COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Tackling unfair trading practices in the business-to-business food supply chain
Date: 2014-07-15
Institutions: European Commission
Subjects: consumer protection, food industry, free movement of goods, restriction on competition, small and medium-sized enterprises













EUR-Lex - 52014DC0472 - EN











|



52014DC0472

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Tackling unfair trading practices in the business-to-business food supply chain /* COM/2014/0472 final */









Tackling unfair trading practices (UTPs)
in the business-to-business food supply chain

1.                      
Introduction

The
food supply chain ensures the delivery of food and drink products to the
general public for personal or household consumption. It affects all consumers
in the EU on a daily basis and accounts for a significant part of the average
household budget.[1]
Before a product reaches the consumer, a number of market participants
(producers, processors, retailers, etc.) add to its value and have an impact on
the final price paid by the consumer. In this respect, the Single Market has
brought major benefits to operators in the food supply chain. Suppliers and
retailers, both large and small, now have more market opportunities and a
bigger customer base. Cross-border trade between EU Member States now accounts
for about 20 % of total food and beverage production in the EU and at least 70%
of the total exports of agri / food products of EU Member States are destined
to other EU Member States.[2]
Therefore, a well-functioning and efficient food supply chain throughout the EU
can significantly contribute to the Single Market.
However,
over the past few decades, developments such as the increased concentration and
vertical integration of market participants across the EU have led to
structural changes in the food supply chain. These developments have
contributed to a situation of significantly different levels of bargaining
power and economic imbalances in individual trade relations between the actors
in the chain. While differences in bargaining power are common and legitimate
in commercial relationships, the abuse of such differences may sometimes lead
to unfair trading practices (UTPs).[3]
UTPs
can broadly be defined as practices that grossly deviate from good commercial
conduct, are contrary to good faith and fair dealing and are unilaterally
imposed by one trading partner on another. 
This
Communication does not foresee regulatory action at EU level and does not
prescribe a single solution to address the issue of UTPs, but rather encourages
stakeholders and Member States to tackle UTPs in an appropriate and
proportionate manner, taking into account national circumstances and best
practice. It encourages operators in the European food supply chain to
participate in voluntary schemes aiming at promoting best practices and
reducing UTPs. It also emphasises the importance of effective redress. The
Commission is committed to continuing working in close cooperation with the Member States and relevant stakeholders; everyone involved will need to play their part to help
eliminate UTPs. 

