EP adopts fair trading practices directive

With an overwhelming majority (589 votes for, 72 against), the European Parliament has approved a directive that wants to protect farmers and small food businesses from unfair trading practices by – usually larger – partners.

Practices banned

The directive aims to ban every kind of abuse of power by large retailers towards small suppliers: late deliveries, late unilateral cancellations, retroactive order changes, refusal to sign a written contract and abuse of confidential information are all practices that will be explicitly banned. Moreover, retailers can no longer retaliate against companies who file complaints, for example by delaying payments or removing products from shelves. Certain other practices are banned, unless they were clearly added to the contract: returning unsold items without payment, forcing suppliers to pay for ads, charging listing fees and promotion costs.

The new rules protect suppliers with a turnover under 350 million euros, who are divided into five categories (turnover under 350 million, 150 million, 50 million, 10 million and 2 million). The smallest companies will enjoy the strictest set of protective rules. This however makes the directive controversial: the limit of 350 million is so high, that in smaller member states even multinationals would be protected. European consumer protection organisation BEUC has already pointed out that customers would have to pay higher prices and would enjoy a diminished choice of products.

The directive does not have immediate effects however: first the European Council has to formally endorse the directive, after which member states will have 24 months to implement it into their national laws. Another six months later, in the autumn of 2021, the new rules should enter into force.