Commission delivers report on the implementation of EU rules against unfair trading practices in the food supply chain

Today, the Commission publishes a report on the implementation of the Directive on unfair trading practices (UTP) in the food supply chain. This was one of the Commission’s commitments, presented on 15 March, to strengthen the position of farmers in the food supply chain. Adopted in 2019, the so-called UTP Directive bans 16 practices that can have harmful effects on the weakest actors in the chain, notably farmers and smaller suppliers. Improving the position of farmers in the food supply chain, supporting their income and ensuring a fair remuneration are important objectives of the Common Agricultural Policy (CAP).

The food supply chain is characterised by different degrees of concentration. If over 95% of the actors in the food industry and retail sectors are micro or small enterprises, a small number of large companies acting as buyers are predominant on the market. By contrast, with 9.1 million farms, the agricultural sector remains highly fragmented (with 17.4 hectares being the average size of a farm in the EU).

The European Union has already adopted several measures aiming to address this situation and ensure a robust and equitable agri-food supply chain, enabling farmers and other small suppliers to leverage the benefits of market opportunities. The Directive on unfair trading practices entered into force on 1 May 2019 and required Member States to transpose it into national laws before 1 May 2021. By December 2022, all Member States had notified its complete transposition to the Commission. In general, enforcement of the Directive is gaining traction and will contribute to an ever-growing degree of protection of farmers and weaker suppliers.

Main findings

A large majority of Member States have adopted a higher level of protection, thus making use of the possibility to adopt or maintain national rules that go beyond the practices banned by the Directive. Enforcement authorities have been designated in all EU countries. In 2023, around 1 500 investigations were opened out of which about 17% resulted in finding an infringement sanctioned by a fine.

The most frequently detected unfair trading practices were late payments for perishable or non-perishable agricultural and food products (50% and 13%), payments not related to a specific transaction (7%), payments requested from the supplier for marketing actions (7%) as well as for stocking, displaying and listing (7%). About 41% of the unfair practices detected had been identified at retail level (47% in 2022), 36% at the level of food industry (27% in 2022) and 22% at the level of wholesale trade (25% in 2022).

Today’s report also highlights areas for improvement. The latest survey on unfair trading practices in the food supply chain showed that the awareness about the existence of EU rules on this important matter is still too low (38% of respondents).  A large share of respondents (57%) also did not know about national enforcement authorities.

When asked why they did not report an unfair trading practice they experienced, respondents mainly indicated fear of some form of retaliation from the buyer (30%), followed by considering it as a common practice in the sector (23%) or thinking the public enforcement authority would not be able to handle it (17%). Proper cross-border enforcement also still faces too many hurdles in that regard.

To accompany the implementation of the rules, and exchange best practices, the European Commission facilitated the setting up of the UTP Enforcement Network. Composed of representatives of national enforcement authorities, it helps ensure a common approach concerning the application of the rules and may issue recommendations.

Commission’s commitments

As part of its proposals to strengthen the position of farmers in the food supply chain, the Commission will propose this year new rules on cross-border enforcement against unfair trading practices.

More actions are being undertaken by the Commission to further correct imbalances in the value chain. First of all, the Commission is setting up the EU agri-food chain Observatory (AFCO) to bring increased transparency on prices, structure of costs and distribution of margins and added value in the supply chain. Second, the Commission will propose targeted changes to the Regulation establishing a common market organisation of agricultural products (CMO). It will include new rules on contracts concluded between farmers and buyers and a strengthening of producer organisations to allow farmers to cooperate and act collectively in a more effective way.

Today’s report will also be used for a more detailed evaluation of the implementation of the UTP Directive that the Commission will present in 2025, and which could be accompanied, if appropriate, by legislative proposals.

Unfair trading practices prohibited at EU level

Black unfair trading practices (prohibited, whatever the circumstances):

• Payments later than 30 days for perishable agricultural and food products
• Payments later than 60 days for non-perishable agri-food products 
• Short-notice cancellations of perishable agri-food products
• Unilateral contract changes by the buyer
• Payment for unrelated services
• Risk of loss and deterioration transferred to the buyer 
• Refusal of a written confirmation of supply agreements by the buyer, despite request of the supplier
• Misuse of trade secrets by the buyer 
• Commercial retaliation by the buyer 
• Transferring the costs of examining customer complaints to the supplier

Grey unfair trading practices (prohibited only, if not agreed beforehand in clear and unambiguous terms between the parties):

• Buyer returns unsold products to the supplier
• Payment of the supplier for stocking, display and listing
• Payment of the supplier for promotion
• Payment of the supplier for advertising
• Payment of the supplier for marketing 
• Payment of the supplier for staff of the buyer, fitting out premises