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Agriculture committee demands an EU law to fight unfair trading practices

12-11-2015

EU legislation is essential to tackle unfair trading practices (UTPs) and introduce more balance into the food supply chain, the Agriculture committee said on Thursday. MEPs in a vote on an opinion for the lead Internal Market committee also called for further actions to boost farmers' bargaining power and demanded better coordination at EU level of member states' efforts to tackle UTPs.

"Today's vote is an important step in raising the issue of fairness in the food supply chain up the political agenda. It reflects the concerns of the Members of the Agriculture Committee about the impact of unfair trading practices on farm incomes, as well as on the sustainability of the food supply chain," said rapporteur of the Agriculture committee's opinion Mairead McGuinness (EPP, IE). Her text was approved by 39 votes in favour, with two abstentions.

"The Committee voted in favour of EU legislation to tackle unfair trading practices. We now must ensure that the Commission takes our report on board in its upcoming assessment of the voluntary Supply Chain Initiative, which while welcome is insufficient. I have been working on this issue for a number of years and I'm heartened that across the political groups in the Committee there is a clear understanding of the damage caused by unfair trading practices and a clear demand for Commission action," Ms McGuinness added.

Voluntary actions inadequate, EU legislation needed

Voluntary endeavours, including the Supply Chain Initiative (SCI), are important, but they are inadequate in eliminating the fear factor from the supply chain and have major drawbacks, including a lack of genuine penalties for non-compliance, says the approved text. EU's competition and antitrust laws do provide some scope for actions and should be applied rigorously to penalise unfair trading practices in the food chain, but they alone are inadequate to tackle all UTPs, MEPs say.

The Agriculture committee therefore urged the Commission to table, in a timely manner, a proposal for a framework EU legislation to tackle unfair trading practices that would ensure that European farmers and consumers can benefit from fair selling and buying conditions.

New EU law, an updated SCI and strengthened farmers to eradicate UTPs

The new EU law and further actions to increase the bargaining power of farmers should complement the SCI and other voluntary initiatives, which should also be updated to inter alia allow anonymous complaints, MEPs say. They insist that these three elements - the binding EU law, voluntary initiatives and enhanced negotiating position of farmers - must be designed in a way to ensure eradication of UTPs from the food supply chain.

However, new EU-wide measures must not lower the level of protection in member states that have already adopted national legislation to combat business-to-business UTPs, MEPs say. They also want an appropriate range of sanctions for those who violate the anti-UTP rules.

EU to coordinate national efforts to tackle UTPs

The approved text highlights positive examples of voluntary codes, legislative measures and initiatives in several member states - such as Belgium, France, Portugal, Spain and the UK - aimed at improving the functioning of the food supply chain. MEPs stress that the cooperation between national authorities, including exchange of best practices, must be enhanced at the EU level. They also urge the Commission to examine these national efforts with a view to incorporate what could be used in the draft future EU anti-UTP rules.

Use existing provisions to boost farmers' bargaining power

MEPs also call on the Commission to encourage farmers to join producer organisations to increase their bargaining power in the food supply chain. They stress that the recent reform of the Common Agricultural Policy (CAP) introduced a number of measures that extend collective bargaining for some sectors, provide for delivery contracts for all sectors and allow temporary exceptions from competition rules in times of severe market imbalances and insist that the Commission should promote their use more vigorously.

UTPs: Examples and their impact on the EU food production

UTPs in the food supply chain result primarily from income and power imbalances in the food supply chain. They include inter alia unilateral and retroactive changes to contracts, flat charges that companies levy on suppliers as a requirement to be on a supplier list (pay to stay), late payments of up to 120 days (pay you later) and arbitrary discounts large firms give themselves for paying early or on time, retrospective discounting to outstanding money owed to a supplier, and retailers forcing suppliers to use certain third party packaging producers that give the supermarkets a fee for the business they receive.

Selling below the cost of production and the serious misuse of basic agricultural foods such as dairy, fruit and vegetables as "loss leaders" by large scale retailers threatens the long term sustainability of European production, warn MEPs. They also say that UTPs have serious negative consequences for farmers, damage the functioning of the single market and may lead to reduced product quality and variety and thus ultimately reduce the consumer choice.

Next steps

The opinion of the Agriculture committee will feed into Parliament's response to the Commission's communication from July 2014 on ways to tackle UTPs in the food supply chain. The text approved by Agriculture MEPs will be forwarded to the lead Internal Market committee, which is expected to vote on the non-legislative resolution on the matter on 7 December. The Parliament could then scrutinise the text during its January or February plenary session next year.

Thursday, 12 November 2015

Committee on Agriculture and Rural Development

In the chair: Czesław Adam Siekierski (EPP, PL)