

22%

80%

80%

15%

0%

13%

30%

19%

12%

9%

17%

0%

6%
21%23%25%25%27%

29%

15%22%

24%

11%

10%

16%

17%

8%

36%

25%29%32%26%

5%

37%

29%32%

16%

50%

30%

5%
15%

14%

33%

0%
20%

14%

40%

29%29%

16%

50%

15%

14%

33%

22%

22%26%

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According to the respondents of the EBTP survey, the prevalent lack of adequate enforcement 
mechanisms  protecting  weaker  parties  from  UTPs  hinders  the  development  of  business  and 
trade, in particular in cross-border situations. This has a significant impact on SMEs, which 
are least likely to have at their disposal the necessary means to cover the potentially high costs 
of legal representation, given the complexity of such processes and the lack of knowledge on 
how to enforce their rights in view of available remedies. 

4.2. 

Enforcement Mechanisms at EU Level 

As explained in Section 3.2 above, at this stage, no specific enforcement mechanism against 
UTPs  exists  at  EU  level.  However,  several  cross-sectoral  instruments  exist  that  cover 
litigation generally and therefore also litigation regarding UTPs50. 

With  regard  to  B2B  misleading  marketing  practices,  the  Commission  has  announced  in  its 
2012  review  of  Directive  2006/114/EC  that  it  will  create  an  enforcement  cooperation 
mechanism51 to strengthen the cross-border cooperation and ensure better protection against 
the most harmful misleading marketing schemes. 

As mentioned above, representatives of food chain actors within the High Level Forum for a 
Better  Functioning  Food  Supply  Chain  have  also  been  looking  at  various  dispute  resolution 

50  

51  

Directive 2002/8 to on legal aid (creating a framework for obtaining legal aid in cross-border disputes); 
Directive 2008/52 on mediation (ensuring the smooth coordination of mediation and court proceedings); 
Regulation 44/2001 on jurisdiction of the courts and recognition and enforcement of judgments in civil 
and  commercial  matters  (determining  which  courts  in  the  EU  have  jurisdiction  to  deal  with  a  given 
dispute  and  how  judgments  given  in  one  Member  State  shall  be  recognised  and  enforced  in  other 
Member States – note that this Regulation has been recast by Regulation 1215/2012 which will abolish 
the  entire  intermediary  procedure  for  recognition  and  enforcement);  Regulations  1896/2006  and 
861/2007  (establishing  uniform  European  court  procedures  for  respectively  uncontested  and  small 
claims), as well as the Regulations 593/2008 and 864/2008 mentioned above, creating legal certainty as 
to the outcome of disputes in Europe. 
COM(2012) 702 final. 

16 

 
 
 
 
 
 
 
 
                                                 
options  for  the  enforcement  of  the  identified  principles  of  good  practice.  This  approach  is 
sector-specific, whereas this Green Paper discusses the issue of UTPs in relationships along 
the  B2B  food  and  non-food  supply  chain  with  a  cross-sectoral  approach.  The  Commission 
will,  in  parallel  to  the  consultation  launched  by  this  Green  Paper,  monitor  the  specific 
developments of the food supply chain and begin work on an impact assessment of different 
options to deliver a fair and effective solution to the issue of UTPs. 

Despite these cross-sectoral instruments which already apply to UTPs, in order to address the 
different  types  of  UTPs  mentioned  in  Section  5  below,  it  may  be  necessary  to  ensure  the 
existence in all Member States of a common set of enforcement principles. The issues covered 
could include a proper remedy to the 'fear factor' described above by, for example, granting 
powers  to  the  competent  national  authorities  to  launch  ex-officio  actions  and  to  accept 
anonymous  complaints.  Moreover,  such  a  common set  of enforcement principles could also 
foresee that the competent authorities should have the right to impose appropriate sanctions. 
These  could  include,  for  example,  the  possibility  to  order  compliance  with  fair  practices, 
recover  damages,  impose  fines  with  deterring  effect,  and  report  publicly  on  their  findings. 
Existing national rules could provide examples of most efficient enforcement mechanisms to 
be included in such a common set of enforcement principles. 

Questions: 

16) 

17) 

18) 

Are there significant discrepancies in the legal treatment of UTPs between Member 
States?  If  this  is  the  case,  are  these  discrepancies  hindering  cross-border  trade? 
Please provide concrete examples and quantify the impact to the extent possible. 

In case of such negative  impacts to what extent should a  common  EU  approach  to 
enforcement address the issue? 

Should  the  relevant  enforcement  bodies  be  granted  investigative  powers,  including 
the  right  to  launch  ex  officio  actions,  impose  sanctions  and  to  accept  anonymous 
complaints?   

