Unfair Trading Practices Enforcement Authority

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Breakfast Seminar: Ensuring Fair Trading in the Agri-Food Supply Chain – Thursday 5th May 2022

 

Introduction

The agricultural and food products supply chain is vulnerable to unfair trading practices due to imbalances between small and large operators. Farmers and smaller operators in the food supply chain often do not have sufficient bargaining power to defend against them.

On 28th April 2021 the Unfair Trading Practices (UTP) Regulations: S.I. No. 198/2021 – European Union (Unfair Trading Practices in the agricultural and food supply chain) Regulations 2021, transposed into Irish law EU Directive 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain. The Regulations protect weaker suppliers against unfair trading practices by stronger buyers in the agricultural and food supply chain.

The Unfair Trading Practices Enforcement Authority (EA) is currently established in the Department of Agriculture, Food and the Marine to enforce the UTP Regulations. The Enforcement Authority can investigate complaints submitted by agricultural and food product suppliers which can include farmers, producer organisations, cooperatives, supplier organisations, organisations of processors, wholesalers/distributors.

The Regulations afford protection for any supplier of agricultural and food products with a turnover of up to €350 million subject to the supplier’s turnover being lower than the buyer's turnover within stated categories. The Regulations provide protection for five graduated levels of supplier turnover categories relative to the buyer up to the €350 million turnover limit.

The UTP Regulations have been applicable since 1st July 2021 to all new supply agreements established since 28th April 2021 and from 28th April 2022, all supply agreements, including those that were in place before 27th April 2021, must be in compliance with the Regulations.

Press Releases:

6th December 2021: Minister McConalogue reminds buyers of agricultural and food products to meet their legal UTP obligations on all supply agreements before April 2022

28th January 2022: Minister McConalogue reminds buyers of agricultural and food products of three-month deadline to meet their legal supply agreements obligations

28th February 2022: McConalogue announces launch of online survey for primary producers in the food supply chain (published)

28th March 2022: Minister McConalogue reminds buyers of agricultural and food products of one-month deadline to meet their legal supply agreement obligations

27th April 2022: Minister McConalogue to lead seminar ‘Ensuring Fair Trading in the Agri-Food Supply Chain

5th May 2022: Minister McConalogue addresses Unfair Trading Practices Enforcement Authority seminar

                               

Prohibited Unfair Trading Practices

The UTP Regulations prohibits 16 specific unfair trading practices. In doing so, it distinguishes between ‘Black and ‘Grey’ practices. There are

  • 10 Black UTPs which are prohibited in all circumstances – they can also be termed as unconditional UTPs
  • 6 Grey UTPs which are prohibited unless previously agreed in clear and unambiguous terms by the parties in a supply agreement – they can also be termed as conditional UTPs.

The ‘Black’ and ‘Grey’ UTPs are listed below. A more detailed explanation on the individual UTPs is available by clicking on the ‘+’ icon.

Black UTPs (prohibited in all circumstances):


  • Where a supply agreement provides for the delivery of perishable agricultural and food products on a regular basis, a buyer must pay a supplier no later than 30 days after the end of an agreed delivery period in which deliveries have been made or no later than 30 days after the date on which the amount payable for that delivery period is set (whichever is the later). For the purposes of the payment period, the agreed delivery period must be no more than one month. Where the buyer sets the amount payable, the payment period starts from the end of the agreed delivery period in which the deliveries have been made.
  • Where a supply agreement does not provide for the delivery of perishable agricultural and food products on a regular basis, a buyer must pay a supplier no later than 30 days after the date of delivery or no later than 30 days after the date on which the amount payable is set (whichever is the later). Where the buyer sets the amount payable, the payment period starts to run from the date of delivery.
  • ‘perishable agricultural and food products’ means agricultural and food products that by their nature or at their stage of processing are liable to become unfit for sale within 30 days after harvest, production or processing.