2.                      
Background

Although
it is difficult to assess its full extent and frequency, the problem of UTPs
has been acknowledged by all stakeholders in the food supply chain. A number of
surveys show that UTPs occur relatively frequently, at least in some parts of
the supply chain. For example, in a EU-wide survey among suppliers in the food
chain, 96% of the respondents said that they had already been subject to at
least one form of UTPs[4]. Surveys have also been undertaken at
national level. In a report by the Spanish Competition Authority on the
relations between manufacturers and retailers in the food sector, 56% of
responding suppliers said that retroactive changes to contract terms occurred
frequently or occasionally[5]. 
A survey by the Italian Competition Authority shows that 57% of producers often
or always accept retroactive unilateral changes, because they are afraid of
commercial retaliation in case of refusal of the changes[6].
UTPs
may have harmful effects, especially on SMEs in the food supply chain.[7]
They may affect the SME's capacity to survive in the market, undertake new
financial investments in products and technology, and develop their
cross-border activities in the Single Market. Whilst the overall effect of UTPs
on the market is difficult to fully assess in quantitative terms, the negative
direct effect on those parties affected by such practices is beyond doubt. In the
abovementioned EU-wide survey, 83% of the respondents asserting that they were
subject to UTPs said that UTPs increased their costs and 77% stated that UTPs
reduced their revenues. Moreover, there could also be indirect effects along
the supply chain in terms of SMEs, in particular, refraining from attempting a
commercial relationship in the first place due to the risk of UTPs being
imposed on them.  
The
new Common Agricultural Policy (CAP)[8]
and the new Common Fisheries Policy (CFP)[9]
strengthen the position of producers in the supply chain vis-à-vis downstream
operators, notably by supporting the creation and development of producer
organisations. The new single Common Market Organisation also includes elements
which aim at reducing the bargaining power gap between farmers and other
parties in the food supply chain in some selected sectors (milk, olive oil,
beef and veal, arable crops). The new rules also provide Member States with the
possibility to require compulsory written contracts in other agricultural
sectors, subject to safeguards that ensure that such provisions do not impair the
proper functioning of the internal market. The CAP reform, notably through the
new single Common Market Organisation, includes elements which aim at reducing
the bargaining power gap between farmers and other parties in the food supply
chain.
A
number of Member States have addressed UTPs at national level using many
different approaches, some regulatory, others based on self-regulatory
platforms among market participants. Where
regulations do exist, they differ in terms of the nature, level and legal form
of protection provided against UTPs. 
The
existence and harmfulness of UTPs in the food supply chain has also been
acknowledged by stakeholders in the High Level Forum for a Better Functioning
Food Supply Chain, set up by the Commission in 2010.[10]
Recognising the need to address the issue at European level, stakeholders set
up a self-regulatory framework (the Supply Chain Initiative) which
the Commission has welcomed and which after nine
months has shown a good uptake among retail, wholesale and manufacturing
companies and some SMEs. But
certain stakeholders – namely farmers and the meat processing industry – have
not have joined this framework at EU level. While
farmers are represented in national platforms in a few Member States[11],
only four farming operations have registered so far
in the framework at EU level. Moreover, the
framework only binds those companies that decided to adhere to it.
The
result is that, today, there remains a wide divergence in the way UTP issues in
food supply chains are addressed in the EU.
The
potential benefits of reducing UTPs could be substantial, especially for SMEs
and micro-enterprises as these are more likely to be subject to UTPs and their
effects than large companies are. It should also be noted that UTPs applied
within the EU could have direct or indirect effects on producers and companies outside
the EU, including in developing countries. 
In
this context, this Communication aims at contributing to fair and sustainable
commercial relationships and a level playing field for market participants in
the food supply chain through helping to reduce the harmful effects
and possible
cross-border obstacles caused
by UTPs, especially for SMEs.

3.                      
problems caused by UTPs

The
possible repercussions of UTPs at EU level have not only raised concerns in the
European Commission but also in the European Parliament. In January 2012, the
Parliament adopted a resolution[12]
which highlighted the European dimension of the imbalances in the food supply
chain which can lead to unfair practices. This resolution identified a list of specific
UTPs and called for them to be subject to specific regulation, supervision and
sanctions.
In
order to better understand the issue, the Commission published a Green Paper on
UTPs in January 2013 to gather stakeholder views on the occurrence of UTPs in
the food and non-food supply chain[13],
and to identify possible ways to address them. The results of the ensuing
public consultation provided the following important insights.
1.     
While UTPs can, in principle, be present
in any sector, stakeholder feedback to the Green Paper suggests that they are
particularly problematic in the food supply chain.
2.     
The main categories of UTPs identified
in the Green Paper and confirmed by a number of stakeholders can be described
as follows:
- a trading
partner's retroactive misuse of unspecified, ambiguous or incomplete contract
terms
- a trading
partner's excessive and unpredictable transfer of costs or risks to its
counterparty
- a trading
partner's use of confidential information 
- the unfair
termination or disruption of a commercial relationship.
3.     
Territorial supply constraints were also
identified as a problematic practice. These constraints are sometimes imposed
by multi-national suppliers on retailers and impede them from sourcing
identical goods across borders or from a central location. However, territorial
constraints are of a different nature than the UTPs categorised above and the
Commission will therefore assess them separately.
4.     
The direct effects of the abovementioned
UTPs, in particular when they are applied in an unpredictable way, can result
in undue costs or lower-than-expected revenues for the trading partner in the
weaker bargaining position. Unpredictable changes
of contract terms may also lead to overproduction and result in unnecessary
food waste. Being subject to UTPs, or even the
prospect of being exposed to UTPs in the future, may impact the weaker trading
partner’s ability or willingness to fund investments. The Commission is also currently
undertaking a study on choice and innovation in the retail sector. This should clarify
the evolution and drivers for choice and innovation at overall market level.
Moreover, the diverse regulatory environment that addresses
UTPs at national level implies that SMEs — with their limited legal resources —
are confronted with a complex situation regarding UTPs and the possible remedies.
The resulting uncertainties may dissuade some companies, in particular SMEs, from
entering new geographic markets or even from cross-border trade. This was illustrated by an EU-wide survey
among farmers and primary producers in the agri-food market. 46% of the
respondents to the survey found that UTPs have a negative effect on access to
new markets or cross border activities[14].