5. 

TYPES OF UNFAIR TRADING PRACTICES 

The results of the surveys and inquiries described above show that UTPs are perceived as a 
common  phenomenon  present  along  the  B2B  food  and  non-food  supply  chain  in  many  EU 
Member States. Moreover, different types of UTPs or related issues have been identified and 
are  described  below.  Based  on  the  principles  and  examples  of  fair  and  unfair  practices  in 
vertical relations in the food supply chain of the High Level Forum for a Better Functioning 
Food  Supply  Chain  and  on  work  carried  out  by  the  Commission  in  the  B2B  food  and  non-
food supply chain, seven types of UTPs have been identified. These UTPs are detailed below, 
along with possible fair practices which could help address them. 

17 

 
 
 
 
5.1. 

Ambiguous Contract Terms 

The most common form of UTPs (recognised in the surveys and inquiries mentioned above) 
results from ambiguous contract terms that make it possible to impose additional obligations 
on weaker contracting parties.  

Elements  of  a  fair  practice  could  be  that  contracting  parties  should  ensure  that  rights  and 
obligations,  including  sanctions  in  contracts  are  provided  for  in  a  clear,  transparent  and 
unambiguous  manner.  Contracting  parties  should  provide  precise  and  comprehensive 
information  regarding  their  commercial  relationships.  It  could  also  include  that  contractual 
sanctions  should  be  proportionate  to  the  damage  suffered.  Contracts  should  contain  clauses 
setting out the circumstances  and conditions under which subsequent changes in the cost or 
price of products or services are permitted. 

5.2. 

Lack of Written Contracts 

The circumstances under which UTPs may emerge have to be taken into account. UTPs are 
more  easily  imposed  where  contracts  are  not  set  out  in  written  form  as  the  parties  have  no 
lasting proof of the terms agreed upon. 

Elements of a fair practice could be that contracting parties should ensure that agreements are 
put  in  writing,  unless  this  is  impracticable  for  one  or  both  parties.  The  content  of  oral 
contracts  should  be  confirmed  in  writing  by  at  least  one  contracting  party  after  their 
conclusion. 

5.3. 

Retroactive Contract Changes 

Retroactive changes, such as deductions from the invoiced amount to cover promotion fees, 
unilateral  discounts  based  on  quantities  sold,  listing  fees,  etc.  could  at  first  sight  seem 
legitimate  but  they  could  be  unfair  if  they  have  not  previously  been  agreed  upon  in  a 
sufficiently precise manner. 

Elements of a fair practice could be that terms and conditions should be fair for both parties. 
Any  agreement  should  contain  precise  circumstances  and  detailed  rules  under  which  the 
parties can jointly modify its terms, in a timely and informed fashion, including the process 
for  setting  the  necessary  compensation  for  any  costs  resulting  from  such  a  contractual 
modification instigated by one of the contracting party. 

5.4. 

Unfair Transfer of Commercial Risk  

Some practices should be examined irrespective of whether they have been agreed in advance 
or not.  

A significant category of such practices is the transfer of risk to the other party, for example, 
by  placing  the  responsibility  for  stolen  goods  entirely  on  the  supplier  (shrinkage  fees), 
whereas the retailer is typically best placed to control theft or disappearance of goods at its 
premises. However, once the risk of theft is transferred to the supplier, the retailer’s incentive 
to take appropriate preventive measures significantly declines. Other practices in this category 
include  financing  proprietary  business  activities  of  the  other  party  (such  as  demanding 

18 

 
 
investment  in  new  outlets),  obligations  to  compensate  for  losses  incurred  by  the  trading 
partner, or long payment delays. 

Another type of UTP that merits attention is the abusive use of the so-called ‘reverse margin’ 
practices.  This  model  is  part  of  many  modern  retailers’  business  models  and  consists  in 
bundling  the  purchase  of  goods  with  some  additional  services  which  retailers  offer  to 
suppliers for a charge (e.g., promotion and transport fees, services linked to use of shelf space, 
etc.). Such practices are legitimate under most circumstances. However, in some cases, they 
can  also  be  excessive  and  unfair:  in  some  EU  jurisdictions  (e.g.,  France),  courts  state  that 
listing  fees  should  be  considered  legitimate  only  if  they  are  linked  to  real  services,  are 
proportionate and are being charged for in a transparent manner. 