  • Where a supply agreement provides for the delivery of products on a regular basis for other agricultural and food products, a buyer must pay a supplier no later than 60 days after the end of an agreed delivery period in which deliveries have been made or no later than 60 days after the date on which the amount payable for that delivery period is set (whichever is the later). For the purposes of the payment period, the agreed delivery period must be not more than one month. Where the buyer sets the amount payable the payment period starts from the end of an agreed delivery period in which the deliveries have been made.
  • Where the supply agreement does not provide for the delivery of products on a regular basis for other agricultural and food products, a buyer must pay a supplier no later than 60 days after the date of delivery or no later than 60 days after the date on which the amount payable is set (whichever is the later). Where the buyer sets the amount payable, the payment period starts to run from the date of delivery.

  • A buyer must not cancel orders of perishable agricultural and food products at such short notice that a supplier cannot reasonably be expected to find an alternative means of commercialising or using those products. 
  • For this unfair trading practice, short notice is considered less than 30 days.
  • ‘perishable agricultural and food products’ means agricultural and food products that by their nature or at their stage of processing are liable to become unfit for sale within 30 days after harvest, production or processing.

A buyer must not unilaterally change the terms of a supply agreement for agricultural and food products in relation to the:

  • frequency, method, place, timing or volume of the supply or delivery of such products
  • quality standard, terms of payment or the price, or as regards the provision of services referenced in the ‘Grey’ UTPs.

A buyer must not require payment from a supplier that is not related to the sale of the agricultural and food products of the supplier.

A buyer must not require a supplier to pay for the deterioration and/or loss of agricultural and food products that occurs on the buyer's premises or after ownership has been transferred to the buyer, where such deterioration or loss is not caused by the negligence or fault of the supplier.

A buyer must not refuse to confirm in writing the terms of a supply agreement between the buyer and the supplier for which the supplier has asked for written confirmation. However, this requirement does not apply where the supply agreement concerns products to be delivered by a member of a producer organisation, including a cooperative, to the producer organisation, if the rules of that organisation contain provisions which have similar effects to the terms of the supply agreement.

A buyer must not unlawfully acquire, use or disclose trade secrets of a supplier within the meaning of Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

This Directive was transposed into Irish law by S.I. No. 188/2018 – the European Union (Protection of Trade Secrets) Regulations 2018. These Regulations provide for civil redress measures and remedies in the event that a trade secret is unlawfully acquired, used or disclosed. The Regulations also ensure the confidentiality of the trade secret during court proceedings by limiting access to the hearing and court documents containing the trade secret.

A buyer must not threaten to carry out, or carry out, acts of commercial retaliation against the supplier if the supplier exercises its contractual or legal rights, including by filing a complaint with enforcement authorities or by cooperating with enforcement authorities during an investigation.

A buyer must not require compensation from a supplier for the cost of examining customer complaints relating to the sale of a supplier's products, in the absence of negligence or fault on the part of the supplier.

Grey UTPs (prohibited unless previously agreed in clear and unambiguous terms):


A buyer must not, unless previously agreed in clear and unambiguous terms in a supply agreement or in a subsequent agreement between the supplier and the buyer, return unsold agricultural and food products to the supplier without paying for those unsold products and/or without paying for the disposal of those products.

A buyer must not, unless previously agreed in clear and unambiguous terms in a supply agreement or in a subsequent agreement between the supplier and the buyer, charge a supplier payment as a condition for stocking, displaying or listing its agricultural and food products, or of making such products available on the market.

If requested by the supplier, the buyer must provide the supplier with a written estimate of:

  • the payments per unit or the overall payments, whichever is appropriate
  • the cost to the supplier and the basis for that estimate.

A buyer must not, unless previously agreed in clear and unambiguous terms in a supply agreement or in a subsequent agreement between the supplier and the buyer, require a supplier to bear all or part of the cost of any discounts on agricultural and food products that are sold by the buyer as part of a promotion. Where a buyer engages in this trading practice, the buyer must, prior to the beginning of the promotion, specify the period of the promotion and the expected quantity of the agricultural and food products to be ordered at the discounted price.

If requested by the supplier, the buyer must provide the supplier with a written estimate of the payments per unit or the overall payments, whichever is appropriate.

A buyer must not, unless previously agreed in clear and unambiguous terms in a supply agreement or in a subsequent agreement between the supplier and the buyer, require the supplier to pay for the marketing by the buyer of agricultural and food products.

If requested by the supplier, the buyer must provide the supplier with a written estimate of:

  • the payments per unit or the overall payments, whichever is appropriate
  • the cost to the supplier and the basis for that estimate.

