IN THE LIGHT OF DIRECTIVE (EU) 2019/633
AGRI-FOOD MARKET REGULATION AND CONTRACTUAL
RELATIONSHIPS
IN THE LIGHT OF DIRECTIVE (EU) 2019/633
16
Edited by
Xxxx Xxxxx Xxxxxxxxxx Xxxxxxxx Xxxxxx
Consumatori e Mercato
Università degli Studi Roma Tre Dipartimento di Giurisprudenza
nella stessa Collana
1. X. Xxxx-Xxxxxxxxx (a cura di), Cosmetici. Diritto, regolazione, bio-etica, 2014
2. X. Xxxxxxxxx, X. Xxxx-Xxxxxxxxx, Introduction to European Union transport law, I ed. 2015; II ed. 2016; III ed. 2019
3. X. Xxxxx, X. Xxxx-Xxxxxxxxx (a cura di), Il diritto all’oblio su Internet dopo la sentenza Google Spain, 2015
4. X. Xxxx-Xxxxxxxxx, Sex and the contract (II ed.), 2015
5. X. Xxxxx, X. Xxxx-Xxxxxxxxx (a cura di), La protezione transnazionale dei dati personali. Dai “safe harbour principles” al “privacy shield”, 2016
6. X. Xxxxxxx (a cura di), Tra regolazione e giurisdizione, 2017
7. C. Xxxxxxxxxx (a cura di), La direttiva consumer rights. Impianto sistematico della direttiva di armonizzazione massima, 2017
8. X. Xxxxxx (a cura di), Introduction to European Union Internal Market Law, 2017
9. M.C. Xxxxxxxxx, M.I. Xxxxxxxxxx (a cura di), Innovazione e regole nei pagamenti digitali. Il bilanciamento degli interessi nella PSD2, 2020
10. X. Xxxxxxxxx, X. Xxxx-Xxxxxxxxx (a cura di), Cibo e diritto. Una prospettiva comparata, 2020
11. A.M. Xxxxxxxxxx, X. Xxxxxxx (a cura di), National Judges and the Case Law of the Court of Justice of the European Union, 2020
12. X. Xxxxxxx, X. Xxxxxxx, X. Xxxxx, X. Xxxx-Zencovich, Data Protection in the Context of Covid-19. A Short (Hi)Story of Tracing Applications, 2021
13. X. Xxxxx, X. Xxxx-Xxxxxxxxx (a cura di), Governance by/through Big Data, 2023
14. X. Xxxxxxxx, X. Xxxxxxxx, X. Xxxx-Xxxxxxxxx, European Media & Communication Law, 2023
15. X. Xxxxxxxx, I tatuaggi fra società, persona e diritto, 2023
Università degli Studi Roma Tre Dipartimento di Giurisprudenza
AGRI-FOOD MARKET REGULATION AND CONTRACTUAL
RELATIONSHIPS
IN THE LIGHT OF DIRECTIVE (EU) 2019/633
Edited by
Xxxx Xxxxx Xxxxxxxxxx Xxxxxxxx Xxxxxx
16
Consumatori e Mercato
2023
Coordinamento redazionale e editoriale:
Gruppo di Lavoro
Collana pubblicata nel rispetto del Codice etico adottato dal Dipartimento di Giurisprudenza dell'Università degli Studi Roma Tre, in data 22 aprile 2020.
Elaborazione grafica della copertina: xxxxxxxxxxxx.xx
Caratteri tipografici utilizzati:
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Impaginazione e cura editoriale: Xxxxxxx-Roma xxxxxxx.xx Edizioni:
Roma, ottobre 2023
ISBn: 979-12-5977-231-2
xxxx://xxxxxxxxxxxx.xxxxxxx0.xx
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L’attività della è svolta nell’ambito della
Fondazione Roma Tre-Education, xxxxxx xxxxx Xxxxxxxxxx 00, 00000 Xxxx
Presentazione della collana “Consumatori e Mercato”
Direttore: Xxxxxxxx Xxxx-Xxxxxxxxx
Comitato Scientifico:
Xxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxx
La Collana “Consumatori e mercato”, pubblicata in open access dalla Roma TrE-Press, intende essere una piattaforma editoriale multilingue, avente ad oggetto studi attinenti alla tutela dei consumatori e alla regolazione del mercato. L’intento è di stimolare un proficuo scambio scientifico attraverso una diretta partecipazione di studiosi appartenenti a diverse discipline, tradizioni e generazioni.
Il dialogo multidisciplinare e multiculturale diviene infatti una componente indefettibile nell’àmbito di una materia caratterizzata da un assetto disciplinare ormai maturo tanto nelle prassi applicative del mercato quanto nel diritto vivente. L’attenzione viene in particolare rivolta al contesto del diritto europeo, matrice delle scelte legislative e regolamentari degli ordinamenti interni, e allo svolgimento dell’analisi su piani differenti (per estrazione scientifica e punti di osservazione) che diano conto della complessità ordinamentale attuale.
*******
The “Consumer and market” series published, in open access, by Roma TrE-Press, aims at being a multilingual editorial project, which shall focus on consumer protection and market regulation studies. The series’ core mission is the promotion of a fruitful scientific exchange amongst scholars from diverse legal systems, traditions and generations. This multidisciplinary and multicultural exchange has in fact become fundamental for a mature legal framework, from both the market practice and the law in action standpoints. A particular focus will be given on European law, where one can find xxx xxxxx of the legislation and regulation in the domestic legal systems, and on the analysis of different levels, in line with the current complexity of this legal sector.
V
Table of contents
Xxxx Xxxxx Xxxxxxxxxx, Introduction: Directive (EU) 2019/633 as a piece
in the puzzle of the agri-food market regulation 3
Xxxxxxxxxx Xxxxxxxxx, Unfair trading practices in the agri-food chain:
the EU framework and the transnational dimension 23
Xxxxx Xxxxx, Directive (EU) 2019/633 on unfair trading practices in the agri-food chain 53
Xxxxx Xxxxxxx, The «fair price» in agri-food chain 75
Xxxxxxxx Xxxxxx, Bargaining power and unfair trading practices in the agri-food chain 91
Xxxxxxx Xxxxxxx, Contractual governance in global food systems 105
Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxx, xxxxxx Xxxxxx, Extending GI protection
within and beyond the EU 123
Xxxxxxx Xxxxxxx, Agricultural production under contract: an overview 139
Xxxxx Xxxxxxx, Covid and agri-food chain 161
PART II
The Member States’ framework
in the light of the implementation of Directive (EU) 2019/633
Xxxx Xxxxxxxxxx, Xxxxx Xxxxxxx, The regulation of B2B relations
in the agri-food chain in Belgium 177
Xxxxxxxxx Xxx Xxxx, Was the transposition into French law of EU Directive 2019/633
on unfair practices in commercial relationships in the agri-food chain pointless? 209
Xxxxxxxxx Xxxxx, Will the implementation of the UTP Directive ban the «fear factor»?
A perspective from Germany 227
Xxxxxxx xxxxxxxxxx, The implementation of Directive no. 633 of 2019
in the Italian experience 249
Xxxxxx Xxxxx, Xxxxxxx xxxxxxx-xxxxx, Xxxxxxxx Xxxx-Xxxxxx, Xxxxxx Xxxxxxx, xxxxxx Xxxxxxxx,
The regulation of contractual relationships in the agri-food chain in Poland 279
Xxxxx Xxxx-Xxxxxxxx, The regulation of the agri-food chain in Spain:
food contracts and unfair trading practices 341
Xxxxx Xxxxxx, The regulation of contractual relationships in the agri-food
chain in Hungary 377
Xxxxxxx Xxxxxxxx, Bargaining power in the agri-food supply chain:
a United Kingdom perspective 421
Xxxxxxxxxx Xxxxxxxxx, Professor of Agri-Food Law, Universitas Mercatorum, Rome. Xxxxx Xxxx Xxxxxxxx, Full Professor of Civil Law, Polytechnic University, Valencia.
Xxxxxxx Xxxxxxx, Associate Professor of Comparative Private Law, University of
Gastronomic Sciences, Pollenzo.
Xxxxxx Xxxxx, Assistant Professor of Civil Law, xxxxxxxxxxxx University, Cracow. Xxxxxx Xxxxxxx, Reader in Intellectual Property Law, City, University of London. Xxxxx Xxxxxxx, Full Professor of Agricultural Law, University of Bari Xxxx Xxxx. Xxxxxxx Xxxxxxxx, Professor Emeritus of Agricultural Law, University of Leeds. Xxxxxx Xxxxxxxx, Post-doc Research Fellow, Sant’Xxxx School of Advanced Studies,
Pisa.
Xxxxx Xxxxxxx, Professor Emeritus of European, Agricultural and Food Law, University of Ferrara.
Xxxxxxxxx Xxx Xxxx, Associate Professor of Private law, University of nantes. Xxxxxxx xxxxxxxxxx, Full Professor of Agricultural Law (Retired ), University of Bari Xxxx
Xxxx.
Xxxxxxx xxxxxxx-xxxxx, Assistant Professor of Civil Law, xxxxxxxxxxxx University, Cracow. Xxxx Xxxxxxxxxx, Professor of European Economic Law, KU Leuven.
Xxxxx Xxxxxx, Attorney, Budapest.
Xxxxxxxxx Xxxxx, Phd Candidate, University of heidelberg.
xxxxxx Xxxxxx, Serra Húnter Associate Professor of Law, University Xxxxxx Xxxxx, Barcelona.
Xxxx Xxxxx Xxxxxxxxxx, Associate Professor of Comparative Private Law, University of Cagliari.
Xxxxxxxx
Xxxx-Xxxxxx,
Assistant Professor of Civil Law, xxxxxxxxxxxx University,
Cracow.
Xxxxx Xxxxxxx, PhD Candidate, KU Leuven.
Xxxxxxx Xxxxxxx, Associate Professor of Comparative Private Law, University La Sapienza, Roma.
Xxxxxx Xxxxxxx, Assistant Professor of Civil Law, xxxxxxxxxxxx University, Cracow. Xxxxx Xxxxx, Full Professor of Agricultural Law, University of Ferrara.
Xxxxxxxx Xxxxxx, Full Professor of Comparative Private Law, Roma Tre University. xxxxxx Xxxxxxxx, Assistant Professor of Civil Law, xxxxxxxxxxxx University, Cracow.
Introduction: Directive (EU) 2019/633 as a piece in the puzzle of the agri-food market regulation
Summary: 1. Premise – 2. Directive 2019/633 and its broader context – 3. The transposition of Directive 2019/633 into the domestic legal systems: a summary report – 4. Critical remarks.
1. Premise
This volume was conceived in the wake of the adoption of 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. The Directive obliged Member States to introduce into domestic law its implementing measures by the deadline of 1 november 2021.
Directive 2019/633 draws the attention of private law scholars, such as the editors of this Volume, both for its repercussions in domestic law and due to its relevance to the hotly debated gradual construction of a European contract law. In fact, it is noticeable that the Directive is one of the few EU instruments for the protection of the weaker party to a contract who is not a consumer: as such, the Directive is directly comparable, as regards the tools of protection and their impacts in the Member States, with the interventions and protection strategies envisaged for consumers by the more numerous contractual directives specifically concerning them. Therefore, Directive 633 can be considered an obligatory point of reference in the attempt to build the regulatory framework for B2B contracts within the European Union and accordingly in the Member States.
however, by focusing on private law, the perspective outlined above immediately reveals itself as limited and partial if one wants to correctly grasp the legal framework concerning the contracts of the agri-food chain in abstract, as well as the practical implications of the discipline provided
by Directive 2019/633. Indeed, in the context of the agri-food chain, the issue of the effectiveness of the protection provided by the rules of private law is more crucial than ever, due in particular to the limits that civil protection encounters in this area. In fact, it is an established fact, as emerges from the contributions in this Volume, that abuses within the food-chain occur despite the legal protections provided by domestic legal systems, but available civil remedies and private enforcement procedures are not sufficient to tackle the problem. In particular, the high market concentration on the demand side and the consequent unfolding of the
«fear factor» stifle the protection afforded by the rules of private law.
Furthermore, the agri-food chain is a complex and multifaceted phenomenon and of public interest, not just of private law. In any case – even if one wanted to merely consider the profile of the protection of the weaker party according to the rules of private law – the very understanding of the protections provided by private law cannot be separated from the consideration of the broader framework within which Directive 2019/633 is placed. This certainly requires putting the Directive into the broader framework of the Common Agricultural Policy (CAP), including the regulation on competition.
Therefore, in the light of the above, it was almost obligatory for the editors of this Volume to widen the scope of the research, by extending the view from the private law of contractual relations to the discipline of the agri-food market and asking for support from experts in the field of agri- food law and of other relevant areas of the law (without any pretension of exhausting all the aspects of this broad and complex matter).
From the foregoing follows the articulation of the volume into two parts: the first is dedicated to the contextualisation of the new EU discipline within the broader regulation of the agri-food market; the second is focused on the implementation of Directive 2019/633 in selected domestic legal systems. That said, in the next pages, a summary illustration of the topics dealt with and of the results that can be drawn from the contributions to this Volume will be provided.
2. Directive EU 2019/633 and its broader context
The initial contributions of the first part of this Volume are devoted to the critical illustration of the legal framework in which Directive 2019/633 is placed, with the Directive only one part of the integrated framework that the European Union has been building under the umbrella of the CAP since the origins of the European Economic Community. This process has been conducted with a view to achieving the more or less specific goals identified in the different historical moments that have marked the evolu- tion of the Common Agricultural Policy.
It is well-known that agriculture has an ‘exceptional’ position amongst the EU policies, to such an extent that, starting from the earliest times of the Treaty of European Economic Community, it has been subjected to derogations from the ordinary rules on competition, which are the corner- stone of the single market. Indeed, «Article 42 TFEU exceptionally allows farmers to enter into horizontal agreements precisely in order to mitigate imbalances in economic and contractual power and ensure that the agricultural party has effective powers to shape the content, including the economic content, of contracts» (Xxxxx Xxxxx; emphasis added).
Furthermore, in recent years there has been «an expansion of the objects considered and of the area covered by the European legislative reforms on a plurality of topics all related in some ways to the CAP and all mentioning the CAP among their legal basis: from the General Food Law of 2002, to the hygiene Package of 2004, to the Quality Package of 2012, to the new rules on transparency and risk assessment in the food chain and on official controls on food, feed, animal health and welfare, plant health and plant protection, up to the reform of the CAP and of the single CMO of December 2021» up to and including Directive 2019/633 (as illustrated by Xxxxxxxxxx Xxxxxxxxx).
Indeed, the legal basis of Directive 2019/633 is Art. 43(2) TFEU, and not, as normally occurs for directives on contracts with consumers, Art. 114 TFEU («measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market»). The Directive, in fact, is well placed in direct relationship with the objectives of the CAP, as established in Art. 39 TFEU, para. 1, in particular as it aims «to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture». Although indirectly, the Directive also relates to the objective
«to increase agricultural productivity … by ensuring the rational develop- ment of agricultural production and the optimum utilisation of the factors of production, in particular labour». In fact, since «labour» means regular work, and therefore fair remuneration of suppliers, the Directive should also help to combat the proliferation of undeclared work (as outlined by Xxxxx Xxxxxxx).
Moreover the EU Court of justice «has explicitly and authoritatively recognized the CAP as the founding basis of a complex system, which uni- fies reasons of competition and reasons of food safety in a multifunctional discipline, overcomes the distinction between subjects, locates in a single regulatory framework all subjects of the production chain and consumers, and aims to ensure the stability of the market and the transparency of pro- duction and marketing conditions» (as remarked by Xxxxxxxxxx Xxxxxxxxx). The rationale justifying the adoption of the Directive is the so-called
«double risk», as set out in recital 6 of the preamble, according to which
«[w]hile business risk is inherent in all economic activity, agricultural production is particularly fraught with uncertainty due to its reliance on biological processes and its exposure to weather conditions. That uncer- tainty is compounded by the fact that agricultural and food products are to a greater or lesser extent perishable and seasonal. In an agricultural policy environment that is distinctly more market-oriented than in the past, protection against unfair trading practices has become more important for operators active in the agricultural and food supply chain». As underlined by several of the contributors, the main reason for the adoption of the new Directive lies in the vey need to protect suppliers as a result of the fading of the support measures previously granted by the EU, while the market has also become more competitive.
Directive 2019/633 is dealt with in more detail in the contribution of Xxxxx Xxxxx. After an illustration of the general framework in which the Directive is placed and of the history of the Directive, the Author focuses on its most relevant aspects, such as the scope, the notion of unfair prac- tice, the types of practices it covers and their respective regulation as well as the minimum harmonisation approach. Finally, some conclusions on the impact of the Directive are made.
The subsequent contributions deal with some specific aspects of the agri-food market regulation, more or less interlinked with Directive 2019/633.
Xxxxx Xxxxxxx concentrates on the profile, as crucial as difficult to regu- late, of the «fair price» of agri-food products, which is immediately related
to one of the aims of the CAP and of the same Directive 633: the aim «to ensure a fair standard of living for the agricultural community, in particular by increasing the individual income of people engaged in agriculture». In this respect importantly the Court of justice has clarified that the principle of freedom of price applies in conditions of effective competition, while in situations of imbalance Member States may intervene with provisions which possibly affect the functioning of the internal market, provided that the measures in question are appropriate for achieving the objective and do not go beyond what is necessary to achieve it.
nevertheless, the EU interventions on prices – both those assigning a primary negotiating role to producer associations and the rules laid down in Art. 168 of Regulation 2013/1308 – have remained incomplete. Even if the more recent Regulation EU 2021/2117 dealt with the formation of the price and the indicators to a more significant extent, the solution is still partial, as the faculty to determine these indicators is left to the Member States and, in accordance with the principle of contractual freedom, it is at the discretion of the parties to establish whether to fix the price on the basis of the indicators and possibly choose the reference indicators. In the final analysis, prices of products charged to suppliers, differently from prices applied to consumers, are not in fact determined upstream, but down- stream, by the large distribution chains. In the final part, Xxxxx Xxxxxxx’x contribution dwells upon the possible indirect impact of Directive 2019/633 on «fairness» of prices.
