Deal on cross-border cooperation against unfair practices affecting farmers

Member states to stop cross-border unfair trading practices on their own initiative

Protection against unfair trading practices of buyers from third countries

Information exchange between EU countries to coordinate responses to unfair trading practices

20% of the agricultural and food products come from another member state

On Wednesday, Parliament and Council negotiators agreed on stronger protection of farmers against unfair trading practices of buyers of agricultural products.

Thanks to the agreed text, the cooperation of national authorities responsible for the enforcement of an EU ban of unfair trading practices will be mandatory so that cross border unfair trading practices farmers and small producers of agricultural products suffer from large buyers, including retail chains and their alliances, are prevented, investigated and punished. With such a system in place, power relations along the supply chain will be rebalanced and farmers will be fairly remunerated for their work.

Stopping cross-border unfair trading practices on member states’ initiative

To strengthen the protection of farmers, MEPs made sure that member states intervene ex officio, stopping cross-border unfair trading practices on their own initiative without any formal complaint from a producer. This system will replicate the protection regime for Geographical Indications in the Single Market.

Rules extended outside the EU

To prevent operators from circumventing the law by moving their base outside of the EU, MEPs made sure that the rules would also protect producers suffering from unfair trading practices of buyers from third countries.

At the request of the Parliament, buyers based outside the EU will also have to designate “a contact person responsible for the EU” in case an investigation is opened against that buyer. The person will be the primary point of contact for enforcement authorities and will be obliged to facilitate investigations into unfair trading practices.

Cross border information exchange

MEPs agreed with the Council that national enforcement authorities will inform each other about unfair trading practices, which might be taking place in two or more countries, or a risk of them taking place, through the Internal Market Information System - an existing EU IT system for exchange of information between public administrations in different member states. This exchange will have an important deterrent effect and will ensure rapid and coordinated responses to stop unfair trading practices.

Extended framework for cooperation of authorities

MEPs also introduced the option for member states who have decided to prohibit more unfair trading practices than the sixteen banned by the current EU law, such as a ban on selling below production cost, in particular when those qualify as overriding mandatory provisions. Enforcement authorities will have the possibility to apply, by mutual agreement, the new rules on their mutual cooperation to investigate and put an end to new unfair trading practices.

Quote

Rapporteur Stefano Bonaccini (S&D, IT) said: “Thanks to the work of Parliament, we have managed to transform a simple administrative regulation into an act of economic and social justice, saying enough is enough to those who think that farmers should bow to the dictates of large buyers and retailers.

Today, Europe is showing that it knows how to listen and decide: we choose to stand with those most in need, with greater protection for small producers and an agri-food supply chain free from abuse and blackmail against the weakest.”

Next steps

The preliminary deal still needs to be approved by Council and Parliament. The rules will then enter into force on the twentieth day following that of their publication in the Official Journal of the EU and will be applicable 18 months after that.

Background

The Unfair Trading Practices (UTP) Directive adopted in 2019 protects farmers selling their products to big supermarkets and food processing companies from practices such as late payments for products or cancelling orders at short-notice. However, as around 20% of the agricultural and food products consumed in the EU come from another member state, the new regulation on cross-border cooperation among authorities responsible for the enforcement of the UTP Directive aims to improve cooperation between these authorities in cases of unfair trading practices where suppliers and buyers are in different member states.