4.                      
The diverse landscape of measures against UTPs
in the EU
4.1.                
Fragmentation in addressing UTPs

To
some extent, the current regulatory framework at EU level contains some rules
aimed at addressing unfair practices in or beyond the food supply chain.
Existing instruments, such as the above-mentioned reform of the CAP, competition
law, the framework on marketing practices[15],
unfair contract terms in consumer contracts[16],
the proposed Directive on trade secrets[17]
and other cross-sectorial legislation can be useful in addressing UTPs in
certain situations but do not, in most cases, apply to the specific UTPs
mentioned above. The proposal for a Regulation on a
Common European Sales Law[18]
prohibits certain unfair terms in business-to-business contracts which may
provide useful clarity in sustainable long term relationships. However, the
application of this law, once agreed by the co-legislators, would depend on a bilateral
agreement between the trading parties concerned.

There
is a lot
of divergence in how
UTPs are addressed at national level.
Some Member States have adopted regulatory measures but a number of them have opted
for self-regulatory approaches or have not taken specific action against UTPs
in supply chains, relying instead on general principles.
The Member States that have sought to tackle UTPs specifically
in their regulation have either put in place specific business-to-business
rules, have complemented their national competition law or extended the
application of the Unfair Commercial Practices Directive[19] to
B2B relations. Some Member States that had initially addressed UTPs through
voluntary approaches, have subsequently decided to address these practices
through legislation.
This
diversity of approaches implies that the extent
and type of protection granted against UTPs, as well as potential enforcement mechanisms
in place would depend on where the company with strong bargaining power and
applying UTPs is situated. This could be problematic in a situation where multi-country
procurement is increasing. Moreover, responses by public authorities to the Green
Paper consultation reported isolated
cases of ‘forum shopping’, i.e. a practice whereby the stronger contractual
party unilaterally determines in which Member State, and hence under which
regulatory framework, the contract is applied in order to avoid the national
frameworks with stricter measures against UTPs. This issue was explicitly
raised by 5 Member States in the public consultation and during discussions in various
stakeholder fora organised by the Commission.

4.2.                
Enforcement 

Any
party exposed to UTPs may in principle seek redress via litigation in court under
provisions of general civil law against abusive contract clauses.
However, some stakeholders especially SMEs have highlighted that litigation
through courts is, in practice, often not an effective way of addressing UTPs. Firstly,
litigation is generally costly and time consuming. Secondly, and perhaps more
importantly, the weaker party in a commercial relationship in the food supply
chain (in most cases an SME) often fears that initiating litigation may lead
the stronger party to terminate the commercial relationship (the ‘fear factor’).
This can discourage parties that are subject to UTPs from taking legal action,
which in turn can limit the deterrence factor for the trading party applying UTPs.

Against
this background, some Member States have put in place other redress mechanisms
to tackle UTPs in vertical supply chains. A number of Member States have
designated an enforcement authority which is independent from the market
players concerned, and some other Member States are currently discussing
possible reforms in this direction. 
In
some cases, the national competition authority has been designated for the
enforcement of rules against abusive behaviour towards economically dependent
undertakings and/or abuse of a superior bargaining position. However, there are
also examples of Member States having designated other existing authorities
(e.g. authorities responsible for food-related issues or consumer protection)
or having established new administrative authorities to enforce rules against
UTPs. Several of these authorities have the power to conduct investigations and
they typically accept confidential complaints.
In
some other Member States a voluntary dispute resolution mechanism has been
established by stakeholders to try to settle disputes out of court. In other
cases, a 'mixed approach', consisting of voluntary schemes complemented with
public enforcement, was retained. 
Farmers
and SME suppliers emphasise that the existence of an administrative authority with
the power to launch investigations and to accept confidential complaints on
alleged UTPs would be crucial to tackling the issue of the fear factor
described above. Most of these stakeholders call for the establishment of an
independent enforcement body at national level, because effective enforcement would
be a key factor in reducing the occurrence of UTPs.
Other
stakeholders considered that voluntary frameworks and self-regulatory solutions
should be looked at first. In case such models should turn out not to
effectively address UTPs, an independent authority could be envisaged.