A buyer must not, unless previously agreed in clear and unambiguous terms in a supply agreement or in a subsequent agreement between the supplier and the buyer, require the supplier to pay for the advertising by the buyer of agricultural and food products.

If requested by the supplier, the buyer must provide the supplier with a written estimate of:

  • the payments per unit or the overall payments, whichever is appropriate
  • the cost to the supplier and the basis for that estimate.

A buyer must not, unless previously agreed in clear and unambiguous terms in a supply agreement or in a subsequent agreement between the supplier and the buyer, charge the supplier for staff for fitting-out premises used for the sale of the supplier's products.

If requested by the supplier, the buyer must provide the supplier with a written estimate of:

  • the payments per unit or the overall payments, whichever is appropriate
  • the cost to the supplier and the basis for that estimate.

 

Important Scope Clarifications

  • A supplier is an agricultural producer or any natural or legal person, including producer organisations, organisations of suppliers and associations of such organisations who sells agricultural and food products.

 

  • A buyer is any natural or legal person or any public authority who buys agricultural and food products.

 

  • Supply agreement means a contract (whether orally or in writing) for the sale or supply of agricultural and food products by a supplier to a buyer

 

  • The Regulations apply only to business-to-business relationships and do not apply to arrangements between suppliers and consumers.

 

The Regulations apply only to agricultural and food products which means products listed in Annex I to the Treaty on the Functioning of the European Union (TFEU) as well as products not listed in that Annex, but processed for use as food using products listed in that Annex. The list of such products is very extensive and can include:

  • Food products listed in Annex I TFEU, such as tomatoes or apples, cereals, fish or shrimp, ham, milk, cheese.
  • Products processed from Annex I TFEU products for use as food, such as chocolate, prepared meals or sauces, processed dairy products, e.g dairy spreads or yoghurts.

Annex I TFEU also includes non-food products such as live animals, live trees, cut flowers supplied for planting or for ornamental use, animal feed, milling industry products.

 

Categories of Turnover

The UTP Regulations protect suppliers with relatively weaker bargaining power. It is not absolute size that matters, only the difference in size between supplier and buyer. The UTP Regulations follow a ‘step-up’ approach according to the annual turnover categories of suppliers and buyers, which is applicable as follows:

(a) suppliers which have an annual turnover not exceeding €2,000,000 to buyers which have an annual turnover of more than €2,000,000,

(b) suppliers which have an annual turnover of more than €2,000,000 and not exceeding €10,000,000 to buyers which have an annual turnover of more than €10,000,000,

(c) suppliers which have an annual turnover of more than €10,000,000 and not exceeding €50,000,000 to buyers which have an annual turnover of more than €50,000,000,

(d) suppliers which have an annual turnover of more than €50,000,000 and not exceeding €150,000,000 to buyers which have an annual turnover of more than €150,000,000, and

(e) suppliers which have an annual turnover of more than €150,000,000 and not exceeding €350,000,000 to buyers which have an annual turnover of more than €350,000,000, or

(f) suppliers which have an annual turnover not exceeding €350,000,000 to all buyers which are public authorities

The relevant turnover is established according to the criteria of the SME recommendation 2003/361/ EC. This means that, in order to establish the turnover of a supplier or buyer, the turnover of any linked or partner enterprise/s of which they may be members, should also be taken into account. A supplier who sells to a public authority can rely on the protection against unfair behaviour of the public authority regardless of turnover considerations.

 

What Buyers Need To Do

If you are a buyer of agricultural or food products at any stage in the supply chain, and the annual turnover of your business is over €2 million, then you should take the following actions to ensure that your business is compliant with the UTP Regulations:

  • Check that supply agreements entered into since 28th April 2021 are  compliant with the Regulations
  • Ensure that all supply agreements will be in compliance with the Regulations by 28th April 2022, including those that were in place before 28th April 2021

More broadly, buyers should take appropriate steps to ensure that their organisation is fully adhering to the Regulations. This can include, but is not limited to, a review of organisational policies, procedures and controls in the context of the requirements of the Regulations.