Xxxxxxxx Xxxxxx focuses on a central aspect of Directive 633, such as the
definition of «bargaining power». In determining its scope, the Directive favours an automatic mechanism, linked to the relationship between the turnover of the parties, identified by brackets (so called «staggered mech- anism»), but this choice, dictated by reasons of compromise, is debatable and may also lead to paradoxical consequences. Evidence of this is the fact that the Member States themselves have not often shared the approach of the Directive, as emerges from the contributions in the second part of this Volume.
Xxxxxxx Xxxxxxx analyses the role of private and hybrid non-state actors, including standard-setting bodies, in the production of agri-food law (which «is increasingly being shaped by private and hybrid non-state actors, thus making private law sources a fundamental component in this sector. Indeed, the vast number of food governance sources, which includes standards, codes of conduct, criteria, guidelines, policies and rulebooks, has reached such a level that it cannot be overlooked when studying com-
parative and global food law.…»). Concerns about growing inequality of bargaining power in the agri-food market would require also a response to this phenomenon, as «the rise of contractual governance is not politically neutral, in the sense that it clearly favors some operators at the expense of others» and «especially transnational corporations and intermediary actors are most likely to benefit from the expansion of governance by contract»; but the regulation of the agri-food chain «cannot be entirely delegated to large businesses and market forces», as it pursues also public goals.
The collective contribution by Xxxxxx Xxxxxxx, xxxxxx Xxxxxx and Xxxxxxxx Xxxxxxxx deals with the protection offered to geographical indi- cations (GIs) in the European Union. The agri-food quality policy is also one of the instruments of the CAP which should help also increase farmers’ incomes by protecting local producers from those who appropriate and exploit their names in the marketplace (as outlined also by Xxxxx Xxxxxxx and Xxxxx Xxxxxxx). Concerns raised in this context are mostly related to the fact that in the EU – the «Old World» – the protection is notoriously stronger than in the «new World», as shown by the growing number of disputes arisen at the international level as illustrated by Xxxxxx Xxxxxxx, xxxxxx Xxxxxx and Xxxxxxxx Xxxxxxxx.
Xxxxxxx Xxxxxxx deals with «contract farming», «as a particular form of supply chain governance adopted by firms to secure access to agricultural products, raw materials and supplies within certain specifications as to the quality, quantity, origin and timing», which can take different forms, based on the product characteristics, the number of parties involved, the targets and resources available to the firms, the farmers’ skills and which presents many benefits, as well as disadvantages and risks, as it very often results in an unbalanced relationship between the parties involved in the contract. Only a minority of countries, both European and non-European, have enacted regulations, also with a view to affording stronger protection to the weaker party, while at the supranational level the UnIDROIT/FAO/ IFAD Legal Guide on Contract Farming, «which offers a comprehensive soft guidance to all possible actors involved in these operations whilst at the same time supporting domestic legislators willing to undertake legal reform, can represent a veritable step forward for a more responsible con- tract farming».
The contribution of Xxxxx Xxxxxxx addresses the impact of Covid
19 on the agri-food chain: while the flow of supplies of foods produced directly by EU farmers or of agricultural raw materials to be processed in industry did not undergo significant alterations during the pandemic,
worse problems have been encountered in developing countries, where the number of people suffering from hunger has swelled significantly. Therefore, after a historical excursus aimed at highlighting the diversity of contexts in past eras as opposed to the present age of more homogenous globalisation and consequent delocalisation of production processes, along with the insufficiency of the international agreements and institutions of global governance, the Author makes some observations on the limited impact of Directive 2019/633 in the perspective of better functioning of the supply chain and of rebalancing of the positions of the parties.
3.The transposition of Directive 2019/633 into the domestic legal systems: a summary report
The ‘rapporteurs’ of the Member States participating in this Volume were asked to present the legal framework governing contractual rela- tionships in the agri-food chain in their own national law, encompassing the specific regulation before and after the implementation of Directive 2019/633, as well as the general regulation provided by private law and competition law, and the related enforcement procedures, to the extent applicable to the agri-food chain relationships.
As to the impact of Directive 2019/633, which is the main focus of this Volume, the contributions provide significant feedback in particular with regard to the extent to which Member States have availed themselves of the possibility to maintain – considering that many Member States already had enacted a specific regulation – or introduce a standard of protection higher than the Directive, in conformity with the minimum harmonisation clause set out in Art. 9 of the Directive.
All the contributions highlight the non-correspondence between the approach taken by the Directive and the choices made by national leg- islatures. The Member States dealt with in this Volume introduced or maintained a standard of protection higher than the Directive in relation to one or more of the core aspects of the discipline, such as scope, general clause and/or list of clauses, adherence to the Directive as far as the inclu- sion of a given practice in the grey list or in the blacklist and inclusion in the national regulation of practices other than those provided in the Directive. Furthermore, while the Directive does not impose the obligation to conclude the contract in written form, this obligation is provided in the
legislation of some Member States.
As to the scope, the approach taken by Directive 633 can be easily questioned for more than one reason. First of all, the Directive is applicable only in favour of the supplier and provided that the turnover of the parties falls under the thresholds laid down in the Directive.
Therefore, regrettably the buyer is not protected under the Directive. Even if it is true that in the real practice the stronger party is normally the buyer, the opposite could also be true and thus such discrimination seems unjustified.
More importantly, as highlighted in the contributions of Xxxxx Xxxxx and Xxxxxxxx Xxxxxx, the «staggered mechanism» laid down in the Directive operates automatically, with the consequence that if the turnover of one of the parties deviates from the threshold figures to a minimal extent, the protection cannot be invoked. This also leads to the paradoxical result that the Directive applies even if the supplier has a turnover of 9.999.000,00 euros and the buyer has a turnover of 10.000.001,00 euros, even if «[i]n these instances, it is evident that the turnover cannot be used as a trust- worthy indicator (the EU legislators use – Whereas 14 – the term “suitable approximation”) of a different negotiating power»; on the contrary, «the Directive does not apply if the supplier’s turnover is 150 million euros plus 1,00 euro and the buyer’s turnover is euros 349.999.999,00. Contrary to the apparent intent of the EU legislators, in this instance a difference of 200 million euros would not be considered to indicate a considerable disparity in negotiation power» (Xxxxxxxx Xxxxxx). Furthermore, practices conducted between micro-enterprises are never prohibited, as they would not fall within the thresholds of the Directive (as outlined by Xxxxx Xxxxx). In the light of this criticism, it is to be welcomed that the Member States dealt with in this Volume have sometimes opted for also protecting the buyer against the seller and that they have sometimes renounced defin- ing the scope of the discipline on the basis of the «staggered mechanism», by following a different approach. At the same time, it cannot be ignored that the adoption of criteria different to the Directive may cause the dif- ficulties which the staggered mechanism has the advantage of preventing. Indeed, as the experience of some Member States shows, and as it emerges also from some of the contributions, outside the scope of abuse of a domi- nant position and the related criteria, the issue of the demarcation of a dis- parity of power justifying protection in contract law is not easy to resolve. With regard to the definition of «unfair practice», Directive 2019/633 does not provide a general clause, but it only identifies as unfair the prac-
tices listed in the black and grey list, provided that the turnover thresholds are met. Conversely some Member States opted for the provision of a general clause in addition to a catalogue of unfair practices. Some Member States considered as «black» some practices which would be grey under the Directive. Some Member States extend the protection to some practices which are not contemplated in the Directive.
Provided below is a summary overview of the basic information of the law in the Member States studied following the implementation of Directive 2019/633, with a view, in particular, to give some indications on the possible ‘deviations’ from the common minimum standard required by the Directive.
In Belgium, the contracts of the agri-food chains had not received any specific regulation before the transposition of Directive 2019/633. Under the implementing legislation only the supplier is protected, like in the Directive, while no reference to the turnover thresholds of the parties involved in the practice is made (provided that the turnover of the supplier does not exceed 350 million euros and exception made for recognised pro- ducer organisations, which can benefit from protection even beyond that threshold); neither is any requirement of significant imbalance between the parties set out. Furthermore, the notion of «food product» includes also feed.
There is not any general clause establishing when a given practice is unfair, but only a list of black and grey practices corresponding to the cata- xxxxx in the Directive (and even if domestic law, unlike the Directive, does not make any distinction depending on the perishable or non-perishable nature of the products). however, it should also be noted that more gen- eral provisions of domestic law, especially those introduced in 2019 on the abuse of economic dependency, unfair terms and unfair market practices in B2B relations, based on general clauses, are applicable, regardless of the relative size of undertakings.
In France, the implementation of Directive 2019/633 has gone almost unnoticed, due to experience already gained in the regulation of the agri- food relationships. Indeed, the subject matter of the disparity of power within the agrifood chain has received great attention in recent years, including in the political debate and in the media, and several reforms have been implemented.
The practices listed in the Directive were already illegal under the French regulation on commercial practices, as recently amended, which considers such practices as «pratiques restrictives de concurrence», which
are forbidden per se, regardless of their effects on the market. Furthermore, the scope of the domestic regulation goes beyond the Directive: the pro- tection is afforded to all businesses, without any reference to the turnover ratio; the implementation of the Directive only led to the introduction of three new practices. It can be further noted that French law provides that the negotiations between the supplier and the buyer do not extend to the part of the supplier’s price that covers the cost of the raw agricultural materials and of the processed products mentioned in the law, and that the contract has to include a price revision clause based on the variation in the price of the raw agricultural materials used in the finished food product.
The German legal framework prior the implementation of the Directive was also to a considerable extent capable of giving the weaker party of the agri-food chain adequate protection, at least in abstract terms, by means of the general provisions on unfair commercial practices, antitrust law and unfair terms. That said, the Directive can be credited with introducing a public enforcement mechanism capable of overcoming the «fear factor», which would prevent the weaker party from taking any legal initiative against the stronger counterparty. As to the scope, the same turnover ratio of the Directive is adopted as a general rule (but the upper limit is wider than the Directive with regard to some sectors and for a transitional peri- od which can be further extended) and only the supplier is protected, in accordance with the Directive. The option to provide a general clause was rejected, because it could have interfered with antitrust law (being a sort of «shadow BGB») and because the presence of a list of detailed practices would better ensure clarity. however, some grey practices of the Directive are contemplated as black in the domestic legislation. Antitrust law remains a valid tool of protection also after the implementation of Directive 633, especially because the abuse of dominant position, in the form of «relative» abuse, can cover practices which are not contemplated under the legislation implementing the Directive.
In hungary, Directive 2019/633 was transposed by amending a pre-ex-
isting regulation on unfair distribution practices vis-à-vis suppliers of agri- food products. Like the Directive, the resulting regulation protects only suppliers against buyers, but, unlike the Directive, it does not determine its scope by reference to the turnover of the parties. Only the practices which are listed in the law can be regarded as unfair; furthermore, all the listed practices are black and none are grey. If the practices listed in the domestic legislation seem to correspond to the same practices provided by the Directive, it is not easy to tell exactly whether the domestic legislation
complies with the Directive, as the former defines the practices in a more sophisticated way and in great detail. It is also interesting to note that the hungarian competent enforcement authority has been involved in many infringement procedures. Unfortunately, the reasons that a given practice is considered unlawful are not made public, with the consequence that no useful indication can be found as to the approach taken by the authority in interpreting the practices (in particular in relation with the Directive) and in order to identify the best practices and avoid future infringements. The Italian legislation implementing Directive 2019/633 goes beyond the scope of the Directive: it also protects buyers against suppliers and it does not refer to the turnover ratio of the parties. It does not contemplate a general definition of unfair practice; it does not require the finding of a situation of abuse; in other words, differently from the regulation previous- ly in force, the domestic legislation is independent «of the verification of the actual occurrence of a specific economic dependence of one contractor with respect to the other which is, on the other hand, an operational pre- requisite in Directive 633 of 2019» (as highlighted by Xxxxxxx xxxxxxxxxx; and taking into consideration the remarks made by Xxxxxxxx Xxxxxx with regard to those practices which the national legislation defines in terms of
«imposition» by the buyer, which conversely would require «a concrete and
careful analysis (…) to determine which of the two parties has the real and effective power to impose itself on the other»). The implementing legisla- tion only lays down a black and a grey list and adds some more practices to those provided in the Directive, including also double-discount electronic tenders and auctions and sales below cost. In particular, the fact that dou- ble-discount auctions are banned is to be positively assessed, because this method for concluding contracts is highly detrimental to all the supply chain relationships, leading to the ‘mortification’ of prices on the entire market; furthermore, below-cost sales very often follow the implementa- tion of such auctions (as remarked by Xxxxxxx xxxxxxxxxx).
It must also be noted that some of those additional practices are defined in broad terms, so that the enforcement authority enjoys a wide discretion in the assessment of their unfairness. Furthermore, collective entities are entitled to bring proceedings in order to obtain an injunction as well as damages.
In Poland both suppliers and buyers are protected. In line with the approach of the legislation on contractual relationships in the agri- food chain already in force prior to Directive 2019/633, and unlike the Directive, a general clause is provided, according to which a given practice
is to be qualified as «unfair use of contractual advantage» if it is contrary to principles of morality and threatens to infringe or infringes upon sig- nificant interests of the other party. To facilitate the assessment on the existence of such practice, some rebuttable presumptions are established, based on the turnover ratio of the parties, and provided that the contrac- tual advantage may be found even regardless of the turnover. Also, a list of clauses, both black and grey, is set out.
Some relevant cases can be found in which the competent administra- tive enforcement authority has intervened in relation to practices in the agri-food market. On the contrary, civil remedies afforded to weaker par- ties do not appear adequate (particularly with regard to the nullity of the entire contract as a consequence of the unfairness of the single clause and to the regulation on prescription; also, the lack of provisions concerning the relation between administrative proceedings and civil proceedings and the lack of standing of associations representing the interests of the operators involved are regrettable).
In Spain as well the regulation of agri-food relationships preceded the adoption of Directive 2019/633. The protection framework of weaker par- ties, as resulting from the amendments introduced in the previous legisla- tion to implement the Directive, is broader in its scope than the Directive: no reference is made to the turnover ratio of the parties and the protection is afforded both to suppliers and buyers, including small undertakings. Practices to be considered unfair are only those listed; the implementation of the Directive led to the introduction into domestic law of the unfair practices set forth in Art. 3 of the Directive, according to the same char- acterisation, as black or grey, provided by the Directive; such practices are additional to the practices already prohibited under national law. It can be noted that – similarly to other legal systems (such as, e.g., France and Italy) – some domestic provisions are concerned with avoiding «destruction of value in the food chain» («destrucción de valor en la cadena»: Art. 12 ter of Ley 12/2013): the price paid by each operator to the previous operator along the chain cannot be lower than the cost of production effectively incurred by the latter and, in order to protect primary producers, the prices applied to final consumers cannot be lower than the real price of purchase of the product. All the means of proof admitted by law can be used to determine the cost of production and the elements to be taken into con- sideration in the assessment are laid down in the same law.
Last but not least, the United Kingdom: Xxxxxxx Xxxxxxxx highlights
how before Brexit the main concerns raised were mostly related to the
possible adverse effect that disparity of power within the chain could have on consumers and on competition rather than on any professional weaker parties, including intermediaries, operating within the chain. The only ini- tiatives taken – such as the Groceries Supply Code of Practice and the later establishment of the Groceries Code Adjudicator – have limited scope and impact. Following Brexit, bespoke national legislation to address imbal- ances within the agri-food supply chain was introduced: Section 29 of the Agricultural Xxx 0000 authorises the Secretary of State for Environment, Food and Rural Affairs to introduce regulations which impose obligations on business purchasers of agricultural products when contracting to pur- chase agricultural products from qualifying sellers and which provide for the enforcement of these obligations, «for the purpose of promoting fair contractual dealing by business purchasers of agricultural products from qualifying sellers». In addition, a non-exhaustive list is provided of the kinds of obligation which regulations made by the Secretary of State might impose. The examples under the Agriculture Xxx 0000 bear considerable similarity to the prohibited unfair trading practices as set out in Art. 3 of Directive 2019/633: in particular both the lists are non-exhaustive and under both measures further action is required for full implementation, but the non-exhaustive list of prohibited practices of the Directive is generally more comprehensive. While no regulations under Section 29 of Agriculture Xxx 0000 have been enacted yet, some specific-sector commit- ments have been undertaken by the Government in April and May 2023 in this respect.
4. Critical remarks
The following considerations summarise the assessments emerging from the contributions collected in this Volume in relation to the effective- ness and impact of Directive 2019/633.
First of all, it should be noted that the ‘judgment’ on Directive 2019/633 depends on the attitude of the observer and the reference stan- dard for the evaluation.
On the one hand, the Directive is an overall modest protection instru- ment. The content is limited, as also arises from the comparison with the regulations already in force in numerous Member States before its adop- tion, as well as from the finding, although based on a sample of a minority
of Member States, that most national legislators have made use of the minimum harmonisation clause, by introducing or maintaining provisions more far-reaching than the Directive.
As to the scope of application, it is true that – thanks to the amend- ments proposed by the Parliament, which played a positive role in strength- ening the position of weaker parties (as highlighted by Xxxxx Xxxxx and Xxxxxxxxxx Xxxxxxxxx) – the Directive applies even if only the supplier or only the buyer is established in the Union. nevertheless, the delimitation of the field of application seems to remain unsatisfactory, as it is anchored to rigid and automatic criteria, which do not allow an assessment on the existence of a situation of weakness needing protection outside the estab- lished numerical parameters (the turnover thresholds). Moreover, only the supplier is protected with respect to the buyer and not vice versa.
