The European Commission adopted a proposal on Thursday 12 April that would restore the balance of power between powerful buyers and SMEs producing foodstuffs. The proposed directive seeks to prevent a number of unfair trading practices within the food supply chain (see EUROPE 11990).
“We’re going to show what a protective Europe looks like”, Agriculture Commissioner Phil Hogan told the European Parliament’s agriculture committee.
The Commission proposes quite simply to ban four kinds of practice in the European Union. The proposal includes effective enforcement provisions: sanctions can be imposed by national authorities where infringements are established.
Banned practices. Firstly, payment to producers must be made within 30 days of delivery. Then, last-minute cancellations – a relatively common practice which not only costs producers money but also results in food waste – will no longer be allowed. The Commission also wants unilateral or retroactive changes to contracts between buyers and smaller operators to be banned. Lastly, buyers will not be allowed to return their unsold perishable foodstuffs.
Unsold food products. The Commission proposes a degree of mitigation in the scope of the measure on unsold products: the producer could agree to take them back at a later time. There are some other circumstances where a prior agreement could allow supermarkets to bill the producer: highlighting a product through where it is placed or by specific marketing or promotion measures.
Penalties. In its proposal, the Commission lays stress on the means of making these measures work. It says that the member states will have to designate a public authority responsible for enforcing the new rules. Where an infringement is confirmed, the competent authority will be empowered to impose a deterrent but proportionate penalty. The authority will be able, on its own initiative, to open investigations following a complaint. Those lodging complaints will have the right to request confidentiality and that their identity is not revealed so as not to compromise their position with regard to their trading partner. The Commission will put in place a coordination mechanism between the enforcement authorities to facilitate the sharing of best practice.
Market transparency. Commissioner Hogan said that his services were working on proposals, expected before the end of the year, that aim to improve market transparency.
MEPs say proposal should go further. Addressing MEPs, Hogan praised a number of national initiatives in this area (in Spain and the United Kingdom) and highlighted the current fragmented situation resulting from the multiplicity of national approaches.
At a meeting of the agriculture committee, Martin Häusling (Greens/EFA) was quite critical of the content of the proposal, suggesting that it would not resolve a serious problem: that of the imbalance in relations between SMEs and large companies, which have all the power. He said that action had to be taken on competition law, “so that small businesses can have their rights respected”. “What you are proposing is not revolutionary”, he regretted.
The Greens/EFA Group will attempt to toughen the text in order to resolve the issue of the imbalance in the food chain resulting from monopolies. José Bové, of the same group, emphasised transparency in prices and accounts, the starting point for negotiations between companies and supermarkets.
Albert Dess (EPP, Germany) said he was “delighted that the proposal is there”. It is, in his view, a very good start but more has to be done in reforming competition law.
Éric Andrieu (S&D, France) said it was a fine initiative but “it doesn’t go far enough”. He regretted that the text offered nothing at EU level against concentration in the distribution sector. “Farmers have to be protected against major undertakings”, he stressed. The issue of distributors’ makes should also be dealt with in the proposal, he suggested.
Ulrike Müller (ALDE, Germany) said this was a good proposal and even Luke Ming Flanagan (GUE/NGL, Ireland) had warm words for it. It had to be hoped, he said, that the text would allow David to overcome Goliath.
Copa and Cogeca unsatisfied. Copa and Cogeca said that the text was a step in the right direction but did not go far enough. According to the farming and agri-cooperative organisations in the EU, independent authorities able to open and conduct investigations will ensure sound implementation; dissuasive penalties must also be imposed for infringements. However, care must be taken not to undermine national legislative systems which have already shown their worth in the EU, they state. (Original version in French by Lionel Changeur)