4.3.                
The Supply Chain Initiative

The
Supply Chain Initiative was developed in the context of the Commission’s High
Level Forum for a Better Functioning Food Supply Chain which is composed of
national authorities and key stakeholder representatives at EU level from the
supply and retail sides of the food sector. In November 2011, all market
representatives involved in the Forum’s working party on UTPs jointly agreed on
a set of principles of good practice in vertical relationships in the food
supply chain[20].
These principles include: predictability of changes in contract terms; responsibility
for own entrepreneurial risk; and justifiability of requests and charges.
In
a second step, a voluntary framework for implementing the principles of good
practice (the Supply Chain Initiative) was launched in September 2013[21]. Individual
companies may join the Supply Chain Initiative once they have assessed their
compliance with the principles of good practice. Individual disputes can,
according to the framework and subject to certain conditions, be addressed by
dispute resolution mechanisms, mediation and arbitration. To prevent UTPs, the
implementation framework focuses on organisational requirements at company
level, including training of staff and the ability to participate in the
dispute resolution mechanisms defined in the framework. Breaches of these organisational
requirements can lead to the concerned company being excluded from the
initiative. The framework commits its members to provide assurance that the
weaker parties using the dispute resolution mechanisms are not subject to
commercial retaliation.
The
initiative is managed by a governance group which is composed of different
stakeholder associations representing operators in the food supply chain. To
date, nine
months after the launch, 98
retail, wholesale and manufacturing groups and companies have registered,
representing 736 operating
companies across all EU Member States. The number of SMEs registering is
increasing.
However, not all relevant stakeholder associations
have signed up to the framework. Notably, representatives of primary producers (i.e.
farmers) and the meat processing industry have refrained from participating in
the scheme's governance group at EU level. Although they agree with the
principles, these stakeholders are concerned about the lack of independent and
effective enforcement within the Supply Chain Initiative. Some of them do
however participate at national level.
The
concerned stakeholders do not consider that the Supply Chain Initiative sufficiently
addresses the aforementioned fear factor for economically dependent trading
parties, notably because a company exposed to UTPs has no possibility to submit
confidential complaints. The voluntary initiative provides for confidentiality only
in the case of aggregated disputes through the possibility for stakeholder
associations to require an interpretation of the principles from the governance
group, and access to dispute resolution mechanisms requires the agreement of
both contractual parties. Nor does the initiative provide for investigations or
sanctions if a company breaches the principles of good practices.
It
should be recognised that there are limits to how far a self-regulatory
initiative can go in providing for a dispute resolution mechanism. Hence, supplementing
the Supply Chain Initiative with independent enforcement measures, in those
Member States where such measures currently do not exist, would increase the
effectiveness of the initiative and would appear to remove the main reason for which
certain stakeholder groups have not joined the framework of the Supply Chain
Initiative.
In
this context it should be noted that the European Parliament's own-initiative
report on retail related matters adopted in December 2013 supported the
principles and framework of the Supply Chain Initiative, but at the same time
invited the Commission to examine the need and feasibility of independent
enforcement to address the aforementioned fear factor of small players in the
supply chain.[22]

5.                      
An effective strategy against UTPs
5.1.                
Comprehensive market take-up of the Supply
Chain Initiative

Voluntary
codes of conduct are an important cornerstone in creating an environment where undertakings
deal with each other in a fair and sustainable way. They can efficiently help
to set up the right mind-sets, negotiation approaches and resolution mechanisms
in organisations, thereby reducing or ideally eliminating unfair trading practices.
Moreover, voluntary codes can provide for dispute resolution procedures between
two parties in a vertical relationship, which can often help avoid lengthy and
cumbersome legal action. The Supply Chain Initiative therefore constitutes a
very important step in addressing UTPs. Setting up national platforms under the
Supply Chain Initiative can further strengthen its positive effects.
Suggested
way forward:
(1)          The Commission encourages all undertakings and relevant
organisations in the food supply chain to sign up to a voluntary initiative
addressing UTPs, in particular the Supply Chain Initiative, in order to show
their commitment, build trust in the food supply chain and achieve the critical
mass and broad coverage such schemes require to be effective.
(2)          The Commission encourages undertakings in the food
supply chain to actively promote the Supply Chain Initiative to their business
partners and inform them of their rights and obligations. They should by
default inform each of their trading partners once they have joined the Supply
Chain Initiative and should encourage their trading partners to do the same.
(3)          The governance group of the Supply Chain Initiative
should continue and enhance its efforts to build more awareness among SMEs and
find efficient ways for them to join the initiative. SMEs are the key
beneficiaries of such schemes, so it is crucial that their participation is
maximised.
(4)          The governance group of the Supply Chain Initiative
should continue its efforts to drive and facilitate the creation of national
platforms in each EU Member State.
(5)          The Commission will continue to facilitate the exchange
of information and discussion between key stakeholder groups and to closely
engage with the initiative's governance group to maximise its reach, in
particular towards SMEs, and will continue to closely monitor the development
of the initiative and encourage the Supply Chain Initiative to work on
reinforcement of the dispute mechanism and sanctioning systems.         

