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Unfair Trading Practices in the Food Supply Chain: Regulating Right?

Published online by Cambridge University Press:  21 February 2019

Abstract

This report examines the pending Proposal for a directive on unfair trading practices in business-to-business relationships in the food supply chain, and its proposed amendments. It provides a general overview of the current content of the Proposal and analyses the proposed rules from a legal perspective. We find that: (1) the CAP legal basis may prove insufficient for regulation that covers the entire agri-food chain; and may (2) result in a strained relationship with the competition and consumer acquis; (3) the empirical basis for the prevalence of unfair trading practices, and the effect of their prohibition is relatively dire, which results in uncertainty with regard to the achievement of the future UTPD’s intended effect and effectiveness; (4) the choice for specific targeted prohibitions instead of general umbrella clauses may lead to ad hoc regulation that leaves large loopholes; (5) the institutional enforcement mechanism makes it likely that the Proposal contributes to the foundation for a new area of EU law, which will increasingly regulate practices in business-to-business relationships.

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Reports
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© Cambridge University Press 

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Footnotes

*

Wageningen University, hanna.schebesta@wur.nl.

***

Wageningen University, kai.purnhagen@wur.nl.

References

1 Commission, “A better functioning food supply chain in Europe” (Communication) COM(2009) 591.

2 European Parliament, “On unfair trading practices in the food supply chain” (Resolution of 7 June 2016) 2015/2065(INI).

3 Council, “Strengthening farmers’ position in the food supply chain and tackling unfair trading practices” (Conclusions of 12 December 2016) 15508/16.

4 Commission, “Opinion of the European Economic and Social Committee on the ‘Report from the Commission to the European Parliament and the Council on unfair business-to-business trading practices in the food supply chain’” COM(2016) 32 final.

5 Commission, “Proposal for a directive of the European Parliament and of the Council on unfair trading practices in business-to-business relationships in the food supply chain” COM(2018) 173 final.

6 Fabrizio Cafaggi and Paolo Iamicelli find that four Member States (Estonia, Luxembourg, Malta, the Netherlands) do not have any specific legislative instrument to address UTPs in business-to-business relations; four Member States (Belgium, Denmark, Finland, Sweden) address a limited range of practices focused on pre-contractual information, advertising and offer design; while 20 Member States have some type of legislation specifically addressing unfair trade practices in business-to-business relations, see F Cafaggi and P Iamiceli, Unfair Trading Practices in the Business-to-Business Retail Supply Chain (European Commission, 2018) <publications.jrc.ec.europa.eu/repository/bitstream/JRC112654/jrc_technical_report_cafaggi-iamiceli_utp_final_1.pdf> accessed 23 January 2019.

7 ibid.

8 See specifically for the food sector Michael Faure, “The Economics of Harmonization of Food Law in the EU” in H Bremmers and KP Purnhagen (eds), Regulating and Managing Food Safety in the EU (Springer Nature 2018) 263; for the agricultural sector on the example of New Plant Breeding Technologies, see KP Purnhagen et al, “The European Union Court’s Advocate General’s Opinion and new plant breeding techniques” (2018) Nature Biotechnology 573.

9 At the EU level, UTPs have been “regulated” by the industry-led Supply Chain Initiative (SCI), which – depending on the standard one applies – was effective in governing most issues involving UTPs. See for a general claim of preference of private regulatory systems over public ones in supply chains, inter alia, Bernstein, L, “Opting out of the legal sytem: Extralegal Contractual Relations in the Diamond Industry” (1992) Journal of Legal Studies 115 Google Scholar ; more nuanced Purnhagen, KP, “Mapping Private Regulation-Classification, Market Access and Market Closure Policy and Law’s Response” (2015) Journal of World Trade 309 Google Scholar at 317 ff.

10 See Cseres, KJ, “Consumer protection in the European Union” in G de Geest (ed.), Encyclopedia of Law and Economics (Edward Elgar 2017) vol 9, 163 Google Scholar at 203.

11 See the relevant press releases: Commission, “Agreement on unfair trading practices in the food supply chain will protect all EU farmers” (European Commission, 19 December 2018) <europa.eu/rapid/press-release_IP-18-6790_en.htm> accessed 23 January 2019; Council, “Fairer contractual relations in the agri-food chain agreed” (Council, 19 December 2018) <www.consilium.europa.eu/en/press/press-releases/2018/12/19/fairer-contractual-relations-in-the-agri-food-chain-agreed/> accessed 23 January 2019.

12 Supra, note 5, p. 6.

13 Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises [2003] OJ L 124/36.

14 On the same day as EU Member States agreed on the Council’s position, the Agriculture Committee of the European Parliament approved amendments to broaden to scope of the draft law. Most remarkable, subsequently, the Committee’s position was approved by the other MEPs. See European Parliament, “Food supply chain: A step closer to ending unfair trading” (European Parliament, 25 October 2018) <www.europarl.europa.eu/news/en/press-room/20181025IPR17307/food-supply-chain-a-step-closer-to-ending-unfair-trading> accessed 23 January 2019.

