Directive (EU) no. 2019/633 – on unfair business-to-business trade practices in the agricultural and food supply chain – was finally published in the EU Official Journal 25.4.19. (1) Brief summary to follow.
EU Directive 2019/633. Scope of application
TheUTPs(Unfair Trading Practices) Directive aims to ‘counter practices that clearly deviate from good business practices, are contrary to the principles of good faith and fair dealing, and are unilaterally imposed by a trading partner on its counterpart’ (Article 1.1).
Scope. The directive applies to certain unfair trade practices implemented in the sale of agricultural and food products:
‘
(a) from suppliers with an annual turnover of € 2 million or less to buyers with an annual turnover of more than € 2 million,
(b) from suppliers with an annual turnover between €2 million and €10 million to buyers with an annual turnover of more than €10 million,
(c) from suppliers with an annual turnover between €10 million and €50 million to buyers with an annual turnover of more than €50 million,
(d) from suppliers with an annual turnover between €50 million and €150 million to buyers with an annual turnover of more than €150 million,
(e) from suppliers with an annual turnover between €150 million and €350 million to buyers with an annual turnover exceeding €350 million‘. (Art. 1.2).
In dealings with PA (public administration), notwithstanding the above, the directive applies to all sales of agricultural and food products by suppliers with an annual turnover of 350 million euros or less. Conversely, it does not apply to agreements between suppliers and consumers. (2)
Agricultural and food products subject of the directive are those defined by the Treaty on the Functioning of the European Union (TFEU). Specifically those listed in Annex I, which also include live animals, guts, bladders and stomachs of animals, whole or in pieces, excluding those of fish. Animal products (not named or included elsewhere, e.g., milk and dairy products). But also those that are not listed in that annex and that are processed from such products for food use (e.g. food jellies).
For ‘
buyer
‘ is defined as ‘any natural or legal person, regardless of that person’s place of establishment, or any public authority in the Union that purchases agricultural and food products.’ As well as groups of individuals and legal entities. Instead, the provider is defined as ‘Any agricultural producer or natural or legal person, regardless of his place of establishment, who sells agricultural and food products. The term “supplier” may include a group of such agricultural producers or a group of such natural and legal persons, such as producer organizations, supplier organizations, and associations of such organizations’ (Art. 2).
EU Dir. 2019/633, prohibited and ‘conditional’ business practices
A ‘
minimum list
‘ of prohibited unfair practices, which we have already outlined in the previous article
, is defined in Article 3. Also in relation to ‘To the services provided by the buyer to the supplier‘ (e.g., marketing and logistics). In particular, ‘blacklisted’ practices should be prohibited at all times. Such as late payment of perishable products, cancellation of orders on short notice, unilateral or retroactive changes to the supply agreement, misuse of confidential information, and retaliation or threat of retaliation against the supplier.
Other practices (on the ‘gray list’) will be allowed only if ‘previously agreed upon in clear and unambiguous terms in the supply agreement or other subsequent agreement between the supplier and the buyer.’ These include the return by the buyer of unsold food products, payment by the supplier for the promotion or marketing of food products sold by the buyer, and the costs of storing, displaying, or listing agri-food products (Article 3.2).
The payment terms – 30 days for perishables, 60 days for others – run, it should be noted, from the date of delivery, ‘from the date on which the amount to be paid was determined, whichever is later.’ (3) Therefore, national legislators will have to place a time limit on the date when the amount to be paid is set, to prevent possible abuses to which the directive lends itself.
Whistleblowing, confidentiality, alternative of disputes
Suppliers may file complaints with the law enforcement authority of the member state where they are established, or with the law enforcement authority of the member state where the buyer suspected of engaging in a prohibited business practice is established. Organizations of suppliers, producers and their associations may file a complaint at the request of one or more of their members (or at the request of one or more of the members of their respective organizations) if they believe they have been subjected to a prohibited business practice.
Other organizations ‘that have a legitimate interest in representing suppliers‘ (e.g., associations representing farmers, artisans and SMEs) are in turn entitled to file complaints. Provided that they are independent non-profit legal entities (Article 5, ‘whistleblowing and confidentiality‘).
The law enforcement agency must ‘adequately protect the identity of the complainant or members or providers‘ who request it. With an obligation to inform the complainant and proceed, ‘within a reasonable period of time after receipt of the complaint.’
he voluntary use of effective and independent alternative dispute resolution mechanisms such as mediation-subject to the rights of complaint and the powers of law enforcement agencies-may be promoted by member states (Article 7, ‘alternative dispute resolution‘).
Unfair trade practices, duties of member states and timeframes for enforcement
The effective implementation of the directive will have to be ensured by member states by following special criteria, which include the national designation of ‘law enforcement authorities‘ (Art. 6). Which are to ‘cooperate effectively with each other and with the Commission‘ for ‘mutual assistance in investigations that have a cross-border dimension‘. Also through ‘recommendations to promote the consistent application of this directive and strengthen law enforcement‘ in the Internal Market (Art. 8).
Member states may maintain or introduce national rules to combat unfair commercial practices that are more stringent than those provided for in the directive, consistent with the rules on the functioning of the internal market. This is also without prejudice to national rules to counter unfair trade practices that are outside the scope of the UTPs Directive, again provided that they are compatible with the rules on the functioning of the internal market.
The directive, in effect since 4/30/19, must be transposed by member states by 5/10/21. By adopting the laws, regulations and administrative provisions necessary to comply, including identifying and empowering the ‘law enforcement authorities’ in charge of supervision and sanctions. National standards must be implemented by 10.11.21 at the latest (Art. 13.1). Supply agreements concluded prior to the publication of national measures to transpose the directive will have to be adapted thanks within the following 12 months (Art. 1.4).
Dario Dongo
Notes
(1) See EU dir. 2019/633, at
https://eur-lex.europa.eu/legal-content/IT/TXT/?qid=1556899533857&uri=CELEX:32019L0633
(2) Unfair commercial practices against consumers are indeed already regulated by dir. 2005/29/EC, transposed in Italy by the so-called Consumer Code (d.lgs. 205/06)
(3) Instead of the ‘end of the month date delivery or receipt of invoice’ established in Italy by Article 62 of Law 24.3.12 no. 27, which has so far in fact allowed for an extension of up to 60 days of the starting day of payment terms (by invoicing in arrears at the beginning of the month following the delivery of goods). For further study, see the writer’s ebook ‘
‘Article 62, a revolution
‘, free download at
https://ilfattoalimentare.it/scarica-gratis-libro-articolo-62-pagamenti-commercio.html
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