Furthermore, the Directive limits itself to laying out some typical cases of unfair commercial practices and there is no case in which practices that are not found in the list can be considered unfair. Moreover the practices of the grey list becomes legitimate if they are provided for in contractual clauses formulated in a clear and intelligible way (and therefore the stron- ger party can easily impose on the other such clauses without any conse- quence).
The Directive also has a relative impact in terms of the level of xxxxxx- isation pursued, because it is a minimum harmonisation measure.
What also emerges from the contributions is an awareness of the inher- ent limits of protection based on contractual formalism and transparency, such as that envisaged by the Directive, for the purpose of rebalancing the position of the parties in a market which is characterised precisely by the asymmetry of negotiating power due to downstream concentra- tion. Indeed, with the words of Xxxxx Xxxxxxx, «[i]nterventions based on strengthening contractual transparency cannot be considered adequate for reducing the abuse of contractual power, since it is precisely the disparity of power that conditions the exchange value». More effective, in relation to this objective, is the protection offered by antitrust law: «[t]he structural imbalance is, in large part, due to the mergers of economic operators at the top end of the food supply chain and the purchasing power that results from this. If this purchasing power cannot be “de-concentrated” then it is important to monitor mergers ex-ante» (Xxxxxxxxx Xxx Xxxx); and «the non-application, on an exceptional basis, of part of the antitrust rules (…) is the most incisive, allowing the weaker party in the market to increase its economic power», while the fight against unfair commercial practices «is a
sort of ‘palliative treatment’, since it does not affect the economic content of the contract nor does it seek to reduce existing imbalances, but it merely ensures that the rules governing the contract and its performance are in line with the principles of fairness and good faith» (Xxxxx Xxxxx).
Looking at the impact of Directive 2019/633 in a positive light, it can be first considered that, in general terms, the very existence of common European rules should activate a mechanism of interaction and dialogue between legal systems, through the different «legal formants», capable of causing further changes and possible advances, as is inherent in any European law intervention and as the experience gained in the field of consumer protection shows. Indeed, the fact that Member States often go beyond the Directive (in particular by regarding as unfair those practices which do not fall under the Directive) should trigger a virtuous cycle whereby in the long-term European law will tend to expand the range of practices deemed incorrect.
Looking at the single commercial practices, it can also be remarked that, with regards to late payments, which are one of the most recurring unfair practices in the agri-food market, Directive 2019/633 goes beyond EU Directive no. 2011/7 on combating late payment in commercial trans- actions, as it introduces mandatory time limits and thus abandons the residual approach set out in the latter Directive (Xxxxx Xxxxx).
Furthermore, the fact that Directive 2019/633 does not deal with the price of agri-food products, does not mean that it does not intervene on the contractual balance, taking into consideration that such price is only one of the factors that contribute to determining the profitability of the operation and the presence of the unfair practices targeted by the same Directive. This undoubtedly affects such profitability, adding costs and risks additional to those inherent in agricultural activities (as remarked by Xxxxxxx xxxxxxxxxx). In this respect it can be also noticed that, despite the lack of provisions on the ‘fair price’ of the product in the Directive, some national legal systems (France, Italy, Spain, for example, even if with partial results), going beyond the obligations deriving from the implementation of the Directive and Art. 168 of Regulation 2013/1308, contemplate the ‘fair’ price as a relevant element for the purpose of qualifying a given practice as unfair (for example in the context of the below-cost sales) and set forth reference indicators (even without concealing the limited impact of these provisions).
In general terms it can be argued that the main merits of the directive
pertain to the mechanism of enforcement, and first of all to the fact that
the Directive has imposed the setting-up of a public law enforcement system, which was not present in all legal systems (as shown in the contri- bution on the German experience). In fact, if it is true that many Member States could compensate for the lack of specific regulation concerning rela- tionships in the agri-food chain through the general provisions applicable in B2B relations, the effectiveness of private remedies would be precluded by the fear factor (as inferred also, indirectly, from the paucity of case law). It is from that same perspective that the Directive protects the anonymity of the complainant. Additionally, the fact that the enforcement authorities are vested with significant investigative and sanctioning powers, as well as the provision of «effective, proportionate, and dissuasive» sanctions, which may lead national legislators to possibly increase the severity of the sanctions already provided, can be considered merits to be credited to the Directive.
Also the mechanism of institutional cooperation laid down in
Directive 2019/633 – i.e., the cooperation between the State authorities and the monitoring role of the Commission – can help to strengthen pro- tection in national contexts and at the European level, possibly leading to further action.
The fact remains that the assessment on the unfairness of the practices is carried out only at national level: the Member States are still considered as better positioned to evaluate the occurrence of situations complementing the criteria of unfairness of the practices in the market that would be complex to identify and to regulate in a uniform way at the EU level. It remains also to be seen what can happen when the unfair commercial practice is conducted by an operator outside the European Union.
Finally, beyond the insight provided by the contributions with specific regard to the regulation of the agri-food chain relationships, their added value has to be underlined also in terms of the knowledge that they provide on the evolving legal framework concerning the protection instruments of weaker parties in contract law, and their interplay with competition law, and accordingly on the coherence of the entire system (particularly in the light of the call for more coherence in European private law expressed in the past by both the EU Parliament and the EU Commission and the rel- evant proposals set forth by the European legal doctrine).
In particular the contributions on Belgium and France epitomise the extent of the complexity that the overall regulation can reach due to the overlap between different «layers» of protection (sectoral, B2B, general: see Xxxx Xxxxxxxxxx and Xxxxx Xxxxxxx, describing the present Belgian framework
as a «millefoglie»; and Chaterine Del Cont, depicting the «pletora» of laws governing the matter): in both cases it seems that such complexity is not balanced by an effective improvement in terms of protection and better functioning of the agri-food chain.
With regard to the regulation of agri-food contracts, the contributions also provide useful insights on the debate concerning those more specific profiles on which Directive 633 says nothing, such as, in particular, the fate of the contract in case of nullity of the clause constituting an unfair practice and the relationship between the enforcement proceedings and the possible civil proceedings, in addition to the issue of the criteria relevant in order to determine whether a situation of imbalance/abuse/advantage exists for the discipline to be applicable in those legal systems which do not simply refer to the criterion of turnover.
The supranational framework
Unfair trading practices in the agri-food chain: the EU framework and the transnational dimension
Summary: 1. CAP, markets, European framework – 2. The Commission’s proposal – 3. The parliamentary path – 4. The new paradigms – 5. The transnational dimension.
1. CAP, markets, European framework
In 1957 the Treaty of Rome establishing the European Economic Community – stipulated by founding Members which had experienced fierce conflicts during the war and were still facing a difficult economic and social situation – insisted on the creation of a common market: «to ensure the economic and social progress of their countries by common action to eliminate the barriers which divide Europe», calling «for concerted action in order to guarantee steady expansion, balanced trade and fair competition»1.
The promotion of full competition was one of the founding principles of EEC2, strongly innovative in comparison to the traditional national approaches, shaping a general framework, which expressly prohibited and declared void, inter alia, all agreements among undertakings or associations of undertakings and all decisions or public aids «which distorts or threatens to distort competition»3.
This principle, applicable to all economic activities of any kind, knew only a relevant and significant exception: the Treaty assigned to agriculture a special regulation, exclusive and different from all other economic activities.
1 See the premises of TEEC.
2 See R. Torino-C. Xx Xxxx (eds), Diritto e politiche dell’Unione Europea, Cedam, Xxxxxx, 0000.
3 See Artt. 85-94 TEEC.
Production and trade of agricultural products were not, in general terms, subject to general EEC rules on competition, but were located in a single regulatory area, taking into account the special objectives assigned to CAP4.
The specialty of regulation was expressly based on the specialty of the objectives, thus identified by art. 39 TEEC:
«The objectives of the common agricultural policy shall be:
(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilization of the factors of production, in particular labour;
(b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
(c) to stabilise markets;
(d) to assure the availability of supplies;
(e) to ensure that supplies reach consumers at reasonable prices»5.
A common element is shared by the objectives of art. 39 TCEE: it is the active search for security, specifically food security, which includes and relates fair earning for producers and adequate access to food for consumers.
The search for security was a founding element even of other European Treaties of that period6: the Coal and Steel Treaty7, and the Euratom Treaty8, both aimed to assure «availability of supplies» through active policies to meet essential needs of European citizens, like carbon, steel, energy.
In Cool and Steel Treaty and in Euratom Treaty, reference to security
4 Art. 42 TEEC states: «The provisions of the Chapter relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the Council within the framework of Article 43(2) and (3) and in accordance with the procedure laid down therein, account being taken of the objectives set out in Article 39».
5 On the specialty of objectives assigned to agriculture, and on the traditional status of price-takers of farmers, see X. Xxxxxxx, Manuale di diritto agrario, Giappichelli, Torino, 9^ ed., 2022.
6 On the development of European integration, see X. Xxxxxx, Percorsi dell’Unione europea, in R. Torino-C. Di Maio, cit., p.1.
7 Treaty establishing the European Coal and Steel Community, of 1951.
8 Treaty establishing the European Atomic Energy Community, of 1957.
implied an active approach, within and outside the new Communities thereby created, with the introduction of provisions on behaviours and duties of public and private actors, and the adoption of public policies, called to guarantee essential goods9. The result was a model of action, which may be traced to that of «heavy modernity»10, a model «where reality was shaped as an architectural work … a time of drawing tables and drafts»11.
In the same perspective, agriculture was recognised by the TEEC as a special area of economic activity, subject to a special regime within the CAP - Common Agricultural Policy, i.e. within a Policy distinguished by a specific governance in consideration of the objectives pursued.
There was something, not expressly declared, but clearly appearing from the whole set of provisions regarding agriculture,
Art. 38 TEEC made reference not to agricultural activity but to agricultural products as «products of the soil, of stockfarming and of fisheries and products of first-stage processing directly related to these products», specifying that the list of such products is that of Annex II to the Treaty. This list was mainly a list of food products12, which e.g. did not include wood, as judicially confirmed still in 1999, when the Court of justice, accepting the appeal of the Commission and the European Parliament, concluded that, since wood is not an agricultural product, support for forestry activities could not be included in the agricultural policy, but had to be traced back to the environmental one13.
This European model marked a relevant difference in comparison to previous Italian experience, which assigned central relevance to the activity performed, including any kind of care of the life cycle of vegetable and animal organisms, even if not addressed to the food chain, moving toward a systemic inclusion within the national model of «agricultural law» of all rules in any way related to the use of natural and land resources14.
9 On content and models of security in those treaties, in comparative perspective, see X. Xxxxxxxxx, Soggetti e oggetti della sicurezza, non solo alimentare, in Europa, prima e dopo Lisbona, in Riv. dir. agr., 2010, I, p. 607.
10 X. Xxxxxx, Liquid Modernity, Cambridge, Polity, 2000.
11 X. Xxxxxx, cit.
12 See the list in Annex II of TEEC, now Annex I of TFEU.
13 Court of justice, 25 February 1999, joined Cases C-164/97 and C-165/97, European Parliament v/ Council of the European Union.
14 As underlined already in the ‘70s, with reference to the original text of Art. 2135 of the civil code, by X. Xxxxxxxx, L’autonomia del Diritto agrario, in n. Irti (ed), Manuale di diritto agrario italiano, Utet, Milano, 1978, p. 37, p. 52. See also the reform introduced by
During the first decades of CAP, starting with the regulations of the ‘60s15, the European Community assured to farmers a minimum level of prices16, with refunds on exports to third countries and intervention on the domestic market, aimed at stabilising markets, «In order to enable the common organisation of agricultural markets to attain its objectives»17, and therefore to guarantee adequate income to farmers and access to food at reasonable prices to consumers.
Through those policies, the European CAP of the first decades largely attained its objectives, as recognised even recently by the European Commission: «The Common Agricultural Policy (CAP) is one of the oldest policies of the European Union (EU). It successfully fulfilled its original objectives of securing supply of good quality, safe and affordable food products while supporting European farmers. … The European agricultural policy turned the EU into the agri-food superpower that it is now: the EU if the first agri-food exporter globally, has an unparalleled reputation for its culinary heritage and food products, and for the savoir- faire of its producers»18.
In a sort of paradoxically counterreaction, at the cross road of the century, the attention to food production and food security, as declared objectives assigned to CAP by TCEE, has been shadowed by the growing attention to environment and rural resources assumed as a whole19,
Decr. Leg.vo 18 May 2001, no 228, which modified Art. 2135 c.c., specifying that the care even of a single phase of the biological cycle of any organism, vegetable or animal, is sufficient to recognize agricultural character to the activity, even if performed without land. On this relevant reform, see X. Xxxxxxx (ed), Commentario a I tre «Decreti orientamento» della pesca e acquacoltura, forestale e agricolo, in Le nuove leggi civ. comm., 2001, p. 668.
15 See Regulation no 25 of the Council, of 4 April 1962, on the financing of the common agricultural policy; formally repealed and substituted only in 2005 by Council Regulation (EC) no 1290/2005, of 21 june 2005, on the financing of the common agricultural policy.
16 On the mechanisms, which guaranteed prices of agricultural products to European producers in the first decades of CAP and until the end of the XX century, see X. Xxxxxxx, Compendio di diritto agrario italiano e comunitario, Padova, Cedam, 1989; Id., Xxxxx xx xxxxxxx xxxxxxx, Xxxxxxx, Xxxxxx, 0000, X. Xxxxxxx-E. Rook Xxxxxx, Diritto agrario, Giappichelli, Torino, 2006, p. 87.
17 Art. 1 of Reg. no 25 of 1962.
18 European Commission, The future of food and farming - Communication on the Common Agricultural Policy post-2020, Brussels, 29 november 2017.
19 Starting with Council Regulation (EEC) no 2088/85 of 23 july 1985, introducing the integrated Mediterranean programmes, considering in a unified perspective agriculture, fisheries and related activities, including the agri-food industries, energy, crafts and industry, including building and public works, services, including tourism; and later with Council Regulation (EC) no 1257/1999 of 17 May 1999, on support for rural
moving toward the reforms of CAP of 200320, which introduced a general definition of «agricultural activity» (until then unknown to EU legislation), giving up the system of economic incentives related to the quantities produced and cancelling the guarantees of prices for agricultural (mainly food) products21.
Even in those years and even after all the relevant reforms of CAP adopted in the XX century, the objectives assigned to CAP in the 1957 TEEC remained nevertheless unchanged, and are still the same in TFEU introduced in 2007 22.
After the Lisbon Treaty, it was argued by some commentators that some of the objectives, assigned to the CAP in 1957 by the Treaty of Rome and reaffirmed in 2007, were to be considered «obsolete» and that the failure to adapt these objectives in the text approved with the Lisbon Treaty would only depend on the tight deadline within which it was necessary to close the agreement23. There was talk of a «chameleon CAP» to point out the evolving nature of agricultural policy24.
The experience of recent years has instead confirmed the lasting effective relevance of the objectives originally assigned to the CAP, reaffirmed in the present Art. 39 TFEU, and most recently enhanced by the Directive on UTP in the agri-food chain, here in comment.
The essential relationship between objects of regulation, sources, and institutions, has always been (and it is, even to-day) an identity dimension of European agri-food law25, in a constant dialogue between legislation and jurisprudence.
This perspective found large confirmation in recent years, with an expansion of the objects considered and of the area covered by the
development from the European Agricultural Guidance and Guarantee Fund (EAGGF).
20 Council Regulation (EC) no 1782/2003, of 29 September 2003, establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers; see the definition of agricultural activity introduced at Art. 2.c).
21 See infra. In the same perspectives are shaped the most recent reforms of CAP adopted in December 2021; see note 31.
22 Compare art. 39 TEEC and art. 39 TFEU.
23 See X. Xxxxxxx, La PAC “camaleontica” alla luce del Trattato di Lisbona, in Riv. dir. agr., 2009, I, p. 592.
24 See X. Xxxxxxx, cit.
25 See X. Xxxxxxx, Agricoltura (Diritto dell’). Quali prospettive per gli anni ’80, in X. Xxxxxxxx (ed), Diritto Agrario, Xxxxxxx ed., 1983, p. 1; X. Xxxxxxx, Politica agricola comunitaria (gli sviluppi dal 2^ Piano Mansholt ad oggi), cit., p. 583.
European legislative reforms on a plurality of topics all related in some ways to the CAP and all mentioning the CAP among their legal basis: from the General Food Law of 200226, to the hygiene Package of 200427, to the Quality Package of 201228, to the new rules on transparency and risk assessment in the food chain29 and on official controls on food, feed, animal health and welfare, plant health and plant protection30, up to the reform of the CAP and of the single CMO of December 202131.
26 Regulation (EC) no 178/2002 of the European Parliament and of the Council of 28 january 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety. 27 This name usually identifies a group of four regulations, all approved in the same day, establishing general European rules to guarantee safety of food products: Regulation (EC) no 852/2004 of the European Parliament and of the Council of 29 April 2004 on the hygiene of foodstuffs; Regulation (EC) no 853/2004 of the European Parliament and of the Council of 29 April 2004 laying down specific hygiene rules for food of animal origin; Regulation (EC) no 854/2004 of the European Parliament and of the Council of 29 April 2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption; Regulation (EC) no 882/2004 of the European Parliament and of the Council of 29 April 2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules.
28 Regulation (EU) no 1151/2012 of the European Parliament and of the Council of 21 november 2012 on quality schemes for agricultural products and foodstuffs.
29 Regulation (EU) 2019/1381 of the European Parliament and of the Council of 20 june 2019 on the transparency and sustainability of the EU risk assessment in the food chain.
