Documents considered by the Committee on 15 May 2019 Contents

6Unfair trading practices in the food supply chain

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny; further information requested; drawn to the attention of the Environment, Food and Rural Affairs Committee and the Business, Energy and Industrial Strategy Committee

Document details

Proposal for a Directive of the European Parliament and of the Council on unfair trading practices in business-to-business relationships in the food supply chain.

Legal base

Article 43(2) TFEU, QMV, Ordinary legislative procedure

Department

Environment, Food and Rural Affairs

Document Number

(39625), 7809/18 + ADDs 1–3, COM(18) 173

Summary and Committee’s conclusions

6.1With the aim of improving farmers’ and other small and medium-sized enterprises’ (SMEs) position in the food supply chain, the EU has agreed new legislation18 on unfair trading practices (UTPs), which are business-to-business practices that deviate from good commercial conduct and are contrary to good faith and fair dealing.

6.2In our scrutiny of the document, we have noted that the legislation will affect the UK under all Brexit scenarios. Even as a third country with no requirement to align in full or in part, the terms of the Directive would apply to relationships between EU suppliers and UK buyers and so UK authorities would need to make provision for such circumstances. As the nature of the future relationship between the UK and the EU is very uncertain, including the length of any transition/implementation period, so the impact of this legislation in the UK is also uncertain.

6.3We last considered the document at our meeting of 27 February 2019, expressing great concern about the continued uncertainties surrounding the impact of this Directive on the UK and looking forward to further information on plans for implementation and enforcement. The Parliamentary Under Secretary of State for Food and Animal Welfare (David Rutley MP) had explained that work on implementation would be tightly bound with the work undertaken to explore enforcement strategies for domestic powers contained in the Agriculture Bill. He promised to write to the Committee once that work had developed.

6.4In his latest letter,19 the Minister explains that the Directive has been formally adopted by the European Parliament and Council. The UK abstained, while the other 27 Member States all supported the Directive. At the final Council vote, the UK did not submit a statement or formal vote explanation as the Committee had suggested. The Minister offers no further comment on plans for implementation.

6.5In separate correspondence with the House of Lords,20 the Minister indicated that a cost-benefit analysis on proposed implementation would be undertaken if it became clear that the UK would need to transpose the Directive. The Minister also explained that establishing the compliance requirements to be placed on UK businesses as a third country will be a largely reactive exercise, depending on how individual EU Member States choose to implement the Directive. This is because if any UK retailers were in breach of the Directive, it would fall to enforcement authorities in the nation of the affected EU supplier to investigate and, if necessary, issue fines. The Minister agreed that it would be important to avoid duplication between enforcement under the EU Directive and domestic UK enforcement under the Groceries Supply Code of Practice.

6.6In our last Report, we asked the Minister to inform us not only how the UK had voted but why. Disappointingly, the Minister simply indicates that the UK abstained and notes that the UK did not submit a statement or a formal explanation of vote. For the purposes of transparency, it is important that the Government clearly sets out the reasons for its vote in Council. Ideally, that should be through a formal explanation of vote but it should at the very least be through a letter to this Committee. We therefore repeat our request for that explanation. It would be helpful if the Minister could also explain why the Government chose not to submit a statement or formal explanation of vote.

6.7Some very important outstanding questions remain concerning implementation and enforcement. The material provided to the House of Lords EU Committee on application of the third country requirements was helpful, but it was disappointing that the Minister did not also communicate that material to us. We ask for an update on the Government’s plans for implementation.

6.8As the Directive has now been adopted, we clear the proposal from scrutiny. We request a response to this chapter by 30 June at the latest in order that the response can take into account relevant developments concerning the UK’s withdrawal from the EU. We draw this chapter to the attention of the Environment, Food and Rural Affairs Committee and the Business, Energy and Industrial Strategy Committee.

Full details of the documents

Proposal for a Directive of the European Parliament and of the Council on unfair trading practices in business-to-business relationships in the food supply chain: (39625), 7809/18 + ADDs 1–3, COM(18) 173.

Previous Committee Reports

Fifty-sixth Report HC 301–lv (2017–19), chapter 3 (27 February 2019); Fifty-first Report HC 301–l (2017–19), chapter 4 (16 January 2019); Forty-eighth Report HC 301–xlvii (2017–19), chapter 3 (12 December 2018); Thirty-ninth Report HC 301–xxxviii (2017–19), chapter 3 (10 October 2018); Thirty-third Report HC 301–xxxii (2017–19), chapter 4 (27 June 2018); Twenty-eighth Report HC 301–xxvii (2017–19), chapter 1 (16 May 2018).


18 Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain

19 Letter from David Rutley MP to Sir William Cash MP, dated 10 April 2019.

20 Letters dated 18 March 2019 and 10 April 2019 from David Rutley MP to Lord Boswell of Aynho.




Published: 21 May 2019