Unfair trading practices (UTP)

Companies acting in the food supply chain for 2021 should revise their supply agreements and harmonise their business practices with the new national laws implementing Directive (EU) 2019/633 on unfair trading practices in B2B relationships in the agricultural and food supply chain. The unfair trading practices (so-called UTPs) scheme must be transposed to national legislations by 1 May 2021. WHAT? The UTPs scheme seeks to combat B2B practices in the agricultural and food supply chain that grossly deviate from good commercial conduct, are contrary to good faith and fair dealing, and are unilaterally imposed by one trading partner on another. In short, the intention of the rules is to shield agricultural producers or any natural or legal person selling agricultural and food products from UTPs. The Directive envisages that national laws will appoint competent authorities to enforce the UTP rules. WHO? The rules are not automatically applicable to all supplier-buyer relationships. The rules apply when there is a significant imbalance in negotiation power, which is assessed by comparing the annual turnovers of the parties. HOW? Precautionary measures for determining business relationship conditions must be applied since national laws have a wide discretion in defining the UTPs, provided that at least those specified in the Directive are included. The list of UTPs is divided into practices that are always forbidden (e.g., payment periods longer than 30 or 60 days (depending on the type of products), unilaterally changing certain terms of a supply agreement, etc.) and those forbidden depending on the circumstances (e.g., requiring the supplier to bear the costs of discounts or advertising, or to accept back unsold products without the obligation of the buyer to pay for them or for their disposal).