30 Regulation (EU) 2017/625 of the European Parliament and of the Council of 15 March 2017 on official controls and other official activities performed to ensure the application of food and feed law, rules on animal health and welfare, plant health and plant protection products.
31 Reference is made to the three Regulations of Parliament and Council, published jointly on O.j.E.U. of 6 December 2021: Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) no 1305/2013 and (EU) no 1307/2013; Regulation (EU) 2021/2116 of the European Parliament and of the Council of 2 December 2021 on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) no 1306/2013; Regulation (EU) 2021/2117 of the European Parliament and of the Council of 2 December 2021 amending Regulations (EU) no 1308/2013 establishing a common organisation of the markets in agricultural products, (EU) no 1151/2012 on quality schemes for agricultural products and foodstuffs, (EU) no 251/2014 on the definition, description, presentation, labelling and the protection of geographical indications of aromatised wine products and (EU) no 228/2013 laying down specific measures for agriculture in the outermost regions of the Union.
It is a path, within which regulation of production and trade of agricultural and food products has been structured as a unitary and systemic framework of rules, of public and private law, on the entire agri- food chain; a legal framework which, starting from agriculture, regulates both food and non-food agricultural products and moves to internal and external markets, in a dimension increasingly transnational.
The conclusion is that we are facing a laboratory of European law, which includes rules on agriculture and on food, in a single complex legal framework, even if food security for some time appeared to someone as a sort of memory of the past, more than an enduring challenge.
The 2019 Directive on UTP in the agricultural and food product market32 finds its place within this integrated framework, which stays at the cross-road between public, private, and competition rules33.
Xxxx xxxxx, European Commissioner for Agriculture in office when the directive has been approved, underlined how this directive «represents only part of the package of proposals on the agri-food chain that the juncker Commission is involved in»34, recalling the Omnibus Regulation of 201735
32 Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair commercial practices in business-to-business relationships in the agricultural and food supply chain, whose transposition deadline was set at 1 May 2021 pursuant to of the art. 13. Italy has implemented the directive with Law 22 April 2021
n. 54, Delegation to the Government for the transposition of European directives and the implementation of other European Union acts - European Delegation Law 2019- 2020, whose Art. 7 establishes principles and criteria to be followed; and then with the Legislative Decree 8 november 2021, no 198.
33 As underlined in comparative perspective, with reference to previous French and Italian experiences and to general EU competition rules, by A. M. Xxxxxxxxxx, Le pratiche commerciali nella filiera agroalimentare e la tutela della parte debole: riflessioni alla luce dell’esperienza francese, in Cibo e diritto. Una prospettiva comparata, X. Xxxxxxxxx-X. Xxxx Xxxxxxxxx (eds), Xxxxxx. dir. civ. e xxxx., 2019, p. 313.
34 X. xxxxx, Introduzione, in P. Xx Xxxxxx (ed), La Direttiva Ue contro le pratiche commerciali sleali, cosa cambia per le imprese e per i consumatori italiani, Roma, 2019, p. 11.
35 Regulation (EU) 2017/2393, of the European Parliament and of the Council, 13 December 2017, known as the Omnibus Regulation due to the large areas involved, introduced relevant innovation in Regulation (EU) no 1308/2013 on the common organisation of the markets in agricultural products, with reference to producers associations and regulatory contracts, recognizing the specialty of this market. On the growing relevance of the collective organisations and agreements, with peculiar reference to UTP, see X. Xxxxxx, in Riv. dir. alim. xxx.xxxxxxxxxxxxxxxxxxxxxxxx.xx, no 4-2021. More generally, on the process assigning regulatory competence to such collective agreements and decisions, starting with the milk quotas reform of 2012 and then with CMO regulation of 2013, see the contributions published in I contratti del mercato agroalimentare, X. Xxxxxxxxx-X. Xxxxxxxxx-X. Xxxxx-X. Xxxxxxxxx (eds), 2013, napoli, ESI; and the analysis of X. Xxxxx, Mercato agroalimentare
and the new Regulation on transparency in risk analysis approved in 201936. Together with those two regulations, it may be mentioned another innovative regulation adopted in that period: Regulation (EU) 2017/625 on official controls, which goes far beyond the perimeter of food products,
assigning attention to the entire life cycle37.
All those regulations mention Art. 43 TFEU on CAP among their legal basis, but place together to this reference the mention of Art. 114 TFEU on the internal market and of Art. 168 TFEU on health protection, there- by adopting the same «plural» model characterized by multiple legal basis followed in 2002 by Regulation (EC) no 178/2002 on general food law38. Directive (EU) 2019/633, on the other hand, assumes CAP as its exclusive legal basis, for a legislative act aimed «at pursuing the objectives of the common agricultural and fisheries policy»; objectives considered suitable for supporting even to-day (more than 60 years after the Rome Treaty) a penetrating intervention on the market, assuming that CAP by its nature invests and regulates commercial and exchange relations, and not
only production.
This is not new: it is a well-known choice, practiced from the first
e concorrenza; I. Canfora, La cessione dei prodotti tramite le organizzazioni dei produttori;
X. Xxxxxxx, Le regole interprofessionali per il funzionamento della filiera, in Trattato di diritto alimentare italiano e dell’Unione Europea, X. Xxxxxx-I. Canfora-X. Xx Xxxxx-X. Xxxxx (eds), Xxxxxxx ed., 2021, p. 12, p. 147 ss., p. 155.
36 Regulation (EU) 2019/1381 of the European Parliament and of the Council of 20 june 2019 on the transparency and sustainability of the Union risk analysis in the food supply chain; discussed in the AIDA-IFLA Congress of 11-12 October 2019, Portici; the papers discussed in the Congress have been published in Riv. dir. alim. xxx.xxxxxxxxxxxxxxxxxxxxxxxx.xx, no 3-2019 and no 4-2019. On the relation between transparency and UTP rules resulting from the joint application of Reg. (EU) 2019/1381 and of Dir. (EU) 2019/633, see X. Xxxxx, I principi generali delle buone pratiche commerciali: la trasparenza dopo la direttiva 2019/633, in Riv. dir. alim. xxx.xxxxxxxxxxxxxxxxxxxxxxxx.xx, no 1-2022, p. 5.
37 Regulation (EU) 2017/625 of the European Parliament and of the Council of 15 March 2017 on official controls and other official activities carried out to ensure the application of food and feed law, health and safety rules animal welfare, plant health and plant protection products. More indications on this regulation in X. Xxxxxxxxx, Regulation (EU) 2017/625: Official Controls, Life, Responsibilities, and Globalization, in European Food and Feed Law Review, 2019, pp. 118-131.
38 Regulation (EC) no 178/2002 of the European Parliament and of the Council of 28 january 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety. For an analytic examination of the provisions introduced by this regulation, see IDAIC (ed), Commentario al regolamento (CE) n.178/2002 del 28 gennaio 2002, in Le nuove leggi civ. comm., 2003, p. 260.
years of CAP, and expressly affirmed more than twenty-five years ago with Regulation (EC) no 820/97 on traceability and origin labelling of beef, adopted in response to the BSE crisis39 and declaring CAP as its single legal basis, therefore following the legislative procedure of Art. 43 TCE, which at that time entrusted the legislative power to Council by qualified majority after consultation with the European Parliament, without co-decision40.
This choice was solemnly confirmed by the Court of justice in a decision of 200041, called to solve the conflict that arose between the Commission and Parliament on the one hand, and the Council of Ministers on the other.
Regulation (EC) no 820/97 was at the time submitted to the review of the Court of justice, on appeal by the European Commission and the Parliament, which did not criticize the merit of the provisions but the choice of the legal basis, assuming that the provisions on traceability and labelling of large areas, since intended to protect the consumer and the right to health, should have been adopted on the basis of Art. 152 (pursuant to Art. 129) and not of Art. 43 TEC, and therefore required the co-decision procedure and not a simple decision of the Council such as the one provided at that time by Art. 43 TEC.
When the Court decision was adopted, the conflict between the institutions of the Community was in the process of being politically resolved42, and the question was no longer relevant in operational terms, but rather on a systemic level, of identifying the founding principles of the regulatory areas in examination.
With the ruling of April 4, 2000, the Court rejected the distinction between production and market, and between rules aimed at producers
39 It is the well-known Council Regulation (EC) no 820/97 of 21 April 1997 establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products; this regulation was adopted assuming CAP as its single legal basis,
40 Art. 43 TCE: «The Council shall, on a proposal from the Commission and after consulting the European Parliament, acting … by a qualified majority …, make regulations, issue directives, or take decisions, without prejudice to any recommendations it may also make».
41 Court of justice, 4 April 2000, C-269/97, Commission of the European Communities supported by European Parliament v/ Council of the European Union.
42 Regulation (EC) no 820/97 has been repealed by Regulation (EC) no 1760/2000 of the European Parliament and of the Council of 17 july 2000, having substantially the same content of the first regulation, but adopted by indicating a multiple legal basis and following the co-decision procedure, thus overcoming the previous conflict between European institutions.
and rules aimed at consumers, supported by the Advocate General, and declared legitimate the use of the CAP as the legal basis for interventions aimed to regulate the market even in the stages following agricultural production, and addressed to all operators in the supply chain (including non-farmers), such as those introduced by Regulation (EC) no 820/97, with this exemplary motivation:
«47. it is clear from settled case-law that Article 43 of the Treaty
is the appropriate legal basis for any legislation concerning the production and marketing of agricultural products listed in Annex II to the Treaty which contributes to the attainment of one or more of the objectives of the common agricultural policy set out in Article 39 of the Treaty. …
51. The content of the contested regulation, which is not in dispute between the parties, consists of laying down the rules necessary, on the one hand, for the identification and registration of bovine animals and, on the other hand, for the labelling of beef.
52. The contested regulation thus concerns the production and marketing of agricultural products listed in Annex II to the Treaty.
53. As regards the aim of the contested regulation, it must be observed that, according to the first recital, it is intended to re-establish stability in the beef and beef products market, destabilised by the BSE crisis, by improving the transparency of the conditions for the production and marketing of the products concerned, particularly as regards traceability.
54. It is not disputed that the systems for the identification and registration of bovine animals and labelling of meat prescribed by the contested regulation will make an essential contribution to the pursuit of that objective. …
59. It must therefore be held that, in regulating the conditions for the production and marketing of beef and beef products with a view to improving the transparency of those conditions, the contested regulation is essentially intended to attain the objectives of Article 39 of the Treaty, in particular the stabilisation of the market.
60. It was, therefore, rightly adopted on the basis of Article 43 of the Treaty»43.
The ruling of the Court has explicitly and authoritatively recognized the CAP as the founding basis of a complex system, which unifies reasons of competition and reasons of food safety in a multifunctional discipline,
43 See points 47, 52, 53, 54, 59, 60 of the decision.
overcomes the distinction between subjects, locates in a single regulatory framework all subjects of the production chain and consumers, and aims to ensure the stability of the market and the transparency of production and marketing conditions.
The framework thus identified by the Court of justice in 2000, and confirmed below by further decisions44, is the same adopted two decades later by Directive (EU) 2019/633, which assuming the CAP as its exclusive legal basis, invests and regulates the market, introduces innovative paradigms, for the object, the subjects, the territorial scope of application, and starting from the declared goal to contribute to ensuring a fair standard of living for agricultural producers45, underlines:
«While business risk is inherent in all economic activity, agricultural production is particularly fraught with uncertainty due to its reliance on biological processes and its exposure to weather conditions. That uncertainty is compounded by the fact that agricultural and food products are to a greater or lesser extent perishable and seasonal. In an agricultural policy environment that is distinctly more market- oriented than in the past, protection against unfair trading practices has become more important for operators active in the agricultural and food supply chain»46.
The specialty of production conditions in agriculture, due to the inherent risks coming from biological processes and meteorological factors,
44 See Court of justice, 2 july 2009, C-343/07, Bavaria NV, Bavaria Italia Srl v/ Bayerischer Brauerbund eV, expressly mentioned at point 2 of the Explanatory Memorandum of the European Commission to the Proposal of the Directive, COM(2018), 173 final. The Court – deciding with reference to a product, bier, not mentioned in Annex I TFEU, but protected under Regulation (EC) no 2081/92 on PDO and PGI adopted having CAP as legal basis – stated: «as regards the argument that Articles 32 EC and 37 EC do not constitute the appropriate legal basis for the adoption of Regulation No 2081/92, on the ground that beer is not one of the ‘agricultural products’ mentioned in Annex I to the Treaty, it must be borne in mind that the Court has already held that legislation which contributes to the achievement of one or more of the objectives mentioned in Article 33 EC must be adopted on the basis of Article 37 EC, even though, in addition to applying essentially to products falling within Annex I to the Treaty, it also covers incidentally other products not included in that annex (see, to that effect, Case C-11/88 Commission v Council, paragraph 15, and Xxxx X-000/00 Xxxxxx Xxxxxxx v Commission [1998] ECR I-2265, paragraph 134)» (p. 50 of decision), thereby confirming an expansive interpretation and application of European legislation adopted within CAP.
45 See whereas (7) of the Directive.
46 Whereas (6) of the Directive.
and the related specialty of the legal regulation of this area47, are expressly recognised as the proper legal basis for the introduction of a special regulation of commercial practices in the agricultural and food products market.
But there is even another element, expressly declared, the present
«agricultural policy context that is decidedly more market-oriented than in the past», which plays a central role in the decision to adopt the new Directive.
As mentioned, basic strategies of CAP knew a dramatic change after the Marrakesh Treaty and the establishment of WTO agreement48.
At the turn of the century, solicited by international trade agreements, persuaded by growing concerns on environmental protection and food safety, and comforted by the widespread (even if erroneous) perception of the definitiveness of the achieved European self-sufficiency (and, in some cases, even surplus) in the production of products agricultural – as well as strongly solicited by some economic analyzes, which wanted to reduce the community expenditure for agriculture, and which in the name of the search for the lowest consumer price pushed to procure food on the world market, regardless of the possible outcomes on present activity in the European countryside – the Brussels regulators moved to abolish production aid and guarantees for prices of agricultural/food products.
This led in September 2003 to the adoption of seven regulations, covering almost all of the production sectors. The most significant changes to the previous disciplinary framework were introduced by the already mentioned Regulation (EC) no 1782/2003, which provided for the adoption of the decoupled single payment scheme from 200549. Starting from this reform, a single annual amount is paid to the farmer, based on the hectares, regardless of effective production, abandoning the previous aid system coupled to the quantities produced, and abandoning the measures aimed to guarantee a sufficient level of prices of agricultural products.
47 On the special regime applied to production and trade of agricultural products, compared with general competition rules, ex Art. 42 TEEC and Art. 42 TFEU, see
X. xxxxxxxxxx, Profili giuridici del sistema agro-alimentare e agro-industriale. Soggetti e concorrenza, 2^ ed., Xxxxxxx ed., 2018; Id., Profili del sistema agro-alimentare e agro- industriale. I rapporti contrattuali nella filiera agro-alimentare, Xxxxxxx ed., Bari, 2018; X. Xxxxxxx, Manuale di diritto agrario, cit.; X. Xxxxxxx-X. Xxxxx, Corso di diritto agrario italiano e dell’Unione Europea, 5^ ed., Xxxxxxx, Milano, 2019.
48 See X. Xxxxxxx, From food security to food sovereignty, in Atti dell’Accademia dei Georgofili, Produzione e mercato innanzi alle sfide del tempo presente, Firenze, 2021, p. 130. 49 See supra note 20.
The result is an agricultural policy expressly market-oriented, with all the critical difficulties for agricultural producers mentioned in the premises of the Directive (EU) 2019/633, and with the resulting need to introduce some new tools aimed to promote agricultural food production and to assure a renewed support for income of farmers, taking into account their position of price takers, made weaker than in the past by the CAP measures adopted in the last years after the Marrakesh Treaty.
2. The Commission’s proposal
The proposal of the directive was submitted by the European Commission in 201850, as a result of a dating process, which has seen during the years the participation of all the European institutions.
The Commission already in 2009, then in 2014 and in 201651, released some communications on the food supply chain52, concerning also unfair trading practices.
The European Parliament, having taken notice of these communications, with a resolution of june 2016 promoted by the Agriculture Commission53, called the Commission to submit one or more proposals, for an EU-level framework laying down general principles and taking proper account of national circumstances and best practices to tackle UTPs in the entire food supply chain in order to ensure a level playing-field across Member States. In the following months, the European Economic and Social Committee, with a report of 19 October 2016, underlined the need for an action by the Union and the Member States in the area of unfair
commercial practices in the food supply chain54.
50 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, Brussels, 12.4.2018, COM(2018) 173 final, 2018/0082 (COD).
51 Report of the Commission, Unfair business-to-business trading practices in the food supply chain, Brussels, 29.1.2016, COM(2016) 32 final.
52 On this point see references in whereas (1) of Directive (EU) 2019/633.
53 Resolution of the European Parliament, Unfair trading practices in the food supply chain,
7 june 2016, 2015/2065(InI).
54 Opinion of the European Economic and Social Committee on the “Report from the Commission to the European Parliament and the Council on unfair business-to- business trading practices in the food supply chain” (COM(2016) 32 final), Oj C, C/34, 02.02.2017, p. 130.
Lastly, the Council, with the conclusions approved on 12 December 2016, concerning “Strengthening farmers’ position in the food supply chain and tackling unfair trading practices”55, starting from the declared acknowledgment that «the sustainability of the food supply chain to be of strategic importance for the European Union and its proper functioning essential for the benefit of European consumers and farmers», urged the Commission and the Member States to take initiatives aimed at strengthening the position of farmers in the food supply chain.
Based on this broad institutional consensus, in April 2018 the Commission presented the Proposal for a Directive56, moving from this premise:
«Farmers, processors, traders, wholesalers, retailers and consumers are all actors in the food supply chain. Smaller operators in the food supply chain are more prone to face unfair trading practices (UTPs) due to their, in general, weak bargaining power in comparison to the large operators in the chain. Agricultural producers are particularly vulnerable to UTPs as they often lack bargaining power that would match that of their downstream partners that buy their products»57.