5.2.                
Principles of good practice

Those
Member States that have already tackled UTPs at national level have chosen
different approaches to do so, including different definitions of unfair
practices. Such national definitions range from very broad descriptions to
detailed lists of prohibited practices. On the other hand, some Member States have
not taken
any specific action against UTPs at all. In order to address UTPs effectively throughout
the EU, and particularly across borders, a common understanding for rules
addressing UTPs would be beneficial.
The
Supply Chain Initiative does not include a precise definition of UTPs, but
provides a list of principles of good practices and examples of fair and unfair
practices. These principles have been jointly agreed by all relevant EU stakeholder
associations in the vertical food supply chain in the framework of the High
Level Forum.
Therefore,
they represent a useful basis for identifying the unfair practices that could be
addressed in potential initiatives on UTPs. The identification of UTPs in turn
allows the definition of principles to
adress them. It is recalled that in applying such principles economic actors
must also ensure that they comply with all applicable rules, including national
and/or European competition law, as relevant.
The
principles defined in the High Level Forum and endorsed by Supply Chain
Initiative are as follows:
(a)                   
Written agreements: Agreements should be in
writing, unless impracticable or where oral agreements are mutually acceptable
and convenient. They should be clear and transparent, and cover as many
relevant and foreseeable elements as possible, including rights and procedures
of termination.
(b)                   
Predictability: Unilateral changes to contract
terms shall not take place unless this possibility and its circumstances and
conditions have been agreed in advance. The agreements should outline the
process for each party to discuss with the other any changes necessary for the
implementation of the agreement or due to unforeseeable circumstances, as
provided in the agreement.
(c)                   
Compliance: Agreements must be complied with.
(d)                  
Information: Where information is exchanged,
this shall be done in strict compliance with competition and other applicable
laws, and the parties should take reasonable care to ensure that the
information supplied is correct and not misleading.
(e)                   
Confidentiality: Confidentiality of information
must be respected unless the information is already public or has been
independently obtained by the receiving party lawfully and in good faith.
Confidential information shall be used by the recipient party only for the
purpose for which it was communicated.
(f)                    
Responsibility for Risk: All contracting parties
in the supply chain should bear their own appropriate entrepreneurial risks.
(g)                   
Justifiable request: A contracting party shall
not apply threats in order to obtain an unjustified advantage or to transfer an
unjustified cost.
Suggested
way forward:
(6)          The Commission encourages Member States to examine
whether their current national regulatory framework is appropriate to address
UTPs, taking into account best practice in other Member States. Member States
should also consider possible other effects of UTPs, such as increased food
waste. For this purpose, Member States are invited to assess whether their frameworks
could rely on a list of practices or a general
provision that allows for addressing possible breaches of the aforementioned principles.
(7)          In addition, Member States should encourage undertakings
on their territory to join voluntary codes of conducts, both at national and EU
level.
(8)          The Commission will continue to support the exchange of
best practices between Member States, e.g. by organising workshops with experts
from national administrations.