Elements of a  fair  practice could  be  that contracting parties should  agree that each operator 
takes responsibility for its own risks and does not unduly attempt to transfer its risks to other 
parties. Contracting parties should agree on the terms and conditions for their contribution to 
either  party’s  proprietary  and/or  promotional  activities.  Fees  for  legitimate  services  should 
correspond to their value. It could also include that, when listing fees are agreed between both 
parties, they should be proportionate to the risk incurred. Contracting parties should never ask 
for  payment  for  services  not  rendered  or  goods  not  delivered  and  should  never  demand 
payments manifestly not corresponding to the value/cost of the service rendered.  

5.5. 

Unfair Use of Information 

‘Unfair’  use  of  information  by  a  party  can  characterise  a  number  of  UTPs.  While  it  is 
legitimate  for  a  party  to  request  some  information  on  the  products  proposed,  the  details 
received should not be used, for example, to develop its own competing product, which would 
deprive  the  weaker  party  of  the  results  of  its  innovation.  The  Commission  has  published  a 
study on the economic and legal aspects linked with the use, misappropriation and litigation 
on confidential business information and trade secrets52. Other practices in this category may 
include refusals to sign a confidentiality agreements or failure to respect confidentiality. 

Elements of a fair practice could be that information provided to a contracting party within a 
commercial relationship must be used fairly (notably in situations where the business partners 
are  also  partially  competitors).  It  could  also include  that  each  party  to  an  agreement  should 
take reasonable care to ensure that the information supplied to the other parties is correct and 
not misleading. 

5.6. 

Unfair Termination of a Commercial Relationship 

Sudden  and  unjustified  termination  of  a  commercial  relationship  or  termination  without  a 
reasonable period of notice may also be a major type of UTPs. While ending a relationship is 
part of business life, it should not be used as a means to bully a contracting party by refusing 
to justify this decision or by not complying with a reasonable notice period. 

Elements of a fair practice could be that contracting parties should ensure fair termination of 
contracts.  Contracts  should  be  terminated  in  compliance  with  the  law  applicable  to  the 

52 

http://ec.europa.eu/internal_market/iprenforcement/trade_secrets/index_en.htm#maincontentSec1   

19 

 
 
                                                 
contract, while giving sufficient notice to the party on whom termination is imposed for it to 
recoup its investment. 

5.7. 

Territorial Supply Constraints 

Territorial supply constraints imposed by some multi-national suppliers may impede retailers 
from sourcing identical goods cross-border in a central location and distributing them to other 
Member States53. When they effectively control the logistic or wholesale level, major branded 
goods manufacturers may have no direct interest in reducing prices and will try to negotiate 
contracts at national level to maintain  price  differences.  On the other hand, retailers seek to 
source  from  the  lowest  cost  wholesale  outlets  or  supplier  subsidiaries  and  put  pressure  on 
manufacturers by contracting directly with competing suppliers to offer private label products. 
Retailers in small Member States suggest that when they seek to source  supplies  from non-
domestic  wholesalers  or  even  directly  from  suppliers  in  more  competitive  and  attractively-
priced  neighbouring  markets,  they  are  redirected  to  the  subsidiary  responsible  of  that 
particular  geographical  market  or  their  national  wholesalers  who  have  territorial  contracts 
with the suppliers. Such constraints allow segmenting the market and can result in significant 
wholesale price differences between countries. 

In  its  2009  Communication  "A  better  functioning  food  supply  chain  in  Europe",  the 
Commission  analysed  the  dispersion  of  price  levels  for  selected  products  across  Member 
States54. 

Coefficient of variation of prices selected food products across Member States; June 2008

Mineral water
Loaf of white bread
Chicken eggs
Ice cream
Minced beef
Tomato Ketchup
Sausage
Natural yoghurt
Potatoes
Pork, cutlet (escalope)
Olive Oil
Coffee
Long-grain, white rice
Black tea
Milk chocolate
Orange juice
Whole chicken
Wheat flour
Jam
Tinned pink tuna
Carrots
Spaghetti
Apples
Fresh milk, unskimmed
Butter
White sugar

70%

58%

49%
48%

44%

42%
42%
41%
41%
40%

A high coefficient of 
variation means that there 
are strong differences in 
price levels of a product 
between Member States

36%
35%
34%

32%

29%
28%
27%
27%
26%
25%
24%

22%
22%
21%

19%

14%

Average for analysed 
food products: 34%

Source:

Based on experimental prices’ collection – see the European food prices monitoring tool

53 

54 

Note that territorial supply constraints in this context are defined as a prohibition for suppliers to sell to 
resellers, which by themselves seek to source from the supplier. It is not considered to be a territorial 
supply constraint when, for instance, a distributor that has been given an exclusive territory in a certain 
geographic area is protected from active sales of other distributors into this area. 
COM(2009) 591 final. 

