The chief executives of 22 of Europe’s biggest retailers and wholesalers have written to the chair of the EU Agriculture Council, Elisabeth Köstinger, to express concern at a new directive that suggests that multinational food processors need ‘protection’ against the retail sector.
The retailers have said in their letter that while the Unfair Trading Practices directive seeks to protect farmers and small-and-medium enterprises in their dealings with bigger buyers, the proposed inclusion of major manufacturers in this grouping would create an unfair playing field.
Signatories to the letter include Ahold Delhaize, Auchan Retail, Axfood, Carrefour, Colruyt Group, Conad, Coop Sweden, Coop Denmark, Dagrofa, Edeka, ICA, Jerómino Martins, Kaufland, Kesko, Lidl, Markant, Metro, Musgrave, Rewe Group, Sonae, Spar Austria and Salling Group.
Trading Practices
The directive covers payment terms relating to perishable products, banning unilateral and retroactive changes to contracts or last minute order cancellations, and allowing certain practices such as joint contribution to marketing and promotion campaigns provided that they have been agreed by the parties.
According to EuroCommerce, which represents the retail sector, major multinationals are putting forth amendments that would see them included in said directive.
‘Amendments pushed by big multinational manufacturers, under the false pretence of “fairness for all”, proposes to have those large companies covered as well, and to extend the list of prohibited trading practices,' EuroCommerce said.
‘If adopted, those amendments would considerably reduce the scope for practices that can benefit both parties and limit freedom of contracts. This will not benefit farmers.’
'Unintended Consequences'
The letter states that extending protection to large manufacturers, and covering service providers that do not buy or sell food products, “will have a number of unintended consequences”.
It also expressed concerns that this extension to big multinationals “raises fundamental questions of its compatibility with the legal base”.
The CEOs affirm their “very clear interest in treating suppliers, large and small, fairly”, citing commitments to existing supply chain initiatives.
“Retailers are a key contributor to employment in Europe," they add. "Our sector is also characterised by high costs and low margins. The rapid growth of online sales is squeezing those low margins even further.
"Retailers are making huge investments to stay relevant in this digital age: new infrastructure and technology, new services, new business models. […] Handing more profit to large multinational suppliers in this directive will intensify these pressures and further exacerbate risks in terms of employment.”
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