5.3.                
Ensuring effective enforcement at national
level

In
order to ensure a credible deterrence factor
against the use of UTPs, appropriate enforcement
is needed.
If
the weaker party in a commercial relationship is economically dependent on its
stronger trading party, it may refrain from asking redress for a UTP through court
litigation or voluntary resolution mechanisms. Situations of economic
dependency may occur. For example, a study undertaken by the Spanish
Competition Commission[23]
shows that on the average almost 40% of the revenues of suppliers in the
grocery supply chain was generated by only three retailers in 2010. In extreme
cases, the situation of economic dependency means that the economic viability
of a buying or selling party depends on individual commercial relationships. In
cases where UTPs are not denounced due to the "fear factor" of losing
the contractual relation, frameworks against UTPs can be significantly strengthened
by the weaker party's possibility to have recourse to an independent authority or
body with enforcement powers and the possibility to protect the confidentiality
of the complainant.
Suggested way forward:
(9)          The Commission invites Member States to assess the
effectiveness and credibility of their available mechanisms for the enforcement
of rules against UTPs. Member States are invited to consider whether further procedural
or organisational measures may be appropriate, drawing on best practice in
other Member States. Particular attention should be given to the  capacity to
preserve the confidentiality of individual companies submitting complaints and
the possibility to conduct investigations.
(10)        National enforcement mechanisms, which could include
dedicated bodies,  should be enabled to effectively cooperate at EU level in
order to address UTPs applied across borders and avoid possible regulatory
arbitrage.
(11)        The Commission will continue to support the coordination
between Member States by facilitating the exchange of information between the national
enforcement mechanisms.
(12)        In developing and applying enforcement measures, Member
States should act proportionally, bearing in mind any impact for stakeholder
and consumer welfare. In particular, they should apply the same enforcement
criteria and practices to domestic and foreign market operators. 

5.4.                
The potential benefits and costs of reducing UTPs

The
potential benefits of eliminating or at least reducing UTPs may be substantial.
When attempting to identify such benefits and costs, it appears that effects
can arise at different levels. In individual bilateral relationships, the
potential benefits of addressing UTPs are rather obvious.
UTPs
often have a direct negative financial impact on the companies to which they
are applied. Moreover, unpredictable behaviour
by trading parties abusing their superior bargaining position could lead to
economic efficiency losses, for example lower investments or over/underproduction
due to unpredictability and increased transaction costs linked to the risk of unilateral
and unexpected changes of the commercial terms. Hence, there could be
significant gains from making commercial relationships more sustainable in the
food supply chain. Possibly, this could extend beyond the direct benefits and
financial relief for companies previously subject to UTPs, i.e. in most cases
SMEs. The mechanisms suggested in this Communication
could also mitigate the impacts of UTPs on weaker parties in third countries,
including in developing countries.
For
the market as a whole, the assessment of the effects of UTPs and the overall
welfare impacts of their possible reduction or elimination is more complex. As
regards the potential impact on consumers, there
is no evidence suggesting a negative impact on consumer prices[24]  in
those Member States where UTPs are regulated and where action against abuses at
business-to-business level is taken by public bodies. Where
UTPs could have negative effects on product choice, availability and quality, a
reduction or an elimination of these
practices can be expected to
be beneficial for consumers.
In
terms of cost impact, there would be no additional costs for businesses already
adhering to or planning to adhere to the Supply Chain Initiative or similar
national frameworks. The suggested approach would not imply any costs for
Member States where the current framework meets the criteria described above. In
those Member States that would choose to adjust their framework in line with
the above, the enforcement costs would depend on whether an
existing mechanism is
used for these purposes or whether new procedural or organisational
arrangements are put in place.