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For  instance,  in  Ireland,  according  to  information  provided  at  a  meeting  of  an  Irish 
Parliamentary Committee in February 2009, the prices of products sold in Ireland and in the 
UK respectively can differ by up to 130 %, with Irish retailers being obliged to procure on the 
basis of the price list applying  to Ireland. While  factors such as salaries and  social charges, 
cost of energy, taxes and logistics can explain part of the consumer price differences between 
markets  for  the  same  branded  product,  territorial  supply  constraints  may  have  a  detrimental 
impact. A similar study was conducted in 2012 in Belgium55. 

If not justified on objective efficiency grounds (such as logistics), such restrictions on cross-
border  sourcing  are  likely  to  lead  to  price  discrimination  based  on  the  country  of 
establishment  of  the  buyer.  As  a  result,  consumers  are  negatively  affected  by  higher  prices 
and a narrower product choice and do not benefit from access to better prices and the smooth 
functioning  of  the  Single  Market.  The  technical  reasons  put  forward  by  suppliers  such  as 
labelling may be valid in certain cases but do not generally apply for identical goods. 

5.8. 

Common Characteristics of UTPs 

The transfer of costs incurred and the shift of entrepreneurial risk to the weaker party in the 
relationship  represent  a  common  denominator  for  most  of  the  above  UTPs.  Excessive 
pressure,  inability  to  carry  out  proper  business  planning  and  lack  of  clarity  as  to  the  real 
content  of  the  contract  all  hamper  optimal  decision  making,  lead  to  squeezed  margins 
potentially reducing companies’ capacity to invest and innovate. 

Questions: 

19) 

20) 

21) 

Does the above list detail the most significant UTPs? Are there other types of UTPs? 

Could setting up a list of prohibited UTPs be an effective means to address the issue? 
Would  such  a  list  have  to  be  regularly  updated?  Are  there  possible  alternative 
solutions? 

Indicate  whether  or  not  you  agree  the  analysis  of  the  Commission.  If 
information. 
Explain  whether  the  UTP  is  relevant  for  the  sector  in  which  you  are  active. 
Explain if the corresponding possible fair practice could be applied across the 

For  each  of  the  UTPs  and  corresponding  possible  fair  practices  identified  above, 
please: 
a) 
applicable, 
b) 
c) 
board in different sectors? 
d) 
made on a case by-case basis. 

Explain if the UTP should be prohibited per se or if its assessment should be 

additional 

provide 

22) 

As regards specifically Territorial Supply Constraints, please explain: 
a)  What  would  you  consider  to  be  objective  efficiency  grounds  justifying  a 
supplier not to supply a particular customer? Why? 
b)  What  would  be  the  advantages  and  disadvantages  of  prohibiting  territorial 

55 

SPF Economie, Etude sur les niveaux de prix dans les supermarchés, February 2012. 

21 

 
 
 
 
 
 
 
                                                 
supply  constraints  (as  described  above)?  What  practical  effects  would  such  a 
prohibition have on how companies set up their distribution systems in Europe? 

23) 

24) 

Should the above possible fair practices be embodied in a framework at EU level? 
Would there be any disadvantages to such an approach? 

If you consider further action should be taken at EU level, should this be a binding 
legislative instrument? A non-binding? A self-regulatory initiative? 

6. 

GENERAL REMARKS 

Question: 

25) 

This Green Paper addresses UTPs and fairness of B2B relationships in the B2B food 
and non-food supply chain. Do you think that any important issues have been omitted 
or under-represented in it?   

7. 

NEXT STEPS 

The Commission is committed to continue working with all relevant stakeholders and value 
all  the  contributions  they  are  going  to  provide  to  the  Commission  in  order  to  improve  the 
functioning and the efficiency of the B2B food and non-food supply chain. 

All  interested  parties  are  invited  to  submit  their  views  in  response  to  the  above  questions. 
Contributions should be sent to the following address to reach the Commission by 30 April 
2013 at the latest: markt-retail@ec.europa.eu. 

Contributions  do  not  need  to  cover  all  questions  raised  in  this  Green  Paper.  Accordingly, 
please  indicate  clearly  the  questions  to  which  your  contribution  relates.  If  possible,  please 
give specific arguments for or against the options and approaches presented in the paper. 

As  a  follow-up  to  this  Green  Paper  and  on  the  basis  of  the  responses  received,  the 
Commission will announce the next steps by mid-2013.  

Contributions  will  be  published  on  the  Internet.  It  is  important  to  read  the  specific  privacy 
statement  accompanying  this  Green  Paper  for  information  on  how  your  personal  data  and 
contribution will be dealt with. 

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