The Proposal identified the CAP as its legal basis, underlining:
«A key objective of the CAP is to ensure a fair standard of living for the agricultural community (article 39 TFEU). The EU’s constitutional emphasis on producer welfare is unique to the agricultural sector hinting at the comprehensive responsibility of the CAP for European agriculture»58;
55 Council of European Union, Brussels, 12 December 2016, 15508/16, AGRI 676, AGRILEG 197, recalling in the premises the previous reports of the Commission and of the Committee, President xxxxxxx’x 2016 State of the Union Speech as well as the report of the Agricultural Markets Task Force presented to the Council on 15 november 2016, concluded: «1. RECALLING the attention the issue of strengthening farmers’ position in the food supply chain has regularly gained in the work of the Council. 2. CONSIDERING the sustainability of the food supply chain to be of strategic importance for the European Union and its proper functioning essential for the benefit of European consumers and farmers. 3. EMPHASIZING that, in order to achieve a well-functioning food supply chain as well as economic growth and employment, it is paramount that relations among all actors of the chain are balanced, that added value is fairly distributed among them and that consumers can make their choices on an informed basis. HIGHLIGHTING the importance of facilitating access to local products. …».
56 See supra note 50.
57 Doc. cit., p.1.
58 Doc. cit., p. 4.
thus assigning a value of constitutional rank to the protection of the agricultural producer, in line with the strategic importance recognized to the food supply chain by the resolution of the Council of December 2016. Despite the declared reference to the general Common Agriculture Policy, the Commission’s proposal concerned only the food supply chain and only food products (as confirmed by the title), and applied only to small and medium-sized enterprises59 and not to the entire agri-food
production and trade chain.
With reference to the geographical area of application, the proposal limited its scope of operations to purchasers «established in the Union»60 as such subject to the sovereignty of the Member States, while extending to any supplier selling food products «regardless of its place of establishment»61; thus binding buyers established in the Union to respect the rules against unfair practices also in favor of suppliers located outside the Union, but (paradoxically) not protecting suppliers established in the Union from buyers located outside the Union.
Even with these limitations, the Commission’s proposal was characterized by innovative rules on market and contractual agreements62, where it prohibited certain commercial practices excluding the possibility of contrary agreements between the xxxxxxx00; allowed Member States to introduce laws against unfair trade practices beyond the provisions of the directive, provided they are compatible with the internal market64; assured the designation of national law enforcement authorities having relevant powers and cooperative mechanisms among them and guaranteeing confidentiality to complainants65.
59 As defined by Commission Recommendation, of 6 May 2003, concerning the definition of micro, small and medium-sized enterprises, mentioned by Art. 2.c) of the Proposal.
60 See definition of «purchaser» in art. 2.a) of the Proposal.
61 See definition of «supplier» in art. 2.b) of the Proposal.
62 See A. M. Xxxxxxxxxx, Le pratiche commerciali nella filiera agroalimentare e la tutela della parte debole: riflessioni alla luce dell’esperienza francese, cit.
63 Thereby introducing relevant innovation in comparison to Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions; see Art. 3 of this Directive.
64 See Art. 8 of the Proposal.
65 See Artt. 4, 5, 6, 7, of the Proposal.
3. The parliamentary path
The proposed directive changed its title and object during the parliamentary process: it no longer affects only the food supply chain, but the entire agricultural and food supply chain66, and does not apply only to food products but to all agricultural products, as well as food, thereby expanding the same area of application considered by the Parliament and the Council with the above mentioned 2016 resolutions67.
The examination of the proposal in Parliament, having overcome some objections by Sweden and Romania on assumed infringement of the principle of subsidiarity, was assigned to the Agriculture Commission, and not to the Commission on the internal market, consistently with the legal basis identified in the CAP and shared by the Parliament.
The Agriculture Commission introduced some amendments68, and acquired the opinions of the other Commissions, pronouncing itself in favour of the project by a large majority69.
Parliament approved its final position on 12 May 201970, later shared by the Council, thus determining the final text of the directive.
From the perspective of regulatory innovation, it must be underlined the role played by the European Parliament in the elaboration of the text and in the definition of the object, as well as in the general scope of the directive.
The Commission proposal applied – as already mentioned – only to the food supply chain.
The text amended by Parliament and definitively approved considers the full agricultural and food supply chain, and insists on the need to
66 As specified by the new title of the Directive, “on unfair trading practices in business- to-business relationships in the agricultural and food supply chain”, and expressly ruled in Art. 1 of the Directive.
67 See supra note 53.
68 See the final Report 10.10.2018, on the 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)0173 – C8-0139/2018 – 2018/0082(COD)) - Committee on Agriculture and Rural Development - Rapporteur: Xxxxx Xx Xxxxxx. xxxxx://xxx. xxxxxxxx.xxxxxx.xx/xxxxx/xxxxxxxx/X-0-0000-0000_Xx.xxxx.
69 38 votes in favour, 4 against, and 3 abstentions; see last doc.
70 Final Position of European Parliament, adopted at first reading on 12 March 2019 with a view to the adoption of Directive (EU) 2019/… of the European Parliament and of the Council on unfair trading practices in business-to-business relationships in the agricultural and food supply chain (EP-PE_TC1-COD(2018)0082).
guarantee a fair standard of living for the agricultural population, taking into account the peculiarities of the forms of collective organization of the offer, already considered by the Regulation Omnibus71.
Amendments and changes to the original proposal of the Commission are numerous. They include not only the extension to all agricultural products referred to in Annex I of the TFEU as well as to food products obtained by processing from these products72, but also the provision – and it is a decidedly innovative element – absent in the original Commission proposal, and inserted by Parliament, which provides for the application of the directive «to sales where either the supplier or the buyer, or both, are established in the Union»73, and the consequent change in the definition of «buyer», which includes any natural or legal person «irrespective of that person’s place of establishment» who purchases agricultural and food products74.
Supply chain agreements and value sharing clauses are also enhanced.
The protection against unfair trade practices is extended not only to small and medium-sized enterprises (as envisaged by the Commission proposal), but also to suppliers with an annual turnover of up to 350,000,000 euros75, therefore with much higher turnovers; further original paradigms are identified.
More generally, the Directive goes beyond the market, and is proposed as a tool of institutional innovation.
As observed by an authoritative scholar of administrative and constitutional law in reference to Regulation (EC) no 178/2002, with
71 With this expression – as it is well known – it is usually named Regulation (EU) 2017/2393 of the European Parliament and of the Council of 13 December 2017 amending Regulations (EU) no 1305/2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), (EU) no 1306/2013 on the financing, management and monitoring of the common agricultural policy, (EU) no 1307/2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy, (EU) no 1308/2013 establishing a common organisation of the markets in agricultural products and (EU) no 652/2014 laying down provisions for the management of expenditure relating to the food chain, animal health and animal welfare, and relating to plant health and plant reproductive material. In particular this regulation, introduced special rules to support market agreements among recognized associations or interbranch organisations of agricultural producers (see Artt. 149, 152, 159, 161, 164, 168 of Reg. (EU) no 1308/2013).
72 See definitions at Art.2.d) of the Proposal and at Art. 2.1.) of the final text approved.
73 Art. 1 of the final text approved.
74 Art. 2.1. of the final text approved.
75 See Art. 1.2. of the final text approved.
considerations that may be entirely confirmed with reference to the Directive on UTP in the agri-food chain, this legislation «operates on different levels: that of the sources of law, ... [where] it bears general principles ... dictates direct provisions, for which they are not necessary national implementing acts; ... that of the structure that must be put in place in each State; … That of the collaboration to be ensured between national organizations and community organizations»76.
We are facing a legislative act, Directive (EU) 2019/633, which introduces operational principles and rules, drawing a complex interaction between European and national sources and institutions, and placing itself within a path which characterizes agriculture and food law: the move towards a unifying and systematic perspective, of codification of the discipline of agriculture and agricultural and food markets.
The European reforms of the CAP of this century, before and after the Lisbon Treaty, most recently with the regulations of December 202177, marked the progressive affirmation of European Codes, which are not uniform homologation texts, but rather common codes, in which needs and subjects, national, regional and local, occupy a prominent place alongside disciplinary choices expressed centrally78.
It is a model of codification and codes, where the sources of law are plural and different among them, and an essential role remains assigned to interpretation, to ius dicere, in its judicial, administrative and doctrinal expressions79, with reference to regulatory acts, general and specific, to decisions of the Court of justice and of national judges, to the operative and administrative decisions of the European Commission.
Within this process, the Directive on unfair commercial practices appears as an exemplary model of building European law, and expresses a systemic structure, which ranges from institutional profiles to those
76 X.
Xxxxxxx,
Introduzione, in Per un’Autorità nazionale della sicurezza alimentare,
Milano, 2002.
77 See supra note 31.
78 For further indications on those trends in EU agricultural law, see X. Xxxxxxxxx, I codici europei dell’agricoltura, dopo Lisbona, in Dalla riforma del 2003 alla PAC dopo Lisbona. I riflessi sul diritto agrario alimentare e ambientale, X. Xxxxxxx-X. Xxxxxx- X. Xxxxx- X. Xxxxxxxxxx (eds), napoli, xxxxxx ed., 2011.
79 Along the lines anticipated, in historical and comparative perspective by X. Xxxxx, in well known researches, among which reference may be made here to: L’interpretazione del diritto, Xxxxxxx, Milano, 1941, reprinted 2003; Raccolta di saggi sull’interpretazione e sul valore del precedente giudiziale in Xxxxxx, xx Xxxxxxxx xxx Xxxx Xxxxxxxx, 0000; Diritto comparato e diritto comune europeo, Xxxxxxx, Milano, 1981.
of merit, overcoming the traditional boundary between private law and public law, and conforming the structure and content of contracts between companies, recognized as an essential moment in the articulation of the market80.
4. The new paradigms
The CAP, with Directive (EU) 2019/633, by going into the market and intervening directly on the content and form of contracts81 introduces new paradigms in the regulatory design, assigning importance to innovation, not only technological, but also organizational, which has characterized in recent decades the market for agricultural and food products82; and thus provides, to mention only some of the provisions contained in the final text approved in parliament as a result of the dialogue between the European institutions:
- the non-necessity of ascertaining a specific dominant position, or a concrete abuse; so that the case-by-case verification of the assumptions of the abuse is not left to the Supervisory Authority, but is defined by law as such, with relevant results in terms of effectiveness of the new framework, especially – with regard to Italy – when compared with the weakening of the innovative content of Art. 62 of the D.L. 1-201283 as a result of
80 On the peculiar contractual regulation in agri-food markets resulting in the Italian legal order from Directive (UE) 2019/633, see X. Xxxxxxxxx, Neoformalismo contrattuale tra tutela del contraente debole e mercato, and X. X’Xxxxx, La giustizia contrattuale nelle filiere agroalimentari, in Riv. dir. alim. xxx.xxxxxxxxxxxxxxxxxxxxxxxx.xx, no 4-2021.
81 As underline X. Xxxxxxxxx, cit., and X. X’Xxxxx, cit., with reference also to the previous Italian legislation introduced by Art. 62 of D.L. no 1/2012.
82 Including within innovation – following the model of j. X. Xxxxxxxxxx, Teorie der wirtschaftlichen Entwicklung, Berlin, 1946; Id., Capitalism, Socialism and Democracy, London, 1954 – not only the introduction of new products, new product qualities or new production methods, but also the opening of a new market, access to new sources of supply, or a different organization of industry such as acquisition of a monopoly position or the breaking of a monopoly position; phenomena all widely present in the evolution of the agri-food and agro-industrial system of recent decades. On the effects of the joint action, within agri-food law, of legal and scientific innovation and of globalization, see Innovation in Agri-Food Law between Technology and Comparison, AIDA-IFLA (ed), Cedam – Xxxxxxx Kluwer, 2019, p. 73.
83 On the innovative rules introduced by this provision, and on the application and interpretation by Mipaaf and by AGCM, see the critical analysis of X. Xxxxxx, La
the circulars of the Mipaaf and the AGCM, which had reintroduced the requirement, absent in Art. 62, of the «significant imbalance in the respective positions of commercial strength»84;
- the aforementioned extension of the scope, by the European Parliament, to all agricultural products, and the tracing of the definition of “food products” not to Regulation (EC) no. 178/2002 (as the Ministerial Decree Mipaaf 19 October 2012, no 199 had done in Italy, expanding the application area of Art. 62 of D.L. 1-2012 well beyond agricultural producers85), but to Annex I of the TFEU and to the products not listed in this annex, but processed for food use starting from the products listed in that annex, thus enhancing the agricultural component86;
- the establishment of payment terms that cannot be derogated through the agreements between the parties (unlike the provisions of the general Directive no. 2011/7/EU on late payment)87;
- the identification of certain trade practices in any case qualified as unfair, and therefore illegal, which affect both the content and the form of the contract (from the refusal to use the written form, to the clauses that require the seller to pay sums not related to the sale, to the terms of payment), and subsequent behaviours (such as the cancellation of the order with too short notice, the unilateral modification of the conditions
nuova disciplina dei contratti e delle relazioni commerciali di cessione dei prodotti agricoli e alimentari, in Contratto e impresa, 2013, n. 6, p. 1425,
84 See D.M. Mipaaf 19 October 2012, no 199, «Regolamento di attuazione dell’articolo 62 del decreto-legge 24 gennaio 2012, n. 1»; e the Resolution of the Italian AGCM 6 February 2013, no 24220, «Regolamento sulle procedure istruttorie in materia di disciplina delle relazioni commerciali concernenti la cessione di prodotti agricoli e alimentari». The Resolution of AGCM, defining the area of exercise of its competences, limited it «to the economic relations between the operators of the supply chain characterized by a significant imbalance in their respective positions of commercial strength», thus neglecting one of the qualifying innovations introduced by Art. 62 of the D.L. no 1-2012, where this had typified as illegal in itself certain behaviors in the context of the sale of agricultural and agri-food (or food) products, excluding the need for the additional conditions required by general antitrust legislation, thereby producing a substantial weakening of the D.L. no 1-2012, which has found very few applications. 85 As recognised by T.A.R. Lazio, Sez. II ter, 17 july 2013, no 7195, Chefaro Pharma Italia s.r.l. c/ Mipaaf; in Riv. dir. alim. xxx.xxxxxxxxxxxxxxxxxxxxxxxx.xx, no 3-2013, p. 33, which expressly and effectively censored the Decree of Mipaaf, on the basis of systemic and literal arguments.
86 See Art. 2.1.) of the Directive.
87 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions; implemented in Italy with D.Lgs. 9 november 2012, no 192.
of the agreement, the request of the buyer to charge the seller for the deterioration or loss of the products after delivery, the unlawful disclosure of trade secrets, the threat of retaliation in the event of a complaint to the authorities, the request for compensation from the supplier for the cost incurred by the buyer to examine customer complaints)88;
- the introduction of a specific series of practices prohibited, unless expressly provided for in writing in the contract, which to a large extent involve practices «parallel» to the sale considered by itself (such as the claim to return unsold products, payment costs for stocking, advertising, marketing, or positioning in the sales spaces, the claim to charge the seller for discounts on products sold in promotion)89;
- the power granted to Member States to «maintain or introduce stricter rules aimed at combating unfair trading practices stringent than those laid down by this Directive, provided that such national rules are compatible with the rules on the functioning of the internal market»90; power that the Italian legislator used in the implementation of the directive, among other things by providing, already in the delegation law, «the application of the discipline to all sales of agricultural and agri-food products, regardless of company turnover91», and by including prohibited trade practices other than those provided for by the directive92;
- the provision of «effective, proportionate, and dissuasive» sanctions93, far higher than those provided for in Italy by Art. 62 of the D.L. no 1-2012, even after the increase introduced in 201594, so that the implementing decree in Italy provided for administrative pecuniary sanctions up to a percentage of the annual turnover of the responsible company95;
- the designation by the Member States of national law enforcement authorities96, the identification of their powers, including investigative as well
88 See Art. 3.1. of the Directive. 89 See Art. 3.2. of the Directive. 90 Art. 9 of the Directive.
91 See Art. 7 co. 1, lett. a) of Law 22 April 2021, no 53; and Art. 1 co. 2 of Decr. Leg.
vo 8 november 2021, no 198.
92 See the analysis of X. X’Xxxxx, cit., e di X. Xxxxx, cit.
93 Art. 6 of the Directive.
94 The original amount of sanctions determined by Art. 1 of Italian D.L. no 1-2012, had been increased by Art. 2, comma 3, lett. a), D.L. 5 May 2015, no 51, L. 2 july
2015, no 91.
95 See Art. 10 del Decr. Leg.vo 8 november 2021, no 198.
96 Art. 4 of the Directive.
as sanctioning powers97, the collaboration between said Authorities98, the regulation of complaints and procedures with guarantee of confidentiality99, the explicit reference to possible alternative national dispute resolution procedures100, the provision of annual reports from the national Authorities101, and of a general assessment by the European Commission102, as well as the adoption of Commission implementing acts103, that intervene on the procedural aspects; with great attention to institutional profiles;
- the enhancement of the peculiarity of the productive structures and aggregation of the offer in agriculture104, both in general as regards the validity and effectiveness recognized to «a value sharing clause within the meaning of Article 172a of Regulation (EU) no 1308/2013»105, both with specific reference «to [multi-year] supply agreements between suppliers of grapes or must for wine production and their direct buyers»106 which fall within the scope of regulatory contracts stipulated by recognized OPs and OIs, thus enhancing the forms of collective organization of supply operating in agriculture107.
