MEPs demand action on 'unfair' food sector supply chains

posted by Anna Scott
in Law
23 November 2015

The “very serious” problem of unfair supply chain practices in the food sector should be tackled with legislation, according to a group of MEPs.

The European Parliament’s Committee on Agriculture and Rural Development voted to adopt proposals put forward by MEP Mairead McGuinness, to follow Spain’s lead and introduce legislation to impose penalties on companies for unfair trading practices.

Certain markets in the food supply chain across the EU are subject to multinational-held monopolies in which contract terms are forced upon suppliers and a lack of transparency in setting prices exists, MEPs said.

And many producers find themselves obliged to deliver produce without knowing what price they will be paid for it and with no written contract, the committee heard.

McGuinness, who is a member of Ireland’s Fine Gael Party and the Group of the European People’s Party, acted as rapporteur – presenting a report on unfair supply chain practices in the food sector, which the committee then voted on and agreed to adopt. The report will now be debated in the European Parliament early next year with view to amending or introducing legislation

Currently a voluntary code for the food sector, the Supply Chain Initiative, exists across the EU but Spain introduced "Law 12" in 2013, which regulates trade relations, combined with a private, self-regulated system that establishes a framework for better quality commercial relations.

The law requires that contracts are formalised in writing, especially if one of the operators is in a weak position relative to the other party, eliminating the possibility of selling the product without knowing the price. In addition, unilateral changes to contracts are outlawed.

Spain’s minister of agriculture, food and environment was asked to give evidence of the country’s experience of the legislation during the committee’s debate. “Unfair commercial practices mainly appear where there is economic imbalance in commercial relationships between partners in the food supply chain,” Isabel García Tejerina said.

McGuinness welcomed the committee’s “clear demand for action” from the European Commission to amend the “insufficient” Supply Chain Initiative. “As things [currently] operate there are questions about whether the food supply chain can sustain this kind of unbridled competition,” she said.

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