6.                      
Conclusions

Practices
between market participants in the food supply chain are in most cases fair and
sustainable for both parties. Nevertheless, stakeholders throughout the supply
chain agree that UTPs do exist and especially SMEs make the case that they
occur relatively frequently and have negative effects on their financial
viability and capability to conduct business. The
Green Paper consultation, accompanying studies and some of the most recent
national initiatives suggest that a ‘mixed approach’,
i.e. voluntary schemes complemented with credible
and effective enforcement based on comparable
principles, may be appropriate in addressing UTPs. In the presence of a
credible deterrence factor, voluntary initiatives such as the Supply Chain
Initiative could be the primary way of resolving conflicts between trading
parties, while public enforcement or court litigation would only be resorted to
if the more efficient and quicker alternative of
a bilateral solution is
not viable. Thus, the way forward suggested in
this Communication would not only complement but also strengthen the Supply
Chain Initiative by making it more attractive for those stakeholder groups that
have so far refrained from joining, due to their concerns about a lack of
effective enforcement.
In
order to address the issues around UTPs, this Communication suggests a
combination of voluntary and regulatory frameworks, identifying UTPs and
principles to address
them, taking into account different national circumstances and approaches.
While some Member States have adopted specific legislation, others rely on
general principles of law and/or on self-regulatory initiatives. In
considering whether further measures are needed, in line with this
Communication and taking into account best practice, Member States should act
proportionally and take account of any impact on stakeholders and consumer
welfare. At
the level of the Commission, the proposed actions do not have any budgetary
impact over and above of what is already foreseen for the years to come in the
official programming.
The
Commission will monitor and
assess the progress made by evaluating (i) the actual impact of the Supply
Chain Initiative and its national platforms[25]
and (ii) the enforcement mechanisms set up by Member States to increase all
parties' trust and confidence in the proper functioning of a sustainable food
supply chain.
The
Commission will present a report to the Council and the European Parliament at
the end of 2015. In light of this report, the Commission will decide whether
further action should be taken at EU level to address the described issues.
[1]               Expenditure on food
accounts for around 14% of the average EU household budget (Eurostat HBS data)
[2]               Report of the High Level Forum for a Better
Functioning of the Food Supply Chain, December 2012
[3]               See Commission Communication
COM(2009) 591: A better functioning food supply chain in Europe http://ec.europa.eu/economy_finance/publications/publication16061_en.pdf
[4]               Survey on Unfair Commercial Practices in Europe, March 2011, organised by Dedicated on behalf of CIAA (European association of the
food / drink industry) and AIM (European Brands Association)
[5]               Report on the relations between manufacturers and
retailers in the food sector, Comisión Nacional de la Competencia, October 2011
[6]               Indagine
conoscitiva sul settore della GDO – IC43, August 2013
[7]               See also Commission Communication COM (2011) 78
final: Review of the Small Business Act in Europe, stating that '…SMEs often
face unfair contractual terms and practices imposed by various players in the
supply chain.'
[8]               Supporting measures for the
creation and development of producer organisations exist under the new rural
development programme, which can help producers face larger buyers.
[9]               The new Common Market
Organisation for fisheries and aquaculture products (Regulation (EU) No
1379/2013) provides support to producers' organisation to improve the placing
on the market of their products and their market position through production
and marketing plans.
[10]             Commission Decision of 30 July 2010 establishing the
High Level Forum for a Better Functioning Food Supply Chain (2010/C 210/03)
[11]             Belgium, Germany, the Netherlands, and Finland
[12]             European Parliament Resolution on imbalances in the
food supply chain of 19.01.2012
[13]             Green Paper on unfair trading practices in the
business-to-business food and non-food supply chain in Europe COM(2013) 37 , 31
January 2013
[14]             Impact of Unfair Trading Practices in the European
agri-food sector, April 2013, organised by Dedicated on behalf of COPA COGECA
(European association of farmers and agri-cooperatives)
[15]             Directive 2006/114/EC of the European Parliament
and of the Council of 12 December 2006 concerning misleading and
comparative advertising
[16]             Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer
contracts
[17]             Proposal for a Directive of the European Parliament and the Council on the protection of undisclosed know-how and business information
(trade secrets) against their unlawful acquisition, use and disclosure of 28
November 2013 COM(2013) 813 final
[18]             Proposal for a Regulation of the European Parliament
and the Council on a Common European Sales Law of 11 October 2011 COM (2011)
635 final
[19]             Directive
2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning
unfair business-to-consumer commercial practices in the internal market
[20]             http://www.supplychaininitiative.eu
[21]             Id.
[22]             European Parliament resolution of 11 December 2013 on
the European Retail Action Plan for the benefit of all actors
[23]             Report on the relations
between manufacturers and retailers in the food sector, Comision Nacional de la
Competencia, October 2011
[24]             As regards general price
developments, the European Food Prices Monitoring Tool is one useful
instrument: http://ec.europa.eu/enterprise/sectors/food/competitiveness/prices_monitoring_en.htm
[25]             In this context, the Commission will consider
prolonging the mandate of the High Level Forum for a Better Functioning of the
Food Supply Chain to follow the implementation of the actions set out in this
Communication through a transparent dialogue with private stakeholders and
national authorities.