The broad institutional design, as well as of merit, that characterizes the directive is clear:
- the general principles are accompanied by direct provisions;
- the institutional rules that intervene in the internal organization of individual Member States are accompanied by specific provisions on the cooperation of the national authorities thus identified, among themselves and with the European Commission.
In this framework, which consolidates and strengthens evolutionary
97 Art. 6 of the Directive.
98 Art. 8 of the Directive.
99 Art. 5 of the Directive.
100 Art. 7 of the Directive.
101 Art. 10.2 of the Directive.
102 Artt. 11-12 of the Directive.
103 Art. 10 of the Directive.
104 See. I. Canfora, La cessione dei prodotti tramite le organizzazioni dei produttori, cit.;
X. Xxxxxxx, Le regole interprofessionali per il funzionamento della filiera, cit.
105 Art. 3.1.i) of the Directive.
106 Art. 3.1.i) of the Directive.
107 See the analysis, which, starting from the reinterpretation of the experiences and reflections of the first half of the twentieth century, reconstructs the emergence of new models of regulation in the most recent interventions, of X. Xxxxxx, Sufficienza regolativa della legge e ruolo delle organizzazioni professionali: soluzioni per il migliore funzionamento della filiera agroalimentare, cit.
lines already known and practiced, a new and transnational dimension emerges, peculiar of Directive (EU) 2019/633, which marks a highly innovative step, when compared to the previous models of legislative intervention, and offers relevant elements for the construction of a positive law of globalization in the area of European agriculture and food law.
5. The transnational dimension
As already mentioned, Directive (EU) 2019/633, due to the amendments introduced by the European Parliament, has expanded its application perimeter far beyond the borders of the European Union, to all sales where either the supplier or the buyer, or both, are established in the Union108, seeking original answers to the challenges of globalization109. It is not the first time that European legislation rules on topics and areas related to the global dimension of agri-food markets, but the prevailing approach until now has been that of cooperation through international agreements110, as most recently confirmed by the regulation on accession
to the Geneva Act for the protection of PDO and PGI111.
Leaving aside the international conventions, reference to a cross-border dimension of regulation had hitherto been understood as operating mainly
108 Art.1.2. of the Directive.
109 Challenges of globalization, accentuated by the serious crises of recent years, as points out X. Xxxxxxx, Globalizzazione, Covid-19, e sopravvivenza, in Riv. dir. alim., no 1-2021,
p. 7; underlines the importance of the asymmetries accentuated by globalization, and the consequent outcomes on UTP in the agri-food chain, the critical comparative analysis of
X. Xxxxxxx, Pratiche commerciali sleali e globalizzazione, in Riv. dir. alim., no 1-2022.
110 In Regulation (EC) no 178/2002, see references to international agreements in whereas (8), (22), (23), (25), (39), and in Artt. 5.3., e 13. See also the principles judicially declared by the Court of justice in a number of decisions, among which, 9 October 2001, C-377/98 (on the patentability of biotechnological inventions), as to the limits placed on the direct operation of international agreements within the European system; and recently, 12 november 2019, C-363/18 (on the indication on the label of food products of the origin from the Palestinian territories occupied by Israel), in a perspective that enhances international humanitarian law and concludes that art. 3 of Regulation (EU) no 1169/2011 «must be read» in such way «that the provision of information to consumers must enable them to make informed choices, with particular regard to health, economic, environmental, social and ethical considerations».
111 Regulation (EU) 2019/1753 of the European Parliament and of the Council of 23 October 2019 on the action of the Union following its accession to the Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications.
inside European Union, through cooperation between national authorities of individual Member States.
This model, which overcomes national borders, but remains already within the EU borders, includes:
- the rapid alert system envisaged by Regulation (EC) no 178/2002112;
- the cooperation between the national authorities responsible for the implementation of the legislation that protects consumers113;
- the ex officio protection introduced by the Quality Package to overcome the national dimension of public supervision on GIs and to commit all Member States to protect ex officio PDOs and PGIs marketed in their territory, even if produced in other Member States114.
In all these cases, we are in the presence of European provisions, largely introduced with regulations, directly applicable and applied in the territory of the Union, within a single market and a common system, as such subject to shared rules coming from shared sources.
The key that unifies these provisions is therefore not globalization, but simply completion of the internal market.
A different approach, with a projection beyond the borders of the Union, can be found in the 2004 hygiene Package, with the provisions introduced by Articles 12 and 15 of Regulation (EC) no 854/2004115, which assigned to the Commission the task of compiling and updating lists of meat processing or fishing establishments operating in countries outside the Union; in the absence of such prior registration in the lists, or in the event of cancellation from the same, the related products cannot be imported into the Union116. In this case, regulation from European sources
112 See Art. 50 of Reg. (EC) no 178/2002.
113 See Regulation (EC) no 2006/2004 of the European Parliament and of the Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws; and now Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws.
114 See Art. 13.3. of Reg. (EU) no 1151/2012.
115 Regulation (EC) no 854/2004 of the European Parliament and of the Council of 29 April 2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption; repealed by Regulation (EU) 2017/625.
116 Even recently, there have been significant cases of cancellation from the list of authorized establishments. See e.g., with reference to meat, Commission Implementing Regulation (EU) 2018/700 of 8 May 2018 amending the lists of third country establishments from which imports of specified products of animal origin are permitted, regarding certain establishments from Brazil, which canceled from that list some factories located in Brazil;
got an effectiveness, that goes far beyond the borders of the European Union and is aimed to operate as well in other jurisdictions, as a requirement of legitimacy for meat and fish processing plants located outside the European borders, admitted to export to Europe only after an administrative act (inclusion in the list) adopted by a European institution, the Commission, and intended to produce effects in the legal sphere of a subject operating outside its territory, with a model similar to that introduce in USA with the FSMA117.
A similar approach has been followed over the years by entrusting the Commission with the maintenance of a list, where to insert (or from which to exclude) third countries and certification bodies for organic products obtained in third countries118.
With the hygiene Package of 2004 and with the regulation of BIO products of 2007 and 2018, European food rules are therefore getting an effectively trans-national dimension, being addressed to operate well beyond EU boundaries.
A further significant step in this direction was recently marked by Regulation (EU) 2017/625 on official controls on food, feed, animals and plants119.
This regulation, as regards its territorial perimeter of application, has introduced, alongside more articulated forms of collaboration between the Member States120, new measures extended to include Commission controls
and, with reference to fish, Commission Implementing Regulation (EU) 2018/981 of 11 july 2018 amending the list of Brazilian establishments from which imports into the Union of fishery products intended for human consumption are permitted.
117 On US rules applicable to import of food products, see X. Xxxxx, L’accreditamento degli importatori di prodotti alimentari in USA, in Riv. dir. alim. www.rivistadirittoalimentare. it, no 1-2014, p. 17.
118 See Council Regulation (EC) no 834/2007 of 28 june 2007 on organic production and labelling of organic products and repealing Regulation (EEC) no 2092/91; whose provisions have been confirmed by the presently in force Regulation (EU) 2018/848 of the European Parliament and of the Council of 30 May 2018 on organic production and labelling of organic products and repealing Council Regulation (EC) no 834/2007. See also the list of the certification bodies operating outside EU borders, list managed by the European Commission, Commission Implementing Regulation (EU) 2021/2325 of 16 December 2021 establishing, pursuant to Regulation (EU) 2018/848 of the European Parliament and of the Council, the list of third countries and the list of control authorities and control bodies that have been recognized under Article 33(2) and (3) of Council Regulation (EC) no 834/2007 for the purpose of importing organic products into the Union.
119 See supra note 37.
120 See Artt. 102-108.
in third countries121 as well as in the Member States122, joint training activities123, unified IT systems for the processing of information124, constant monitoring of food operators through a unified register on
«compliance records»125. All the information collected, from EU and non- EU institutions, is placed within the new System for the processing of information for official controls (IMSOC)126. The System is set up and managed by the Commission, and it is the basis for the introduction of the rating mechanism, by virtue of which is determined «a classification of operators based on the evaluation of their correspondence to the rating criteria»127.
The creation of a unified system for the collection and processing of information, fed with information also from countries outside the European Union, the provision of a rating under which all operators are classified on a unified and systemic basis, constitute a regulatory innovation of great importance, which recognizes the need to build new forms of reputation based on original tools, no longer looking to the traditional model of direct knowledge and evaluation characteristic of closed markets (whether local proximity markets, or wider but still homogeneous national markets), but placing knowledge, and with this reputation, on a level not defined ex ante but homogeneous with the current global dimension of the markets.
Even with these significant innovations, however, the EU measures introduced in recent years, and operating in a cross-border dimension, are all measures pertinent to products, their characteristics, their control, essentially aimed at protecting health and food safety, whereas the measures relating to the contents of the contractual discipline had maintained up to now an operational limit within EU borders.
In this scenario, Directive (EU) 2019/633 has introduced radical innovations, which affect the object, the application area, and the operational tools.
The directive:
- regulates contracts and contractual relationships, borrowing some models from the regulations relating to contracts with consumers, but
121 See Artt. 120-129.
122 See Art. 118.
123 See Art. 130.
124 See Artt. 131-136.
125 See Art. 44.2.c).
126 See Artt. 131-136 of Reg. (EU) 2017/625.
127 See whereas (39), Art. 3.1. no 31, and Art. 131 of Reg. (EU) 2017/625.
investing business contracts whose form and contents are predetermined by law, without the need to identify a dominant position or a abuse; so that the supplier of agricultural and agri-food products is identified ex se as the recipient of a special discipline, due to the recognized specialty of its position in the production chain and in the market;
- applies to all contracts for agri-food products and related services, even if the buyer or the supplier is not established in the Union128, going well beyond the spatial dimension of the directives concerning contracts with consumers129;
- overcomes the traditional international private dimension as regards the law applicable to contracts130, establishing a hard core of provisions on form and content, as well as on subsequent conduct during execution, which prevail in any case both on the will of the parties and on any hypothetical different provisions.
In Italy, up to now the general rules on private international law leave the parties wide choice to decide on the applicable law and therefore on individual negotiated clauses, recognising supremacy of a mandatory provisions in force in a country only «if at the time of the choice all other data in fact refer to a single country».
In a quite different perspective, Directive (EU) 2019/633, in Art. 3.4., expressly provides: «Member States shall ensure that the prohibitions laid down in paragraphs 1 and 2 constitute overriding mandatory provisions which are applicable to any situation falling within the scope of those prohibitions, irrespective of the law that would otherwise be applicable, to the supply agreement between the parties», with a provision confirmed in Italy by the implementing legislative decree.
For years we have witnessed a globalization linked to «the emergence of liberalism» as an «essential feature of the Marrakech Agreements» of
128 See Art. 1.2. co. 4 of the Directive.
129 See Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market; Directive 2009/22/EC of the European Parliament and of the Council of 23 April 2009 on injunctions for the protection of consumers’ interests; Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 november 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC.
130 See Italian L. 18 December 1984, no 975, of the ratification and execution of the International Convention on the law applicable to contractual relations adopted in Roma on 19 june 1980. The validity and effectiveness of this Law has been expressly confirmed by Art. 57 of Italian L. 31 May 1995, no 218, on the reform of the Italian system of private international law.
1994131, characterized by confidence in the market’s ability to regulate itself.
As observed with great effectiveness by xxxxxxxx Xxxx already at the beginning of the century, as a result of the globalization of markets «the territory, the territories with what each of them has of individual and peculiar, have been replaced by space, or better by “a” space without internal borders”, not a larger territory, but an artificial “space” for production and trade»132.
Today, such critical issues and the challenges of trade globalisation to fundamental security rights, including food security (but also access to other fundamental resources, among which energy), appear with clear evidence as a result of the economic crises of recent years, and as effects of the Covid-19 Pandemic and of the war Russia-Ukraine133.
A first tentative answer with reference to food production and availability – to ensure a fair standard of living for the agricultural community, as declared in 1957 by Art. 39 TCEE and confirmed in 2007 by Art. 39 TFEU – is now sought by Directive (EU) 2019/633 on UTD in agri-food chain, with the rediscovery of politics, governance, choices of priorities, hierarchies of interests, as well as values.
Along this path, European law, moving from the CAP, becomes the
«national law of others»134: the reaffirmed specialty of agriculture, identified as a prerequisite of the new discipline, translates into original measures and in mandatory rules, in terms of substance and structure of contractual agreements, which are intended to operate in a transnational dimension and cannot be overcome by private contracts, proposing a possible model for regulatory innovations even in other sectors of the European legal system.
It does not seem accidental that this happens in one area, the discipline of agriculture, which in the very name of the CAP, enhances the component of «Politics», therefore of assumption of responsibility.
It remains to be seen how adequate to face these challenges will be the national legislators.
131 As underlined by X. Xxxxxxx, Globalizzazione, Covid-19, e sopravvivenza, cit.
132 n. Irti, Norma e luoghi. Problemi di geo-diritto, Laterza, Bari-Roma, 2001.
133 For a first analysis of the effects of these recent crises on the CAP, see Accademia dei Georgofili (ed), La PAC innanzi alle sfide del tempo presente, 6 May 2002, with contributions of X. Xxxxxxx, X. Xxxxxx, X. Xxxxx, X. Xxxxxxxx, X. Xxxxxxxxx, X. Xxxxxxx, P. Xx Xxxxxx, at xxx.xxxxxxxxxx.xx
134 Borrowing the expression introduced with reference to commercial law by X. Xxxxxxx, La globalizzazione nello specchio del diritto, Bologna, 2005.
It cannot fail to be noted that the Italian decree of implementation in Italy of Directive (EU) 2019/633135 expressly declared that rules adopted on the basis of Directive prevail on any contrary rule «whatever is the law applicable to the contract»136, but did not introduce any specific tool in reference to contracts entered with parties located outside the territory of the Union, referring only to the law enforcement authorities of the Member States137.
Comparative analyses on the implementation of Directive (EU) 2019/633 in different EU Member States, having different legal orders, traditions and systems, as those proposed in this book, may contribute to offer some possible answers to this and others crucial questions, still open.
In this perspective, the peculiar structure of agri-food law, characterized by a multiplicity of sources, institutions, rules, and models, confirms the central role of the comparative method as a valuable tool for all those seeking to «ask the appropriate questions»138, searching for consistent answers to critical questions.
135 Decr. Leg.vo 8 november 2021, no 198.
136 Art. 1, co. 4, of Decr. Leg.vo, no 198/2021.
137 See Art. 9, co. 1, of Decr. Leg.vo 8 november 2021, no 198.
138 As observed by X. Xxxx Xxxxxxxxx, in the conclusion of Comparative Legal Systems. A short and illustrated introduction, Roma-Tre Press, Roma, 2019, p. 105: «In this much more complex, but real, context the role of comparative law is not to provide correct answers but, much more engagingly, to ask the appropriate questions».
Directive (EU) 2019/633 on unfair trading practices in the agri-food chain
Summary: 1. The fight against unfair trading practices in the agri-food chain in EU law – 2. Directive (EU) 2019/633: the origins – 3. General features of Directive 633/2019: minimum harmonization approach, legal basis and objective and subjective scope – 4. Unfair trading practices: lack of a definition – 5. Unfair trading practices always prohibited – 6. Trading practices which are potentially unfair – 7. The other provisions of the Directive – 8. The Commission’s Report on the implementation of the Directive – 9. Conclusions.
1. The fight against unfair trading practices in the agri-food chain under EU law
At a time when the CAP started to become progressively less effective, leaving farmers increasingly exposed to the dynamics of an increasingly global and less assisted market, the issue of their adequate economic and contractual protection started to become more and more evident.
Bargaining within the agricultural market takes place between parties with different bargaining power, to the detriment of the agricultural product supply sector, so that in most cases agricultural producers are forced to accept the economic content of the contract. They also are faced with practices – not necessarily reflected in contractual clauses – carried out through the opportunistic or unfair behaviour of the counterparty against which there is no other alternative than concluding the contract as it is or giving up1.
It is no coincidence that the agricultural sector is the subject of particular
1 On this topic see x. Xxxxxxxx, Le pratiche commerciali sleali nel sistema delle relazioni contrattuali tra imprese nella filiera agroalimentare, Xxxxxxx Kluwer, 2017, passim. See also X. Xxxxxx, L’abuso nella contrattazione di impresa nella filiera agroalimentare, in Dir. agroalim., 2019, p. 261 ff.; X. Xxxxxxxxxx, La tutela del contraente debole nelle relazioni lungo la filiera agro-alimentare nelle più recenti esperienze giuridiche europee e statunitensi, in Riv. dir. agr., 2013, I, p. 166 ff.
attention with regard to the applicability of antitrust law. Indeed Article 42 TFEU exceptionally allows farmers to enter into horizontal agreements precisely in order to mitigate imbalances in economic and contractual power and ensure that the agricultural party has effective powers to shape the content, including the economic content, of contracts2. Alongside this fundamental guideline, the EU legislator has begun to introduce rules aimed at protecting weaker contracting parties in the market for agricultural products (and not only), in order to prevent the adoption of contractual clauses or unfair commercial practices to the detriment of the party placing agricultural products on the market. In other words, the stronger contracting party must be precluded from introducing clauses or imposing unfair practices to the detriment of the other party, who is forced to suffer unfair behaviour both before and after the conclusion of the contract.
There is no doubt that the first form of action – the non-application,
on an exceptional basis, of part of the antitrust rules – is the most incisive, allowing the weaker party in the market to increase its economic power (think of the rules on agricultural producers’ and interbranch organizations, as well as the various aid and support measures for agricultural producers provided for by EU law) and, consequently, also its bargaining power3. The second type of action – the fight against unfair commercial practices – is a sort of ‘palliative treatment’, since it does not affect the economic content of the contract nor does it seek to reduce existing imbalances, but it merely ensures that the rules governing the contract and its performance are in line with the principles of fairness and good faith.
