EU Directive on unfair trading practices in the agricultural and food supply chain

On April 17, 2019, the European Parliament and the Council enacted the Directive No. 2019/633 ("Directive") on unfair trading practices in business-to-business relationships in the agricultural and food supply chain.

The Directive applies to certain unfair practices, which may occur in relation to sales of agricultural and food products, with exclusive respect to business-to-business relationships. It constitutes the results of a longstanding commitment of the European Union in the creation of a common legal framework concerning unfair trading practices in the agricultural and food supply chain. The Directive – indeed – comes after a series of publications of the Commission focused on this topic – the first dated 2009 – and after the endorsement – by the Commission-led High Level Forum for a Better Functioning Food Supply Chain – of a set of principles governing the vertical relations in the food supply chain. 

Whereas, the majority of the member States already have a set of rules – although diverging rules – on unfair trading practices, the main objective of the Directive is to introduce a minimum standard of protection under EU Law applicable to unfair trading practices occurring at any stage of the agricultural and food supply chain.

In order to provide a better protection to the weaker operators, the Directive adopts a dynamic approach based on the size of the supplier and the buyer in terms of annual turnover. This approach originates from the assumption that the number and size of operators vary across the different stages of the agricultural and food supply chain, thus inevitably leading to different levels of economic dependence and bargaining powers.

Article 3 constitutes the core part of the Directive, through which the European Legislator tries to standardize and list the prohibited trading practices, mainly focusing on:

1. (a) terms of delivery both for perishable and non-perishable food and agricultural products; and
2. (b) terms of notice for orders cancellation; and
3. (c) mechanisms to amend the supply agreement's terms and conditions.

Moreover, one of the main innovation of the Directive is the introduction of an obligation of the buyer – at supplier's request – to confirm in writing the terms and conditions of supply.

To the extent standard contracts recognized by producer organizations are used and been made binding by a Member State – according to Article 164 of the EU Regulation No. 1308/2013 – the Directive does not apply to the supply of grapes and must for wine production.

Member States shall implement the Directive by May 1^st, 2021.