Draft law No. 1721-B (European Delegation Act), Article 7 of which contains the principles and guidelines for the implementation of European Directive 2019/633 on unfair trading practices in B2B relationships in the agricultural and food supply chain, will be approved in the next few days.
Indeed, by May 1, 2021, Member States will have to adopt the legal, regulatory and administrative provisions necessary to comply with European Directive 2019/633.
The directive provides for a number of cases where a commercial practice within the food supply chain should be seen as unfair and should therefore be banned. In particular, as always, the policy looks at prohibited business practices that result in:
- late payments over 30 days for perishable products;
- in the event of unilateral changes to the contractual conditions for the delivery of agricultural and food products by the buyer in terms of the frequency, method, place, time or volume of delivery or delivery of the products;
- When canceling orders for perishable products at short notice, so that it can be assumed that the supplier cannot find an alternative to the market or to the use of such products;
- in the request for payment for the deterioration or loss of products by the buyer or after the transfer of ownership to the buyer if the deterioration or loss is not due to the supplier;
- in the event of the unlawful acquisition, use or disclosure of the supplier’s business secrets by the buyer; (vi) when threatening (or implementing) trade retaliation measures against the supplier if the supplier exercises his contractual and legal rights.
Conversely, practices are permitted in which unsold products are returned without payment, payments as a prerequisite for entry into the buyer’s distribution chain, as well as payments for advertising, marketing or advertising costs – provided that they have been clearly and clearly agreed beforehand. Clear provisions in the supply contract or in other subsequent agreements between the supplier and the buyer.
A business practice is considered unfair if it is carried out:
- from suppliers with an annual turnover of no more than EUR 2 million to buyers with an annual turnover of more than EUR 2 million;
- from suppliers with an annual turnover between 2 and 10 million euros to buyers with an annual turnover of more than 10 million euros;
- from suppliers with an annual turnover between 10 and 50 million euros to buyers with an annual turnover of more than 50 million euros;
- from suppliers with an annual turnover of between 50 and 150 million euros to buyers with an annual turnover of more than 150 million euros;
- from suppliers with an annual turnover of between 150 and 350 million euros to buyers with an annual turnover of more than 350 million euros.
From the wording of the draft law it can be deduced that the new implementing rules apply to all deliveries of agricultural and agricultural products regardless of the company’s turnover. Therefore it applies to buyers with an annual turnover of less than 2 million euros and for suppliers with an annual turnover of more than 350 million euros.
Coordination with Article 62 of Legislative Decree No. 1 of January 24, 2012, with amendments by Law No. 27 of March 24, 2012, which introduces significant innovations in terms of the form of contracts in the context of commercial relations in relation to the food chain and the terms of payment must be applicable: the Delegation Act requires confirmation that there is an obligation to be in writing. Contracts for the sale of agricultural and food products cannot be fulfilled exclusively using equivalent forms, and these contracts are concluded prior to the delivery of the products, with the exception contracts that have been concluded with the consumer or that provide for payment (at the same time as delivery) of the agreed price; In terms of payment terms, the new legislation will be aligned with the provisions on electronic invoicing.
Given the ability of Member States to introduce stricter national rules to combat unfair commercial practices, the draft law provides that the prohibited unfair commercial practices include the sale of agricultural and food products using electronic tenders and auctions with double discounts, as well as the sale of products at prices that are well below production costs. With regard to the latter aspect, the regulation on sales below the cost (Presidential Decree No. 218 of April 6, 2001) needs to be revised so that the sale of fresh and perishable food below the cost is only permitted if unsold products are too The risk the loss is recorded or if commercial transactions are planned and agreed in writing with the supplier, without prejudice to the prohibition on unilaterally imposing the loss or the cost of the sale below the acquisition cost on the supplier, directly or indirectly.
The focus is also on the reporting and control phase. The protection of anonymity for complaints in connection with unfair practices that may originate from individual operators, individual companies or associations and representatives of companies in the food chain must be guaranteed.
The national enforcement authority, which is responsible for monitoring the application of the provisions on trade relations in the transfer of agricultural products and foodstuffs, as well as for the application of the prohibitions set out in European Directive 2019/633 and the application of the relevant sanctions, is located in the Central Inspection Department for the fight against fraud and the protection of the quality of agricultural and food products and foodstuffs (ICQRF); This identification seems to contradict the recent proposals for competition reform that the AGCM presented to the government on March 23, 2021, which assign the central role in combating the violations identified in European Directive 2019/633 to the AGCM should.
Finally, according to the DDL, the government is urged to introduce effective, proportionate and dissuasive sanctions that take into account the nature, duration, frequency and severity of the violation, within a maximum of 10 percent of the offender’s last fiscal year prior to the assessment.