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)

FVO – Bovine meat in Brazil

The report describes the outcome of an audit carried out by the Food and Veterinary Office (FVO) in Brazil from 15 to 28 October 2013. The objectives of the audit were to evaluate the operation of controls over the production of fresh bovine meat destined for export to the European Union (EU), as well as certification procedures and to follow up the measures taken by the Brazilian authorities to address the recommendations outlined in audit report DG(SANCO)/2012-6370 – MR Final.

The FVO audit team noted that in the period 2012-2013 the Competent Authority (CA) carried out 10 % or more re-audits of the cattle holdings listed in TRACES in all approved Brazilian States. With the exception of three cases, controls carried out at the holding by the certificadoras and the CA were found to be satisfactory. However, the need to strengthen the procedures in place was identified by the FVO audit team. The Brazilian CA informed the FVO audit team that the procedure to integrate different IT applications into a single database to include animal health control, animal identification and registration, animal movement and certification, has progressed significantly.

The meat establishments visited were mainly in line with the general and specific hygiene requirements.
Deficiencies were identified by the FVO audit team in relation to the de-hiding process in three establishments, the working of sterilisers in two establishments and pest control in one establishment. The official controls in meat establishments were carried out in accordance with the relevant procedures and adequately documented. Nevertheless the deficiencies mentioned above had not been identified by the Food Business Operator (FBO) or the CA.

Ante- and post-mortem inspection, including the verification of the food chain information were carried out in accordance with the EU requirements.

In the establishments visited the procedures based on Hazard Analysis Critical Control Points (HACCP), traceability and maturation of beef were implemented and verified by the CA and were found to be satisfactory.

The microbiological testing of carcasses regarding testing methods, parameters, sampling and sampling frequencies were still not in line with the requirements laid down in Regulation (EC) No 2073/2005. The CA confirmed their position to the FVO audit team and considers their guidelines for microbiological testing of carcasses to be EU equivalent. Nevertheless the CA has not yet sent a request to DG SANCO to have their guidelines recognised as EU equivalent.

Water testing was carried out in line with the requirements of Council Directive 98/83/EC. Animal welfare controls remain as previously described. The stunning process and the controls at slaughter were satisfactory.

The certification of fresh bovine meat in the establishments visited was satisfactory. For the consignments verified by the FVO audit team, the officials were able to demonstrate that the certificate conditions were met, with the exception of one case.

The FVO audit team visited the two establishments which have been at the origin of numerous Rapid Alert System for Food and Feed (RASFF) alerts in 2013 due to the presence of Shigatoxin-producing E-coli (STEC) in chilled boneless beef sent to the EU. These two establishments are now under the re-enforced control procedure for their consignments entering the EU. The reaction of the Central Competent Authorities (CCA) was slow and it took more than two months for the establishments to be officially notified. An official answer from the CCA to the Commission services was only sent in October 2013. Meanwhile, the establishments had already started implementing initial actions to address the issue. As new RASFF alerts were notified, the establishments reviewed and further developed their initial action plan. The reviewed action plan has been implemented since mid-October 2013. Since then and up to the date of the on-the-spot visit, no meat produced after this date from these establishments has entered the EU.
In addition to the actions initiated by these two establishments, since 16 September 2013 the CCA is implementing a country wide monitoring programme with the aim of identifying the presence of STEC.

A number of recommendations have been made to the CA with a view to addressing the deficiencies identified during this audit.

Specifically, to consider improving procedures in order to make a proper risk evaluation of Rapid Alert System for Food and Feed alert and to react appropriately and timely to the issues identified.