Buyers should understand that compliance with the Regulations goes beyond ensuring that supply agreements do not contain any prohibited clauses. Buyers will be found to have acted unfairly even if the content of the supply agreement is fully compliant with UTP rules if the actual behaviour of the buyer breaches the UTP Regulations. Potential behaviour breaches of the UTP Regulations can take many forms but can include:

  • Cancelling orders of perishable agri-food products at short-notice
  • Failure to make payments owed or do not make them on time
  • Requiring a supplier to pay for deterioration or loss of agricultural or food products that occurred on buyer premises
  • Refusing a request by a supplier to confirm the content of an oral supply agreement or an oral framework agreement in writing
  • Threatening commercial retaliation against suppliers who exercise their contractual / statutory rights.

To ensure that staff in a buyer’s business do not engage in behaviour that could lead to a breach of the Regulations, buyers are recommended to ensure appropriate training and dissemination of information is undertaken on a regular basis for all relevant staff on the UTP Regulations.

 

Making a Complaint

If you are a supplier of agricultural or food products and feel you have been the subject of an unfair trading practice, please provide details of your complaint in confidence to the Enforcement Authority [HERE] through our secure online complaint submission form. Please note the form can be accessed on Google Chrome, Microsoft Edge or Mozilla Firefox web browsers.

We recommend providing unfair trading practices complaint details through our online form, but if you prefer you can contact the Enforcement Authority in confidence via:

Following receipt of the complaint, the Enforcement Authority will consider the information received and we will be back in touch within a reasonable period of time indicating how we intend to follow up on the complaint.



Enforcement

Where the Enforcement Authority considers that there are sufficient grounds for acting on a complaint, it will subject to any request for confidentiality initiate, conduct and conclude an investigation of the complaint within a reasonable period of time.

The Enforcement Authority may also initiate and conduct investigations on its own initiative.

If following an investigation, the Enforcement Authority is of the view that the UTP Regulations is not being or has not been complied with, it may issue a compliance notice requiring the buyer to take appropriate action. Failure to comply with a compliance notice is an offence.

A person who commits an offence under these Regulations is liable –

  1. on summary conviction, to a class A fine or to imprisonment for a term not exceeding 6 months or to both, or
  2. on conviction on indictment, to a fine not exceeding €500,000 or to imprisonment for a term not exceeding 3 years or to both

 

New Office

The General Scheme of a Bill to establish a new independent statutory Authority to be known as the ‘Office for Fairness and Transparency in the Agri-Food Supply Chain’ was approved by Government on 22 March 2022.

With regard to the Unfair Trading Practices Directive, currently enforced by the UTP Enforcement Authority in the Department of Agriculture, Food and the Marine, Minister McConalogue’s intention is to repeal the current UTP Regulations and to use the enabling provisions in the Bill to provide for the transfer of responsibility for UTP enforcement functions from his Department to the remit of the new Office. This is expected to occur at the time of commencement of the Act.

Resource Materials and Further Information

Detailed Brochure: Brochure on the Unfair Trading Practices in the Agricultural and Food Supply Chain Regulations (pdf 1,422Kb)                                      

Summary Leaflet: Leaflet on the Unfair Trading Practices in the Agricultural and Food Supply Chain Regulations (pdf 2,184Kb)             

Frequently Asked Questions on Unfair Trading Practices (pdf 293Kb)   – last updated 24th May 2022     

         

                                  

Other Useful links

Legal Text of Ireland’s UTP Regulations: S.I. No. 198/2021 - European Union (Unfair Trading Practices in the agricultural and food supply chain) Regulations 2021 (irishstatutebook.ie)

Legal Text of EU UTP Directive: The Unfair Trading Practices (UTP) Directive (Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019

Information on 26 April – 11 June 2021 Public Consultation by the Department of Agriculture, Food and Marine on the functions to be assigned to a new Office (National Food Ombudsman/Regulator)/Equivalent

Details of Information Seminar on UTP Regulations and Office of National Food Ombudsman hosted by the Department of Agriculture, Food and the Marine on 25 June 2021

Information on the General Scheme of the Agricultural and Food Supply Chain Bill 2022 to establish a new Office for Fairness and Transparency in the Agri-Food Supply Chain.

 

 

Contact

The contact details for the Unfair Trading Practices Enforcement Authority are:

Email: utp@agriculture.gov.ie

Phone: +353 (0) 1 5058607