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EUROPEAN COMMISSION Brussels, 12.4.2018 SWD(2018) EUROPEAN COMMISSION Brussels, 12.4.2018 SWD(2018) 92 final COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Initiative to improve the food supply chain (unfair trading practices) Accompanying the document 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 {COM(2018) 173 final} - {SWD(2018) 91 final} - {SWD(2018) 93 final} EN EN 1 INTRODUCTION ........................................................................................................................ 7 1.1 General ................................................................................................................................................ 7 1.2 Political context .................................................................................................................................... 8 1.3 Unfair trading practices and their relevance in the agricultural sector ................................................... 9 2 PROBLEM DEFINITION ........................................................................................................ 11 2.1 Overview of the problem definition .................................................................................................... 11 2.2 Introduction ....................................................................................................................................... 11 2.3 Occurrence of unfair trading practices in the food supply chain ........................................................... 12 2.4 Under-protection against UTPs in Member States ............................................................................... 13 2.5 Harm caused by unfair trading practices ............................................................................................. 15 2.5.1.1 Operators ................................................................................................................................. 15 2.5.1.2 Consumers ................................................................................................................................ 18 2.6 What are the problem drivers? ........................................................................................................... 20 2.6.1 Imbalance of bargaining power ......................................................................................................... 20 2.6.2 Divergence of UTP rules at the national level .................................................................................... 21 2.6.3 Lack of coordination among enforcement authorities ...................................................................... 22 2.7 How will the problem evolve? ............................................................................................................ 22 2.8 Prior evaluations ................................................................................................................................ 26 3 WHY SHOULD THE EU ACT? ............................................................................................... 26 3.1 Legal basis for EU action ..................................................................................................................... 26 3.2 Subsidiarity: Necessity of EU action .................................................................................................... 28 3.3 Subsidiarity: Added value of EU action ................................................................................................ 28 4 OBJECTIVES: WHAT IS TO BE ACHIEVED? .................................................................... 34 4.1 General objectives .............................................................................................................................. 34 4.2 Specific objectives .............................................................................................................................. 35 4.3 Consistency with other EU policies ...................................................................................................... 35 5 WHAT ARE THE AVAILABLE POLICY OPTIONS? ......................................................... 37 5.1 Introduction ....................................................................................................................................... 37 5.2 Degree of harmonisation of substantive UTP rules .............................................................................. 37 5.2.1 Baseline .............................................................................................................................................. 37 5.2.2 Options discarded at an early stage: detailed harmonisation of substantive UTP rules ................... 37 1 5.2.3 Partial harmonisation of substantive UTP rules ................................................................................. 38 5.3 Scope of UTP prohibition .................................................................................................................... 38 5.3.1 Baseline .............................................................................................................................................. 38 5.3.2 UTPs subject to generally formulated prohibition (based on fairness) ............................................. 38 5.3.3 Prohibiting specific UTPs .................................................................................................................... 39 5.3.3.1 Unilateral and retroactive changes to contracts ...................................................................... 41 5.3.3.2 Last-minute order cancellations concerning perishable products ........................................... 42 5.3.3.3 Claims for wasted or unsold products ...................................................................................... 42 5.3.3.4 Payments for perishable products later than 30 days .............................................................. 42 5.3.3.5 Claims for contributions to promotional or marketing costs of buyer ..................................... 43 5.3.3.6 Requests for upfront payments to secure or retain contracts without consideration ............ 44 5.3.3.7 Criteria concerning the assessment of unfairness of the practices .......................................... 44 5.4 Operationally, an EU approach based on the options set out in section 5 should incorporate the said considerations and be shaped accordingly. Coverage of products ................................................................ 44 5.4.1 Baseline .............................................................................................................................................. 44 5.4.2 Agricultural and processed agricultural products covered ................................................................ 45 5.4.3 Agricultural products covered ............................................................................................................ 45 5.5 Operators covered by UTP rules .......................................................................................................... 45 5.5.1 Baseline .............................................................................................................................................. 45 5.5.2 UTP rules apply in situations characterised by weak bargaining power ............................................ 45 5.5.3 UTP rules apply to all operators ......................................................................................................... 46 5.5.4 UTP rules ‘benefit’ 3rd country suppliers ............................................................................................ 46 5.5.5 UTP rules ‘benefit’ suppliers situated in the EU................................................................................. 46 5.6 Enforcement ....................................................................................................................................... 47 5.6.1 Baseline .............................................................................................................................................. 47 5.6.2 Options discarded at an early stage ................................................................................................... 47 5.6.3 Minimum enforcement requirements “plus” .................................................................................... 47 5.6.4 Minimum enforcement requirements ............................................................................................... 49 5.7 Coordination of enforcement authorities ............................................................................................ 49 5.7.1 Baseline .............................................................................................................................................. 49 5.7.2 Coordination ...................................................................................................................................... 50 5.8 Legal instrument to be used ................................................................................................................ 50 5.8.1 Recommendation ............................................................................................................................... 50 5.8.2 Legally binding instrument ................................................................................................................. 51 6 WHAT ARE THE IMPACTS OF THE
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