The resolution, drafted by the Committee on the Internal Market and Consumer Protection is non-binding, but if passed will send a signal to the Commission.
Although there is currently legislation in place to combat unfair trading practices (UTP) at a business-to-consumer level, there are no equivalent rules to cover practices between different operators within the supply chain, and UTPs are only partly covered by competition law.
“[We] call on the Commission and the Member States fully and consistently to enforce competition law, rules on unfair competition and anti-trust rules, and, in particular, to impose firm penalties for abuse of a dominant position in the food supply chain,” the Committee said.
The resolution calls on the Commission to submit a proposal for an EU-level framework to tackle UTPs in the entire food supply chain in order to ensure a level playing field across member states.
Unfair trading practices can include:
- suddenly cancelling contracts without any justification
- unilateral changes to contacts, delaying payments
- restricting access to the market
- offloading transport or storage costs onto the supplier.
Owing to the perishable nature of their goods, farmers are particularly vulnerable to UTPs, which are fuelling overproduction of food and food waste in the bloc. Small and medium businesses and microenterprises that make up 90% of the EU’s economic fabric are also most at risk while consumers are affected through a loss in product diversity, cultural heritage and fewer retail outlets, reads the resolution.
Legislation is necessary because those affected by UTPs are often unable to speak out, said MEPs. "The ‘fear factor’ comes into play in commercial relationships, with the weaker party being unable to make effective use of their rights and unwilling to lodge a complaint about UTPs imposed by the stronger party, for fear of compromising their commercial relationship.”
Meanwhile the Supply Chain Initiative (SCI), which aims to address some of these issues, is a voluntary scheme that has major limitations: it does not penalise non-compliance nor does it allow complaints to be lodged confidentially, said MEPs.
President of the Irish Farmers' Association, Joe Healy, told FoodNavigator he hoped the European Commission would recognise that farmers continue to be treated unfairly at the bottom of the food chain.
"Strong legislation is needed at European level to address this issue. We would like to see common EU legislation that would support any existing voluntary initiatives but which would address the criteria of enforcement, anonymous complaints and sanctions which continue to be absent at the current time.
“Across all EU Member States, there is an urgent need for a rebalancing of power in the food supply chain. The aggressive behaviour of dominant retailers towards smaller suppliers, particularly vegetable, fruit and potato growers, must be stopped.”
Commission inaction
Farmers and producers were left disappointed in January this year when the Commission published a report into UTPs and concluded that, although there were some issues with the voluntary supply chain initiative, it had not planned any further EU-wide regulation to curb unfair trading practices.
“Given the positive developments in parts of the food chain and since different approaches could address UTPs effectively, the Commission does not see the added value of a specific harmonised regulatory approach at EU level at this stage,” said the report, adding that the Commission did plan to monitor the effectiveness of recently-introduced legislation.
The European food sector employs over 47 million people and has a retail food trade value of €1.05 billion.
MEPs will debate and vote on the resolution at a plenary session in Strasbourg next week.