Unfair trading practices (UTPs) in the business-to-business food supply chain

Question for written answer to the Commission – 6th November 2014 – Alyn Smith (Verts/ALE)

Over the past month there has been a series of allegations made against the UK supermarket chain Tesco. The UK Government’s Serious Fraud Office (SFO) has launched an official criminal investigation into Tesco, taking over from an already existent investigation by the Financial Conduct Authority (FCA).

Duncan Swift, who leads the Food Advisory Group at respected audit firm Moore Stephens LLP, has emphasised that ‘supermarket buyers, operating in trading rooms similar to those operated by the banks and investment companies’ have placed pressure on supply chains. If buyer bonuses are influencing the price of Tesco’s purchasing then it is clear that the size and behaviour of supermarkets is having an unfair impact on the amount farmers receive for their produce.

1. Under current EC law, is it legal for supermarkets to operate a ‘buyer bonus’ scheme as currently used by Tesco?

2. If it can be proven that such practices are having an adverse impact on the prices which producers receive, does the Commission intend to reconsider its position on Unfair Trading Practices (UTPs) which, it concluded in June 2014, were an issue best left for national governments?

Answer given by Ms Bieńkowska on behalf of the Commission – 5th February 2015

In July 2013, the Commission adopted a communication Tackling unfair trading practices (UTPs) in the business-to-business food supply chain. The communication suggests a set of principles of best practice as the basis for a common understanding between Member States in terms of what does and does not constitute unfair practices. Buyer bonuses, offered by retailers to their employees, are not specifically covered by the communication and there is also no legislation at EU level that prohibits such bonuses.

The communication calls on Member States to ensure that rules against UTPs can be enforced effectively. In the specific case of the United Kingdom, an enforcement authority responsible for tackling UTPs already exists, namely the Groceries Code Adjudicator.

Over the following year, the Commission will assess whether Member States have established enforcement frameworks against UTPs and to which degree these are effective on the basis of the criteria defined in the communication. The Commission will report the findings of this assessment to the European Parliament and Council and, at that stage, decide whether further action at EU level is necessary.

(Source: European Parliament)