More fairness for farmers and suppliers

The Federal Minister of Food and Agriculture, Julia Klöckner, takes regulatory action against unfair trade relations and strengthens the market position of smaller suppliers and farms. The Federal Cabinet today approved the relevant amendment to the law by the Federal Ministry of Agriculture. Smaller producers are often exposed to unfair contract terms due to the market imbalance. Because in contrast to the diversity on the one hand, they are faced with the highly concentrated food retail trade on the other. The four largest retail chains have a market power of over 85 percent. This has led to practices that clearly disadvantage producers, such as short-term cancellations, long payment terms for perishable goods or unilateral changes in delivery conditions. These unfair trading practices will now be banned.

Federal Minister Julia Klöckner: "With the law we are creating equality, strengthening regional production and competition. Small suppliers often had no choice but to accept the unfair trading conditions - they did not want to be delisted. That will now come to an end! Or else In other words: David clearly gains in strength compared to Goliath."

Federal Minister of Economics Peter Altmaier: "The draft for the implementation of the UTP Directive is a good compromise between agricultural producers, other food manufacturers and suppliers on the one hand and the food retail trade on the other. Fair and reliable contractual relationships are essential for both sides. This goal is we have done justice with the present draft law."

Specifically, the following is prohibited:

1. that the buyer cancels orders for perishable foodstuffs from the supplier at short notice;

2. that dealers unilaterally change the terms of delivery, quality standards, payment terms, listing, storage and marketing terms;

3. that perishable food is paid for more than 30 days after delivery and for non-perishable food more than 60 days after delivery;

4. that the buyer does not confirm in writing any delivery agreements that have been concluded, despite the supplier's request;

5. that Buyers unlawfully acquire and use trade secrets from Suppliers;

6. that Buyer will threaten retaliation of a commercial nature if Supplier exercises its contractual or statutory rights;

7. that buyers seek compensation from the supplier for handling customer complaints through no fault of the supplier;

8. that buyers require the supplier to bear costs not specifically related to the products sold.

9. that unsold products will be returned to the supplier without payment of the purchase price;

10. that the buyer demands payment from the supplier for the storage of the products.

11. that the supplier has to bear costs which the buyer incurs through no fault of the supplier after the delivery has been handed over to the buyer.

The directive also stipulates that other commercial practices are only permitted if they are expressly and unambiguously agreed beforehand between the contracting parties. For example,

• if the supplier bears the costs for price reductions as part of sales promotions;

• if the supplier pays listing fees;

• when a supplier contributes to the retailer's advertising costs.

The enforcement authority will be the Federal Office for Agriculture and Food (BLE), a subordinate authority of the Federal Ministry of Agriculture. The BLE will make decisions about violations in agreement with the Federal Cartel Office. The BLE will decide independently on the amount of the fine, taking into account a statement from the Federal Cartel Office. Violations can result in fines of up to 500.000 euros. The Düsseldorf Higher Regional Court will rule on appeals against decisions by the enforcement authority.

Source: BMELV