EU Directive 2019/633 is the first general measure aimed to contrast unfair commercial practices. It innovates the approach to the issue compared to the measures previously implemented by the European Union: in fact, following the chronological order, measures of a completely heterogeneous nature are to be ascribed to the action against possible unfair practices in contracts for the sale of agricultural or agri-food products,
2 On this point see in particular X. xxxxxxxxxx, Profili giuridici del sistema agro-
alimentare e agro-industriale. Xxxxxxxx e concorrenza, Bari, 2016, p. 117 ff.; C. Del Cont,
X. Xxxxxxxx and X. xxxxxxxxxx, EU Competition Framework: Specific Rules for the Food Chain in the New CAP, in xxxx://xxx.xxxxxxxx.xxxxxx.xx/xxxxxxx.
3 To date, the legislation on this point must be considered still inadequate, in the light of the lack of clarity that still exists - despite the adoption of EU Reg. no. 2017/2393 of 13 December 2017 - regarding many aspects concerning the actions entrusted to POs: see
X. xxxxxxxxxx, Dal caso “indivia” al regolamento omnibus n. 2393 del 2017: le istituzioni europee à la guerre tra la PAC e la concorrenza?, in Dir. Agroalim., 2018, p. 109 ff.
such as, in particular, the directive on late payment in commercial transactions, adopted in 20004. Clearly the latter is not a directive specific to the agricultural or foodstuffs sector alone, since the scope of the legislation is extremely broad, covering the entire field of commercial transactions between businesses, with a few exceptions5. In any event, the harmonization brought about by that directive is minimal, since it does not impose mandatory time limits for payment, but it only intervenes on a subsidiary basis, where the parties to the contract (or, more generally, to the transaction) did not provide anything in this regard. Even the interest rate in case of late payment may to a large extent be left to the discretion of the parties, who may in fact fix interest rates lower than those laid down in the directive, provided that they are not derisory and are not such as to entail a substantial circumvention of the rules.
Subsequently, after an initial intervention limited to the dairy sector, contained in EU regulation no. 261/12, the EU legislator has – with EU regulation no. 1308/2013 – extended to all the sectors of the CMO the discipline relating to the possible introduction, at the discretion of each individual Member State, of the obligation of written form for contracts for the delivery of agricultural xxxxxxxx0. Even this provision, although specific to the agricultural sector unlike the directive on late payments, appears to have little impact, since it is aimed exclusively at ensuring greater transparency of contractual conditions and does not therefore affect,
4 Directive 2000/35/EC of the European Parliament and of the Council of 29 june 2000 on combating late payment in commercial transactions, subsequently repealed: that directive concerned any payment made as remuneration for commercial transactions. It concerned any payment made by way of consideration in a commercial transaction, which, on the basis of the definition of «commercial transaction» given in Article 2(1) of the directive, was to be understood as meaning any contract, however named, concluded between undertakings or between undertakings and the public authorities which lead to the delivery of goods or the provision of services for remuneration.
5 The Directive provided that Member States could exclude its application in only three cases, relating to debts subject to insolvency proceedings instituted against the debtor, to contracts concluded prior to 8 August 2002 and in case of claims for interest of less than €5.
6 See Article 168, Reg. 1308/2013, which sets out the discipline of the so-called
«contractual relations» (see the heading), also applicable to all the sectors covered by the CMO, with the sole apparent exception of milk and dairy products and sugar: apparent because it is already subject to similar discipline in other articles of the same regulation (Articles 148 and 125 respectively). On this topic, see X. xxxxxxxxxx, La disciplina dell’atto e dell’attività: i contratti tra imprese e tra imprese e consumatori, in Trattato di diritto privato europeo, Lipari (ed), III, L’attività e il contratto, Padua, 2003, p. 48 ff.
except for a minimal extent7, the economic content of the contract: on the contrary, the provision itself specifies that the content of the contract is
«freely» negotiated between the parties.
In essence, the provision under consideration achieves a sort of optional harmonisation with very limited content, establishing only that the written form, if and insofar established autonomously by each Member State, must also concern the main contractual clauses, in order to increase the level of cer- tainty, in favour of the weaker party, as regards contractual agreements, and that the contract, to be drawn up in writing, must necessarily be concluded before the delivery or deliveries of the product; as regards the actual content of the contractual relationship, it is left to the parties to decide, with the sole exception – again left to the discretion of each Member State – of the possi- ble introduction of a mandatory minimum duration for the purchaser8. It is also significant to note that, even before Regulation 1308/2013, a number of European States9 had already approved regulatory acts of similar content10.
7 Indeed, once Member States have made it compulsory for contracts for the sale of one of the products covered by the CMO to a processor or distributor to be in writing (or for a written offer to be made by the first purchasers), they are obliged to provide that the formal requirements must also cover the clauses referred to in paragraphs 4 and 6 of that Article; this is without prejudice to the possibility for Member States to set a minimum duration of at least six months.
8 In the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 15 july 2014, COM (2014) 472, Tackling unfair trading practices in the business-to-business food supply chain, it is noted that following a survey conducted at European level among suppliers in the food supply chain, 96% of respondents stated that they had suffered at least one form of unfair commercial practice. nevertheless, the Communication does not reveal any intention, at least for the time being, to promote a proposal for a regulatory intervention at European level aimed at combating the phenomenon of abuse of bargaining power between companies, while noting the extreme diversity with which some Member States have addressed the issue, noting that «where [national] rules exist, they differ in terms of level, nature and legal form of the protection granted against unfair commercial practices». 9 And not only: also in the United States, for example, the first timid steps in this regard are being taken: see X. Xxxxx, I contratti del mercato agro-alimentare: l’esperienza USA, in Riv. dir. alim., no. 1/2013, p. 40 ff.
10 Think of Italy, with Article 62, Decree-Law no. 1 of 2012; Spain, with the Food Chain Law no. 12/2013 (Ley 12/2013 of 2 August 0000, xx xxxxxxx xxxx xxxxxxx xx xxxxxxxxxxxxx xx la cadena alimentaria, on which see X. Xxxxxxx xxxxxxxxx, Los contratos alimentarios en la Ley de la cadena alimentaria. (Referencia a la normativa y doctrina italiana “dei contratti di cessione dei prodotti agrícoli e agroalimentari”, in Actualidad Civil, 3/2015, pp. 4-35); as to France, see the Law of Modernisation of Agriculture and Fisheries of 27 july 2010 (Loi 2010-874 adopted the 27 july 0000 xx xxxxxxxxxxxxx xx x’xxxxxxxxxxx xx xx xx xxxxx, on which see. C. Del Cont, Filières agroalimentaires et contrat:
Moreover, the rules in question say nothing about the consequences (e.g. civil or administrative) of any failure to comply with the written contractual obligation established by the Member State or of any failure to include in the contractual text the minimum information required by the regulation or, again, in case of breach of the mandatory minimum duration by the purchaser11.
2. Directive (EU) 2019/633: the origins
After repeatedly arguing that there was no need for EU regulatory intervention in this area12, the Commission was forced to revise its thinking, following calls to the contrary from the European Parliament.
In fact, in its conclusions to the Report to the European Parliament and the Council of 29 january 201613, the Commission did not see any added value in an harmonizing intervention by the EU on the issue of combating
l’expèrience francaise de contractualisation des relations commerciales agricoles, in Riv. dir. alimentare, no. 4/2012, p. 1 ff.).
11 It is, in some ways, surprising that the provision does not deal with sanctioning profiles, since the Commission itself has pointed out on several occasions, addressing the issue of unfair commercial practices in the agro-food supply chain, that the regulatory fragmentation of the matter, left, in substance, to the decisions of individual Member States, including sanctioning profiles, which differ from one State to another as regards the
«nature and legal form of the protection granted at national level against unfair commercial practices», implies a fragmentation of the single market: see, e.g., the Green Paper on unfair commercial practices in the business-to-business food and non-food supply chain in Europe, 31-1-2013, COM (2013) 37.
12 An initiative taken on the input of the high Level Forum for a better functioning of the agri-food supply chain has been, since 2013, the Supply Chain Initiative (SCI), operating on an exclusively voluntary basis: in addition to having a limited impact on the territory of the Union, it has not produced, in reality, great and appreciable results, due, in essence, to the lack of an adequate system of sanctions. Moreover, the organizations representing agricultural producers have not joined the scheme, partly because of the alleged lack of confidentiality – in the scheme in question – for the person denouncing an unfair practice to his detriment.
13 The Report referred to in the text has been classified as COM (2016) 32 final, on unfair business-to-business trading practices in the food supply chain. Earlier, and of similar tenor, see Commission Communications COM (2009) 591 final, A better functioning food supply chain in Europe, and COM (2014) 472 final, Tackling unfair trading practices in the business- to-business food supply chain.
unfair commercial14 practices in contracts of the food supply chain. In the report, the Commission also noted that the phenomenon of unfair practices in the sector was widespread, since at that time as many as 20 Member States had already adopted rules to combat them or planned to do so in the near future. Moreover, precisely because State interventions were intended to respond to needs for which there was no EU regulation, the rules adopted at domestic level were inevitably, although intended to tackle the same phenomenon, heterogeneous in content and thus harboured fragmentation and distortions of the internal market, especially whenever commercial transactions concerning agricultural products or foodstuffs took place at transnational level15.
Already in june 2016, on the contrary, the European Parliament, responding to the above-mentioned Communication, invited the Commission to present a legislative proposal on unfair commercial practices in the agri-food sector16, and the EU Council17 and the European Economic and Social Committee18 came to similar conclusions.
The Commission thus presented a proposal for a directive in April 201819, which received much attention also from the media, and led to the unusual quick adoption of Directive 2019/633 of 17 April 2019, shortly before the end of the parliamentary term (followed by the European elections in May 2019)20.
14 For a critical stance, against the Commission’s position, see. X. Xxxxxxxx Xxxxx, Unfair practices in the food supply chain, in EFFL, 2014, 293 ff. Against a direct intervention of EU law in the sector, see instead R.M. Hilty, X. Xxxxxxx-Xxxxxxx, X. Xxxxxxx, Comments of the Xxx Xxxxxx Institute for Intellectual Property and Competition Law, Munich, of 29 April 2013 on the Green Paper of the European Commission on unfair trading practices in the business-to-business food and non-food supply chain in Europe dated 31 january 2013, com (2013) 37 final.
15 For a meritorious study of national regulations aimed at countering the phenomenon of unfair trading practices also, but not only, in the food sector, X. Xxxxxxx and P. Iamiceli, Unfair trading practices in the business-to-business retail supply chain, An overview on EU Member States legislation and enforcement mechanisms, EC Commission jRC Technical Reports, Publication Office of the Xxxxxxxx Xxxxx, Xxxxxxxxxx, 0000.
16 Thus European Parliament Resolution 2015/2065(InI) of 7 june 2016 on unfair trading practices in the food supply chain.
17 See Council Conclusions of 12 December 2016 on strengthening the position of farmers in the food supply chain and combating unfair trading practices.
18 See COM (2016) 32 final of 30 September 2016.
19 Of 12 April 2018, (COM) 173, on unfair business-to-business commercial practices in the food supply chain.
20 On EU Directive no 2019/633 see X. xxxxxxxxxx, La tutela dei produttori agricoli
It is therefore not surprising that the effectiveness of the action envisaged by the directive has been significantly enhanced following the intervention of the European Parliament, since the text of the original Commission proposal was not particularly relevant and incisive in combating unfair commercial practices against weaker players in the agri-food sector, so much so that the Economic and Social Committee21 «regretted» it.
3. General features of Directive 633/2019: minimum harmonization approach, legal basis and objective and subjective scope
The proposed harmonization appears, first of all, to be of a minimal nature, leaving the Member States free to implement the discipline by strengthening – or maintaining, if already existing – the protection for the party affected by the unfair conduct22. In particular, Member States are given the possibility of maintaining or introducing stricter rules than those provided for by the Directive, as well as of regulating cases which do not fall within the scope of the Directive (see Article 9(2))23.
The minimum harmonization approach can indeed be understood in the light of the above mentioned Commission’s scepticism, and of the fact that the directive is essentially the first organic intervention on the topic24,
nelle filiere agroalimentari alla luce della direttiva sulle pratiche commerciali sleali business to business, in Riv. dir. agr., 2019, I, p. 5 ff.; A. Genovese, Le pratiche commerciali sleali nella filiera agroalimentare, in Trattato di diritto. alimentare, in X. Xxxxxx, X. Canfora,
X. Xx Xxxxx and X. Xxxxx (eds), Xxxxx, 2021, p. 190 ff.; X. Xxxxxxxx, Xxxxxxx
agroalimentare e pratiche commerciali sleali, in Europa e dir. priv, 2019, no. 4, p. 1133 ff.; let us also refer to X. Xxxxx, La nuova direttiva UE sulle pratiche commerciali sleali nella filiera agroalimentare: una prima lettura, in Riv. dir. civ., 2019, I, p. 1418 ff.; on the Commission’s proposal, see X. Xxxxxxxxx, K.P. Xxxxxxxxx, B. keirsbilk, X. Xxxxxxx, Unfair trading practices in the food chain: regulating right?, Wageningen Working Paper Law and Governance, 2018/03.
21 See EESC Opinion on the proposal for a directive of 19 September 2018, COM (2018) 173 final, in OjEU C 440, 6-12-2018.
22 See Art. 9, according to which «with a view to ensuring a higher level of protection, Member States may maintain or introduce stricter rules aimed at combating unfair trading practices than those laid down by this Directive».
23 Provided that the internal rules are compatible with those relating to the functioning of the internal market: see Article 9(1) and (2).
24 In fact, it has already been pointed out that EU law does not lack interventions on specific aspects, such as the rules on interest for late payments in commercial transactions, or the possibility of formalizing in writing the contracts of first sale of
as such susceptible to checks and additions over time.
It is worth noting that Article 43(2) TFEU is indicated as the legal basis, since the declared aim of the directive is primarily to achieve one of the objectives of the CAP as set out in Article 39 TFEU, namely the need to ensure a fair standard of living for the agricultural community25.
Moreover, it has been pointed out that subjecting farmers to the unfair practices of their contractual partners has a wide range of negative consequences, not only for the farmers concerned, who see their margins reduced and find themselves exposed to factors that are difficult to foresee in ordinary commercial relations, but more generally for the entire sector, in view of the spread of the phenomenon, with a consequent reduction in investment and innovation in general26. Recital (7) of Directive 633/2019 also points out that the agricultural sector, as a sector upstream in the food chain, runs the risk of being victim of unfair practices that are carried out in contractual relations relating to subsequent links in the chain, since the operators who suffer them will in turn try to pass on the negative effects to their suppliers27.
On closer inspection, the directive provides protection not only to ‘genuine’ agricultural producers, but also to food producers and simple traders in agricultural products and foodstuffs, so much so that the commercial transactions covered by the discipline are both those relating to agricultural products listed in Annex I to the TFEU and those relating to foodstuffs not listed in the Annex, but processed for use as food using products listed in the Annex28.
Indeed, the protection offered by the directive applies both to agricultural undertakings, i.e. those engaged in the production of products defined as such and included in the list in Annex I to the TFEU; and to undertakings producing foodstuffs, i.e. not only products for food use listed in Annex I to the TFEU, but also «products not listed in that
agricultural products subject to EU regulation no. 1308/2013.
25 See the Explanatory Memorandum accompanying the proposal, which notes that
«unfair commercial practices jeopardize the profitability of agricultural producers and generate downward pressure on their market income. Regulating them is therefore a core competence of the CAP». This assumption is then repeated several times in the opening recitals: see recitals (1) and (7).
26 Thus already the Green Paper, cit.
27 In particular, recital 7 highlights the possible ‘cascading’ effects, with negative consequences on primary producers operating in the agricultural and food chain.
28 This is reflected in the definition of «agricultural and food products» in Article 2(1), under the heading «Definitions».
Annex but processed for use as food using products listed in that Annex»29; and, finally, undertakings which simply market agricultural products or foodstuffs30.
In order to justify the reference to Article 43 TFEU as the legal basis of the Directive, in its proposal the Commission31 referred to the now long- standing case law of the Court of justice, according to which a legislative act may be adopted under the «agricultural» umbrella even if it concerns, in an ancillary manner, products not included in Annex I to the TFEU, if this can contribute to the achievement of one or more objectives of the CAP and if the legislative act at issue essentially concerns agricultural products32. The extension of the ambit of application of the directive to the supply of ‘Annex I’ agricultural products, without further distinction as to their use, certainly strengthens the case for the use of Article 43, even if it is probably excessive to consider that the entire body of the directive can be said to be aimed essentially at protecting the incomes of farmers alone.
In addition, the Directive is intended to apply to contracts which allow the transfer of ownership of foodstuffs: consider Article 1(1), which refers to the prohibition of contracts «between purchasers and suppliers»;
29 Thus Article 2(d) of the directive, entitled Definitions.
30 Thus, the final text of the directive significantly broadens the scope of those potentially covered by its rules compared to the original Commission proposal, which only covered products for food use and not agricultural products in general listed in Annex I. Under the proposal, it follows that those engaged in the production of agricultural products which, although included in Annex I to the TFEU, are not intended for food use, would be left without the protection offered by the future directive, whereas non-farmers would also benefit from the rules in question. As a result of the amendments made by the European Parliament, the title of the directive has also been changed: it now refers to unfair practices in «business-to-business relationships in the agricultural and food supply chain», whereas the proposal referred only to «businesses in the food supply chain».
