As war rages in the breadbasket of Europe, economic sanctions targeting Russian interests are putting pressure on entire sections of the agricultural and food supply chain. The whole sector fears shortages and price increases. As the first link in the chain, the producer of agricultural products is a key player among the suppliers of foodstuffs, and the legislator wants to be able to defend the quality of life of the producer and therefore the conditions for quality agricultural production.
Dating back to well before the war in Ukraine, Directive (EU) 2019/633 on unfair commercial practices in business-to-business relations within the agricultural and food supply chain was transposed into Belgian law by a law of November 28, 2021 Buyers must now take into account enhanced protection for suppliers of foodstuffs of agricultural origin, as well as foodstuffs processed from or containing them. This applies not only – among other things – to meat, fish, vegetables, fruit, milk and eggs, but also to all foodstuffs which contain these products as ingredients.
The law of November 28, 2021 establishes in a “black list”, 9 practices considered in all circumstances unfair to the supplierand in a “grey list”, 6 practices deemed unfair to the supplier, unless they have been agreed in advance in clear and unambiguous terms. For example, are still prohibited, and therefore “blacklisted”, payment to the supplier more than 30 days after the delivery date, cancellation by the buyer of an order within a period of less than 30 days , the request for payment by the buyer to the supplier which is not related to the sale of agricultural and food products by the supplier, etc. The “grey list” includes, for example, returning unsold agricultural products without paying for them or without paying for their disposal, having to pay for products to be stored, displayed or listed or made available on the market, or having to pay for the buyer’s advertising.
However, the food supplier is only considered a weak party – and therefore protected in its economic relationship with the buyer – if its annual turnover does not exceed 350 million euros, regardless of the turnover. buyer’s business. Nevertheless, each supplier remains protected by the provisions of the Code of Economic Law regulating the abuse of economic dependence and prohibiting certain practices between companies considered abusive and/or unfair.
In the event of a breach of the new law, a complaint may be filed by the supplier with the Economic Inspection DG of the FPS Economy, SMEs, Self-Employed and Energy. The administration can impose a fine of up to 80,000 EUR, or even 200,000 EUR if the offender is guilty of serious bad faith. A proposed legislative amendment will significantly increase the amount of these fines, if passed.
Consumers are therefore no longer the only actors who can be considered “weak”. There are many ongoing trends in today’s society that are forcing a rebalancing of business-to-business practices.