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Frontal attack on retailers will hurt consumers and do nothing for farmers, says Euro Commerce

Frontal attack on retailers will hurt consumers and do nothing for farmers, says Euro Commerce

Ahead of the European Parliament Plenary on 22 October, at which MEPs will be asked to accept without a vote a mandate for the negotiation with Commission and the Council on the Unfair Trading Practices Directive, EuroCommerce Director-General Christian Verschueren warned of the consequences of the amendments proposed:

“The mandate which MEPs are being asked to nod through without further consideration includes a tsunami of amendments, many of which will be positively harmful to the farmers and small manufacturers the Commission was proposing to protect. I can do no better than quote the senior German MEP Werner Langen who described them as ‘irresponsible and counterproductive, far from reality and driven by the blind fervour of a few farming lobbyists’.”

The Agriculture Committee has ignored the advice of the Commission, set out very clearly in its impact assessment and accompanying documents. Encouraged by heavy lobbying from powerful multinational food manufacturers, the report mounts a frontal attack on retailers, by for example prohibiting small retailers seeking to buy cooperatively to get a better price from the big brands, and stopping retailers from building up close partnerships with small producers to grow their businesses.

The amendments include some extraordinary ideas, such as banning retailers working together with farmers to give them a better prices and meet consumer demand for higher welfare and environmentally-friendly production. But it is worrying that the amendments, including some 50 new prohibitions - none of which have been assessed for their impact on consumers, the wider economy and even on farmers - were rushed through the committees with no real chance for debate or consideration. 

The fundamental changes MEPs are being asked to approve include:
• Extending the scope of the directive to protect large suppliers: the Commission proposal covers farmers and manufacturers with up to 250 employees and a turnover of up to €50 million. Extending it to large brand manufacturers, who buy and sell worldwide, will make them even more powerful, with no guarantee that any benefits will be transferred to European farmers. Large manufacturers will be free to continue to pursue trading practices such as imposing unjustified price increases under threat of stopping deliveries, fragmenting the Single Market to maintain large profits, and very many more. Retailers have no rights under the proposal to appeal against such practices, and no choice but to pass on the additional costs to consumers who will end up footing the bill. 

• Ill-defined prohibitions and restrictions with huge legal risks for buyers only: The directive gives unlimited rights to sellers and none to buyers, thus discarding fundamental EU principles of equality before the law and non-discrimination. The reversal of the burden of proof (amendment 96) will make the directive even more discriminatory against buyers. Vaguely-worded general prohibitions will reinforce the power of large brand manufacturers on whom retailers depend for the must-have products that consumers expect to find in shops.

• The concept of "economic dependence", which will harm SMEs and farmers:
Prohibiting mutually beneficial practices wherever there is economic dependence will act as a disincentive for retailers to grow their relationships with small suppliers. If it becomes too legally risky for retailers to build such relationships, SME suppliers who develop niche and local products, or organic food, will lose out to big brands. The two Member States with such rules have found them impossible to implement. 

• Prohibitions on joint purchasing will prevent hundreds of thousands of small independent retailers across Europe buying cooperatively from large brands. This amendment is in direct conflict with EU competition rules, and will threaten the existence of these independent retailers, causing disruption to millions of consumers, to thousands of local suppliers from whom they buy and to millions of people they employ. 

• Prohibition of animal welfare and environmental standards beyond EU minimum requirements will force retailers and other buyers to fall back to the legal minimum, and undermine the efforts of retailers and farmers over the past years in improving animal welfare and environmental standards beyond minimum legal requirements, and seeking to reward farmers for the additional cost and effort of doing so. 

• Prohibition on the minimum shelf life on receipt of goods means that retailers will have to accept goods which are almost at the end of their shelf life, and therefore cannot be sold, causing food waste and lower revenues for farmers; 

• Prohibition of retailers picking up goods from suppliers to cut truck journeys, will mean more emissions
The list goes on - these and a vast number of other proposed prohibitions, either covering issues only relevant to dealings with big brands, or directly detrimental to farmers, will dramatically undermine the ability of parties to organise efficient contractual relations, which will bring no benefit to suppliers and farmers, and much harm to consumers.

Verschueren added: 
“We have written to MEPs to highlight these concerns, and have seen a number of other organisations voice similar worries. This rushed, untransparent, and unconsidered approach risks nullifying many of the achievements of this Parliament in improving the environment and animal welfare standards, improving the protection of consumers and farmers, and in promoting jobs and EU competitiveness. We hope that the Parliament will not let it do so”.

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