Members' Research Service By / August 2, 2019

Protection of small producers against unfair trading practices in the food supply chain [European Parliament impact 2014-2019]

The food supply chain ensures that food and drink products are delivered to the public. It affects all consumers in the EU. The final price paid by the consumer is impacted by the number of participants in the food supply chain.

The power of the European Parliament

The only directly elected European Union (EU) institution; the European Parliament’s (EP) power and influence in pursuit of citizens’ interests have evolved significantly, transforming it into a full-fledged legislative body and forum of discussion and engagement at the heart of representative democracy, whose influence is felt in virtually all areas of EU activity.
What are then the European Parliament’s main powers?

What difference does the Parliament’s work make to how Europeans live their lives? This series highlights some practical examples of EP impact during the 2014-2019 legislative term.

EP POWERS Law makingThe food supply chain ensures that food and drink products are delivered to the public. It affects all consumers in the EU. The final price paid by the consumer is impacted by the number of participants in the food supply chain. While the single market has brought benefits to operators in the supply chain, through more market opportunities and a larger customer base, it has also brought challenges. Structural changes have occurred, leading to different levels of bargaining power and imbalances between actors in the chain. The abuse of such differences may lead to unfair trading practices (UTPs).

Over recent years, the European Parliament has actively highlighted imbalances in the food supply chain. It has also made the case very strongly that there is a need to ensure adequate incomes for farmers.

To strengthen the position of smaller producers (such as farmers) in the food supply chain, in April 2018 the European Commission presented a proposal for a directive on unfair trading practices. The proposal focuses on the protection of smaller actors in the food supply chain, and aims to protect them from trading practices imposed unilaterally.

The Parliament’s Committee on Agriculture and Rural Development (AGRI) welcomed the proposal as a long-expected legislative instrument to defend the position of agricultural producers in the food supply chain. Following AGRI’s consideration, the European Parliament priorities were to have a clear definition of what constituted an unfair trading practice, extending the scope of suppliers and buyers in the food supply chain and the scope of products to all agricultural products (i.e. not only food products). The Parliament also sought to deliver an increased list of prohibited unfair trading practices. In trilogue negotiations, Parliament and Council negotiators reached an agreement on 19 December 2018, after six meetings. Parliament’s negotiating team achieved important modifications to the legislative text, especially on widening the scope to agri-food businesses bigger than SMEs (up to a certain threshold) and an extension to the list of prohibited unfair trading practices from 8 to 15.

Directive (EU) 2019/633 of the European Parliament and of the Council on unfair trading practices in business-to-business relationships in the food supply chain was signed on 17 April 2019.

Thanks in part to Parliament’s efforts, the new legislation will ensure fairness in the market and the food supply chain and will remove the ‘fear factor’ experienced by small-scale operators in the food chain and/or those with less bargaining power. It will lead to a more balanced distribution of consumer spending along the food supply chain and, finally, it will provide for a designated authority to enforce the new rules and sanctions where infringements are proven.

Law-making powers

a mapping of EP powers

Together with the Council, the Parliament participates in the shaping of European laws in what may be seen as a bicameral legislature at EU level. The nature of the Parliament’s involvement depends on the area in question and may mean Parliament being consulted (consultation procedure), giving its consent (consent procedure), or legislating on an equal footing with the Council (the ordinary legislative procedure, or co-decision).

The latter procedure consists of the joint adoption of an act by the European Parliament and the Council on the basis of a proposal by the Commission. Here, both legislators need to agree on an identical text before it becomes law, which may take up to three readings in each of the two institutions. On average, it takes about 22 months for legislators to agree on a legislative file, starting from the Commission proposal until the signature of the final act.

The number of areas in which the Parliament co-legislates has expanded greatly over time and now includes the EU internal market, environment, consumer protection, food safety, regional development, agriculture, transport, energy and many others. Indeed, most legislative acts are now adopted following the ordinary legislative procedure.

Besides the power of consent with regard to legislative acts, the Parliament’s consent is required in many other instances not related to legislative acts in the strict sense. For example, it is needed before any new country joins the EU (Article 49, Treaty on European Union, TEU), but also before any withdrawal treaty can be concluded when a country decides to leave it (Article 50 TEU). The Parliament’s consent is also required before concluding agreements with third countries, for example association agreements, as well as before the Council determines that an EU Member State is breaching – or is about to breach – EU values (Article 7 TEU).

Read the complete study on ‘The power of the European Parliament: Examples of EP impact during the 2014-19 legislative term‘ in the Think Tank pages of the European Parliament.

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