The European Union wants to fight cross-border unfair trading practices in the agricultural and food supply chain. These are increasingly widespread practices in a market that has increasingly integrated supply chains and in which approximately 20 percent of the agricultural and food products consumed in a member state come from another country in the Union.
The green light
The European Parliament definitively approved, last week, the update of the regulation on the matter which establishes that member states will now be able to intervene against unfair practices even without formal complaints from farmers, with national authorities being obliged to cooperate with each other.
To ensure fairness, the gaps that until now have allowed some large buyers to escape controls by moving their activities across the border will also be filled. The system aims to make the protection already provided for in the 2019 regulation effective, transforming a fragmented system into a coordinated European mechanism.
“We have transformed what could have been a simple administrative document into a powerful act of economic and social justice. We are therefore sending a clear message: farmers will no longer be forced to submit to the unjust demands and behavior of large buyers and traders”, claimed the speaker for the Chamber, Stefano Bonaccini of the Democratic Party.
“Today Europe is demonstrating that it knows how to listen and act. We are alongside those who most need support, strengthening protections for small producers and guaranteeing a fair, transparent and exploitation-free agri-food supply chain”, he added.
Unfair practices
The term unfair commercial practices refers to a series of behaviors with which large buyers, such as distribution chains or processing companies, exploit their bargaining power to impose disadvantageous conditions on agricultural suppliers. The most frequent cases include systematic delays in payments, which shift the financial burden of sales onto farmers, in particular for perishable products which should be paid within very short terms.
Another typical practice is the cancellation of orders with little notice, when the goods are already ready for delivery and production costs have already been incurred. Unilateral changes to contracts, such as the sudden imposition of new prices, different quantities or stricter quality standards without the supplier’s consent, are also considered unfair. Added to this are requests for additional payments to access shelves, finance promotions or cover losses that do not depend on the producer, as well as the transfer of commercial risks, for example by forcing the farmer to take responsibility for unsold or deteriorated products.
When these behaviors occur between companies established in different countries of the Union, they become unfair cross-border practices, precisely those that the new regulation aims to target with faster and more effective control and sanctioning tools.
Office interventions
One of the central innovations concerns the possibility for national authorities to act on their own initiative in cross-border cases. From a legal perspective, this means that the initiation of investigations no longer necessarily depends on a complaint from the supplier. Administrations can intervene automatically when sufficient elements emerge.
For producers, often reluctant to expose themselves for fear of commercial retaliation, this is a significant change: protection is no longer linked to their personal initiative.
Mandatory cooperation between states
The Regulation establishes a structured mutual assistance mechanism between law enforcement authorities. States will be able to exchange information, request investigations to be carried out on the territory of another country, coordinate executive actions and notify decisions taken. There are precise deadlines for responses, rules on cost coverage and guarantees on the confidentiality of information.
The logic is to overcome the limit of the principle of territoriality: until now, when the buyer was established in another Member State, the authorities encountered concrete difficulties in gathering evidence or enforcing sanctions.
For cases involving at least three Member States, a coordinated action mechanism is introduced. The authorities concerned can launch a joint investigation, designate a coordinator and take enforcement measures simultaneously in the different countries involved.
On a technical level, the coordinator ensures the exchange of information, monitoring of investigations and consistency of decisions. This allows us to avoid misaligned responses to identical behaviors implemented in multiple national markets.
Obligations also for non-EU buyers
A specific chapter concerns operators established outside the Union who purchase agricultural and food products on the European market.
The regulation provides that such buyers must designate a contact point in the EU, responsible for cooperation with supervisory authorities. In case of lack of cooperation, the authorities can activate the cooperation mechanisms provided for between Member States.
This is a response to a growing phenomenon: the use of legal structures in third countries to make control action more complex.
Operational rules
The text also regulates technical aspects that are decisive for the effectiveness of the system: deadlines for requests for assistance, criteria for the reasoned refusal of a request, linguistic methods, cost coverage and protection of confidential data.
It is also provided that financial sanctions can be enforced in another Member State if the buyer does not have sufficient assets in the country that adopted the decision.
The objective is to prevent procedural differences or administrative obstacles from depriving the decisions adopted of their content.
