The Directive on Unfair Trading Practices oversees business-to-business relationships across the agricultural and food supply chain. The directive will ban the most obvious unfair trading practices such as but not limited to:
· late payments for perishable products
· last minute order cancellations
· unilateral or retroactive changes to supply agreements
· the misuse of confidential information
The retaliation or threat of retaliation against the supplier.
This move provides EU member states with more effective ways of tackling trading abuses.
The introduction of this directive comes as welcome news to the NFU who have lobbied in favour of strengthening regulation to provide a fairer operating supply chain for over 10 years. Despite the UK’s decision to leave the EU, this directive will still have a positive impact for UK producers, as the rules will apply to any 3rd country exporting products into the EU.
This directive goes one stage further than the UK’s Grocery Supplier Code of Practise (GSCOP) and Grocery Code Adjudicator (GCA) regulation as it oversees the relationship between farmers and growers (as long as they are small and medium size businesses) and their buyer/processor. A step the NFU has wished to see implemented within UK domestic regulation.
The EU is giving member states 24 months from 30th April 2019, to implement this directive within their national regulations. There will then be a further 6 months for businesses to comply, meaning the strength of this new ruling will not be felt until November 2021.
It is not fully understood if the UK will take up this regulation, due to the complexities in the timing of Brexit and the long implementation period given to comply. The NFU are looking to understand this situation further with DEFRA and identify where alternative powers could be used within the Agricultural Bill, if it is required.