Unfair Trading Practices in Food Supply Chains. Regulatory Responses and Institutional Alternatives in the Light of the New EU Directive

Abstract

Unfair trade practices (UTPs) can refer to individual firms or, more often, concern the entire chain. The article contends that UTPs in supply chains present specific features; as a consequence, they require specific rules and remedies. Power concentration in food global chains often leads to abuse by shifting risks and costs to weaker contractual partners, who are not necessarily the most efficient actors to control risks and to manage costs related to production and distribution processes. Inappropriate exercise of market and contractual power may bring about inefficient allocation of tasks together with undesirable distributional consequences. A distinction should be made between isolated UTPs, whose effects mostly remain within the bilateral contractual relation, and systemic UTPs, whose effects directly or indirectly spread along the chain. The latter create much more severe consequences, both distributional and exclusionary. By examining the recently adopted EU Directive on UTPs in agri-food chains and its complementarities in respect to private regulation, the authors develop a conceptual framework that might be useful to complement existing and forthcoming regulation at EU and national level with rules reflecting the supply chain dimension of UTPs. More particularly, the authors suggest that both distributional and exclusionary systemic effects should be considered in (a) the definition of the practice, (b) the type of prohibition and the extent to which agreed terms may allow the use of some of the practices, (c) the nature and scope of liability of the infringer(s), (d) the use of presumptions concerning the practices’ effects, (e) the choice and content of sanctions and remedies. These distinctions fit within the discretionary space allowed to Member States (MSs) when implementing the directive, making the implementation more effective and consistent with its regulatory goals.