15 See Council, “Better protection for farmers against unfair trading practices: Council agrees its negotiating position” (Council, 1 October 2018) <www.consilium.europa.eu/en/press/press-releases/2018/10/01/better-protection-for-farmers-against-unfair-trading-practices-council-agrees-its-negotiating-position/> accessed 23 January 2019.

16 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 and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (“Unfair Commercial Practices Directive”) [2005] OJ L149/22.

17 Supra, note 6, p. 14.

18 Agricultural Markets Task Force (AMTF), “Improving Market Outcomes. Enhancing the Position of Farmers in the Supply Chain” (Agricultural Markets Task Force, November 2016) <ec.europa.eu/agriculture/sites/agriculture/files/agri-markets-task-force/improving-markets-outcomes_en.pdf> accessed 23 January 2019.

19 See Commission, “Tackling unfair trading practices in the business-to-business food supply chain” (Communication) COM 2016 (472) final.

20 Within the meaning of Art 172a of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products (“CMO Regulation”) [2013] OJ L 347/671. Such clauses determine how any evolution of relevant market prices for the products concerned or other commodity markets is to be allocated between them, including market bonuses and losses.

21 See European Parliament, “Unfair trading practices in business-to-business relationships in the food supply chain” (European Parliament, 1 October 2018) <www.emeeting.europarl.europa.eu/committees/agenda/201810/AGRI/AGRI(2018)1001_1/sitt-8762379> accessed 23 January 2019; European Parliament, “Fairer food supply chain: Agriculture MEPs clamp down on unfair trading” (European Parliament, 1 October 2018) <www.europarl.europa.eu/news/en/press-room/20181001IPR14722/fairer-food-supply-chain-agriculture-meps-clamp-down-on-unfair-trading> accessed 23 January 2019.

22 See European Parliament, “Fairer food supply chain: Agriculture MEPs clamp down on unfair trading” , supra, note 21.

23 Art 5 of Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers [2011] OJ L 55/13.

24 Cases 203/83 Asteris EU:C:1985:357, [1985] ECR I-2815; C-127/07, EU:C:2008:728; C-373/11 Panellinios EU:C:2013:567.

25 Eg the Treaty provisions that promote environmental protection (Art 11 TFEU), animal welfare (Art 13 TFEU), public health (Art 168 TFEU) and consumer protection (Arts 12 and 169 TFEU), see Purnhagen, K and Feindt, P, “Principles-based Regulation: Blueprint for a ‘New Approach’ for the Internal Agricultural Market” (2017) 42 European Law Review 722 Google Scholar .

26 Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products [2013] OJ L 347/671.

27 G Schmitt, “Landwirtschaft-Ein Ausnahmebereich? – Ein alte Frage und eine neue Antwort” (1990) 41 Ordo: Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft 220.

28 Case 281/84 Zuckerfabrik Bedburg EU:C:1987:3.

29 Case C-373/11 Panellinios EU:C:2013:567.

30 See in this respect K Purnhagen and H Schebesta, “A Case Moving at the Frontiers of Market Access, Freedom of Goods, the Common Agricultural Policy and Science in Court – Reflections on Scotch Whisky Association” (2017) 42 European Law Review 427.

31 Case 139/79 Maizena EU:C:1980:250, para. 23; E-J Mestmäcker and H Schweitzer, Europäisches Wettbewerbsrecht (2nd edn, Munich 2004) para. 77.

32 Case C-671/15 APVE ECLI:EU:C:2017:860, para. 37.

33 See on this judgment and its impact S Weatherill, “The limits of Legislative Harmonization ten Years after Tobacco Advertising: How the Court’s Case Law has become a ‘Drafting Guide’” (2011) 12 German Law Journal 827.

34 Several studies were conducted, but these at most cover “the food sector” in its entirety. See Commission, “Impact assessment. Initiative to improve the food supply chain (unfair trading practices)” SWD(2018)92 final, p. 15.

35 Supra, note 5, pp. 2, 6, 13, 16.

36 Supra, note 34.

37 Fischer, C et al, “Factors influencing contractual choice and sustainable relationships in European agri-food supply chains” (2009) 36 European Review of Agricultural Economics 541 CrossRefGoogle Scholar .

38 ibid.

39 Supra, note 6.

40 Mentioned, for instance, in supra, note 34.

41 A Renda et al, Study on the Legal Framework covering B2B unfair trading practices in the retail supply chain (European Union, 26 February 2014), available at <publications.europa.eu/en/publication-detail/-/publication/c82dc8c6-ec15-11e5-8a81-01aa75ed71a1/language-en> accessed 23 January 2019.

42 See, for instance, recital (6) of the Proposal.

5
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