31 The reference to Article 43 TFEU is considered as not entirely satisfactory by X. xxxxxxxxxx, La direttiva sulle pratiche sleali commerciali business to business nella filiera alimentare: considerazioni introduttive, in Dir. lav. e delle rel. ind., 2019; Id., La tutela dei produttori agricoli nella filiera agro-alimentare alla luce della direttiva sulle pratiche sleali commerciali business to business, cit., p. 44 ff.; x. Xxxxxxxxx, K.P. Xxxxxxxxx, B. keirsbilk and X. Xxxxxxx, Unfair trading practices in the food chain: regulating right?, cit. 32 In this sense, see Court of justice of the European Union, Case C-343/07, para. 50:
«the Court has already held that legislation which contributes to the achievement of one or more of the objectives mentioned in Article 33 EC must be adopted on the basis of Article 37 EC, even though, in addition to applying essentially to products falling within Annex I to the Treaty, it also covers incidentally other products not included in that annex (see, to that effect, Case C11/88, Commission v Council, paragraph 15, and Xxxx X000/00 Xxxxxx Xxxxxxx v Commission [1998] ECR I2265, paragraph 134)».
references to such positions are, moreover, repeatedly contained in the articles of the directive, and specific definitions are offered to identify both the «purchaser» and the «supplier»33. Thus the Directive cannot be taken into account in all those vertical integration contracts – particularly widespread in the livestock sector – in which there is no such transfer: since they are essentially obligations to do something placed on the integrated company, which operates on products that are and remain the property of the integrating company.
Moreover, in addition to these objective conditions, the Directive contains further equally important subjective conditions: the protection is afforded only to those relationships involving producers and traders in agricultural products and foodstuffs, on the one hand, and purchasing undertakings34, on the other, which do not exceed (as regards the supplying undertakings) and do exceed (as regards the purchasing undertakings) certain turnover thresholds35.
The solution adopted is thus characterized by a certain rigidity, resulting from the need to ascertain annual turnovers, which could lead to practical difficulties and to eccentric results: as has already been correctly observed,
«the same practices implemented by a purchaser could be either unfair or not unfair, depending on the economic weight of the other party»36. The fact is that under the directive, and unlike the proposal, supplier companies that fall under the definition of large companies will also be able to benefit from the relevant discipline, if their counterparty has a turnover in excess of EUR 350 million. On the other hand, supply relationships where both the supplier and the purchaser can be considered micro-enterprises cannot enjoy the same protection.
In particular, for the Directive to be applicable, the maximum turnover
33 Within these relationships, certain services may also be sanctioned as UCPs, provided that they are included among the prohibited conduct referred to in Article 3 of the directive: see Article 1(2)(5).
34 The rules do not apply to sales to consumers, being reserved for business-to-business relations only.
35 here too, the final version of the directive differs significantly from the content of the original proposal: the latter, in fact, established the applicability of the future directive exclusively to (only) food suppliers that qualified as small or medium-sized enterprises and that, however, sold these products to an enterprise that was neither small nor medium-sized, according to the parameters set out in Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium- sized enterprises.
36 Thus X. xxxxxxxxxx, La tutela dei produttori agricoli nella filiera agro-alimentare alla luce della direttiva sulle pratiche sleali commerciali business to business, cit., p. 48.
threshold of the transferring undertaking (agricultural or foodstuff ) must be lower than the turnover of the acquiring undertaking. In substance, the application of the discipline is subject to the presence of a situation characterized by a disparity in the size of the contracting undertakings, such as to entail – with a sort of absolute presumption – asymmetries of bargaining power between them such as to justify the regulatory intervention in question.
The Parliament’s intervention broadened the scope of the «purchasing» companies relevant for the application of the directive, by including also the public authorities37, establishing that in case of supply relationships with them the turnover thresholds established in Article 1, para. 1, do not apply, provided that the turnover of the supplying company does not exceed 350 million euros.
having outlined the boundaries of application of the Directive, it is now possible to analyze its content.
4. Unfair trading practices: lack of a definition
In this regard, it should be noted that the text of the directive in question does not contain – unlike Directive 2005/29/EC on unfair business-to-consumer commercial practices38 – a general definition of unfair trading practice: there is therefore no definition or general concept of unfair commercial practice, characterized by the presence of specific elements or indices denoting its unfair nature, but only39 an exhaustive list of typical cases.
This, moreover, can be justified by the difficulty in laying down a general definition which would probably remain excessively indeterminate
37 These means «national, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law»: Article 2(3) of the Directive.
38 On which see in particular X. Xxxxxxx, Pratiche commerciali scorrette e consumatore medio, Milan, 2016; X. Xx Xxxxxxxxxx (ed.), Le “pratiche commerciali sleali” tra imprese e consumatori. La direttiva 2005/29/CE e il diritto italiano, Torino, 2007; Id., Le pratiche commerciali scorrette e il codice del consumo, Torino, 2008; X. Xxxxxxxxx and X. Xxxxx Xxxxxx (eds), Le pratiche commerciali sleali, Milano, 2007.
39 A list of prohibited practices is also contained in Directive 2005/29/EC, and in particular in Annex I thereof, but the Annex is not the only instrument for the identification of UCPs.
as regards its boundaries. Moreover, the scope of UCPs in the agri-foodstuffs sector differs profoundly from that already outlined in relations between professionals and consumers in Directive 2005/29. Suffice it to say that in the latter directive the prohibited practices are aimed, in principle40, at affecting the mechanism by which the consumer makes a purchase decision, so that the consumer would not have taken a commercial decision or would have done it under different conditions in the absence of the unfair practice carried outby the professional counterparty41.
In relations between companies operating in the agri-food chain, on the other hand, the concept of unfairness of the commercial practice changes significantly, since the company that is subjected to such practices is in almost all cases perfectly aware of the abuse that before, during or after the conclusion of the contract is forced to suffer to its own detriment, but is not able to oppose it adequately, because it does not have the possibility or because, in any case, it does not want to prejudice a commercial relationship that could prove fundamental for its survival on the market.
This is certainly not the place to compare the two sets of rules (those protecting consumers and those protecting agri-food businesses), but only to highlight at least the major differences between them, without considering that the harmonizing nature of the two directives is quite different: while Directive 2005/29 achieved complete harmonization of the field, as recognized also by the case law of the Court of justice42, the harmonization in the Directive 2019/633 is declaredly minimal.
On the other hand, the new Directive does not contain certain clarifications of no little importance which can be found in the directive on consumer contracts. We refer, in particular, to the absence of any indication as to the relationship between the finding of the presence of an unfair commercial practice and the fate of the relevant contract from the civil law point of view: in particular, Directive 633/2019 lacks a clause similar to that contained in Article 3(2) of Directive 2005/29, according to which the provisions contained therein are without prejudice to «contract law and, in particular, to the rules on the validity, formation or effect of a
40 This is so even though, strictly speaking, Article 3 of Directive 2005/29 provides that the directive applies to unfair business-to-consumer commercial practices carried out before, during or after a commercial transaction.
41 See, in this respect, recital 7, according to which «This Directive addresses commercial practices directly related to influencing consumers’ transactional decisions ... ».
42 See EU Court of justice, judgment of 16 April 2015 in Case X-000/00, Xxxxxxx Xxxxxxxxxxxxxxxx Hatosag, para 32, which recalls other previous well-established case law on the point.
contract».
Lastly, unlike the UCPs with consumers, which, as they are structured in the Directive, can exist irrespective of the trader’s intentionality or fault – so much so that Directive 2005/29 takes care to point out that the relevant sanctions can be imposed «even without proof ... of intention or negligence on the part of a trader»43 –, the definition of UCPs within the agri-food chain is such as to always imply an intentional behaviour of the undertaking in a ‘dominant’ position (with the sole exception of non- payment or late payment within to the due date, which could be due to simple negligence), so that the ascertainment of the existence of one of the prohibited practices implies (in any case or subject to certain conditions, as will be seen below) the application of sanctions, being implicit in the case the voluntariness of the action in which the UCPs is substantiated.
5. Unfair trading practices always prohibited
The Directive identifies – in Article 3 – fifteen types of unfair conduct, nine of which, listed in paragraph 1, are considered always prohibited, and the remaining six, listed in paragraph 2, prohibited only under certain conditions44.
In particular, the different types of terms which are always prohibited are listed below, followed by some separate considerations as to their content and effectiveness. That said, the conducts which are always prohibited, as referred to in Article 3(1), para. 1, of the Directive, are:
(a) non-payment or delayed payment of the supply beyond the legal deadlines: on this point the rule is much more articulated than in the original proposal, distinguishing not only between perishable or non- perishable agri-food products45, but also between continuous supply contracts (for which the delivery of the products takes place «on a regular basis») or spot contracts. Four distinct cases are thus identified,
43 Thus Article 11(2) of Directive 2005/29/EC. For a case of imposition of sanctions on the trader for UCPs against an individual consumer and irrespective of proof of fault of the author, see the already cited Cj 16 April 2015, in case C-388/13.
44 In contrast, the original Commission proposal listed a total of eight types of unfair conduct, four of which were considered to be always prohibited and the remaining four prohibited only under certain conditions.
45 An agricultural product or foodstuff is perishable, as defined in Article 2(5), if it is likely to become unfit for sale within 30 days after harvest, production or processing.
depending on whether the relationship is continuous or not and on whether the product is perishable or not. In principle, and simplifying, legal and mandatory time limits for the payment of the price are identified, set at 30 or 60 days, depending on the perishable or non- perishable nature of the product, with a different determination of the respective dies a quo, depending on the continuous or non-continuous nature of the relationship. Pursuant to Article 3(2), the delay in payment is without prejudice to the creditor’s rights acquired under the directive on late payment in commercial transactions (Directive 2011/7/EU) and to the possibility for the parties to agree on a value sharing clause pursuant to Article 172a of EU Regulation 1308/2013.
(b) the cancellation of orders for perishable agricultural products or foodstuffs at such short notice that it can be «reasonably» assumed that the supplier will not be able to sell or otherwise use the products; the provision – innovative in this respect compared to the proposal – specifies that notice of less than 30 days is «short», although «in duly justified cases and for specific sectors» Member States are allowed to legitimize shorter notice periods.
(c) unilateral (and no longer necessarily retroactive, as provided for in the proposal) modifications by the purchaser of certain contractual provisions (frequency, method, place, timing, volume of supply or delivery, quality standards, terms of payment, price of the product);
(d) the request for payments not related to the sale of the products;
(e) the claim for payment for deterioration and/or loss of the products which has occurred on the buyer’s premises or after the purchaser has become the owner of the products, without the supplier being negligent or at fault in respect of the deterioration or loss;
(f ) the refusal from the buyer to confirm in writing the terms of a supply agreement despite the fact that the supplier had requested written confirmation46;
(g) the unlawful acquisition, use or disclosure by the buyer of the supplier’s trade secrets;
(h) the threat or use by the buyer of commercial retaliation against the supplier for exercising its contractual or legal rights, including the filing of a complaint or cooperating with enforcement authorities;
(i) the buyer’s request of compensation from the supplier for the costs
46 Similarly to what has already been established with regard to the possible written form of first sale contracts for agricultural products included in the single CMO, relations between the member and the PO to which the former belongs are excluded from the prohibition, if the statutes of the organization offer adequate protection to the transferor.
incurred in examining customer complaints relating to the sale of the supplier’s products, in the absence of negligence or fault on the part of the supplier.
In principle, not necessarily contractual clauses are sanctioned, but more generally the conduct of the stronger party, normally put in place after the conclusion of the contract and irrespective of the existence of any express agreements47; such conduct, or clauses, are generally accepted by the weaker contracting party precisely because of its position of weakness and its limited or non-existent bargaining power.
If we wish to examine the prohibited conduct separately, it may thus be noted, as regards the failure to comply with the time limit for payment, that the scope of the directive in question seems to be that, significantly, of introducing mandatory time limits, thus abandoning the residual approach set out in EU Directive no. 2011/7. In this way, the supply of agricultural products or foodstuffs is configured as a special relationship with respect to all other commercial transactions, due to the mandatory time limits for payment. As already pointed out at the beginning of this work, the directive on payment periods in commercial transactions does indeed identify a time limit for payment of the service, which, however, is applicable in lack of any other agreements of the parties, which, as a rule, remain valid with the sole threshold of the «gross unfairness» referred to in Article 7 of the directive. Exceptions to the applicability of the prohibition are, however, provided for in the last subparagraph of para. 1 of Art. 3, Directive 2019/633.
The final text of the directive has the merit of introducing a
presumption of illegality for notice of less than 30 days (while allowing derogations in certain circumstances), since the text of the Commission’s proposal was devoid of indications, so that, except in the most striking cases of no notice or very short notice, it could have been very difficult to classify the cancellation of an order as an unfair practice within the meaning of para. 1(b).
The modification of the contractual conditions constitutes a prohibited practice when it is imposed unilaterally by the purchaser: it is not clear whether the provision is intended to prohibit conduct of the purchaser
47 As regards non-compliance with payment terms, this may be relevant both in terms of an unfair contractual term, if the agreement provides for longer terms for the payment of the supply, which, in the light of the Directive, are intended to be replaced by the shorter terms provided for in Article 3(1)(a) by operation of law, and in terms of unfair conduct, if and in so far as the buyer, despite the existence of agreements complying with the Directive, fails to make timely payment of the amount due.
subsequent to the formation of the contract or whether the prohibition concerns the very contractual provision of possible unilateral modifications for the purchasing party.
With regard to the refusal of the purchaser to conclude a written contract although requested by the supplier, the provision follows what has already been set out in para. 1a of Articles 148 and 168, EU Regulation no. 1308/2013, according to which, if the Member State of origin has not made use of the option to introduce an obligation of written form, it is the transferor who may request the purchaser to adopt such a contractual form, provided that the latter is not a micro, small or medium-sized enterprise: the provision contained in the directive is thus more stringent, given that the provisions of regulation 1308/2013 allows the application of the rule only in cases where the purchaser is a large enterprise.
The other prohibitions are newly drafted cases, introduced in the final version of the Directive, which were not covered or, as to hypothesis e), formulated differently in the original proposal. Among them, it is worth noting the inclusion within the list of prohibited practices of retaliatory conduct (or even the mere threat thereof ) by the buyer against the supplier, due to the fact that the latter has done no more than exercise rights conferred on him by contract or by law.
6. Trading practices which are potentially unfair
Para. 2 of Art. 3 of the Directive contains a list of clauses which are to be considered prohibited only if not «previously agreed in clear and unambig- uous terms in the supply agreement» or in another subsequent agreement, such as: the return to the supplier of unsold goods without payment and/ or disposal; the imposition on the supplier of a payment «as a condition for stocking, displaying or listing» its products or of making them available on the market; the request to the supplier to bear, even in part, the costs of any discounts given by the purchaser as part of a promotion, unless the buyer, prior to a promotion, specifies to the supplier the period of the promotion and the expected quantity of the goods to be ordered at the discounted price; the request to the supplier to pay the costs of advertising carried out by the purchaser; the request that the supplier pay the costs of marketing carried out by the purchaser relating to the products purchased from the supplier; and the request that the supplier pay the costs of the personnel for fitting-out premises used for the sale of the supplier’s products.
The presence of the above condition («unless they have been previously agreed in clear and unambiguous terms in the supply agreement») for the applicability of the prohibitions makes such prohibitions merely residual. It will, in fact, be sufficient to take care to include clear and detailed contractual provisions at the time of the conclusion of the contract or in a subsequent agreement in order to avoid the application of para. 2. The presence of clear and unambiguous terms does not seem to be an effective deterrent to the inclusion of such terms in the contract, since the disparity of bargaining power is likely to make suppliers willing to accept terms such as those at issue.
This consideration, which is of an eminently practical nature, avoids going into the details of individual cases.
7. The other provisions of the Directive
In order to ensure the effectiveness of the prohibitions laid down in Article 3, Article 3(4) requires the Member States to implement the prohibitions laid down therein by means of mandatory provisions and of necessary application, so as to prevent their otherwise easy circumvention: indeed, according to the express provisions of Article 1(2), the directive shall apply «to sales where either the supplier or the buyer, or both, are established in the Union». This means that it applies even where only the supplier or only the buyer is established in the territory of the Union.
Under Article 4, each Member State must designate an enforcement authority, i.e. a body responsible for monitoring and verifying compliance with the above prohibitions, and inform the Commission of that designation. The Directive provides that this authority shall act48 either on its own initiative or following a complaint from any person claiming to have been harmed by an unfair practice; producer organizations or other associations of suppliers or associations of such organizations may also lodge a complaint. Appropriately, it is expressly provided that the complainant may, if he so requests, remain anonymous in order to avoid possible commercial retaliation by the complained49.
Art. 6 governs the consequences of an unfair practice: the Enforcement Authority may impose on the purchaser: i) the cessation of the prohibited practice, unless in so doing there is a risk of disclosing the identity of the
48 Thus Article 6(1)(a) of the Directive.
49 See Article 5(3) of the Directive.
complainant when the latter expressed the wish to remain anonymous;
ii) fines and other equally effective penalties, which50 are effective, proportionate and dissuasive, taking into account the nature, duration, recurrence and gravity of the infringement. Finally, as a further form of sanction, the Authority may order the publication of the injunctions and sanctions referred to in (i) and (ii) above. Member States must also give the enforcement authority the power to carry out unannounced on-site inspections and to require the parties to provide any information necessary for the investigation. The exercise of the enforcement authority’s powers must, however, respect the parties’ rights of defence.
Article 7 provides that Member States may promote voluntary recourse to dispute settlement systems, without prejudice to the possibility for interested parties to lodge complaints before the Enforcement Authority.
As mentioned at the beginning of this work, the legal systems of many Member States already provided rules designed to combat unfair commercial practices in the agri-food sector; however, given the lack of a harmonized framework to date, national measures are characterized by their heterogeneity, both as to the conduct to be qualified as relevant unfair practices and as to the applicable penalties. Therefore, in the light of the adoption of the Directive and its implementation into the Member States, in order to permit the widest homogeneity of application also on the practical-operative level Article 8 provides for the necessary coordination between the national enforcement authorities and for an exchange of information procedure.
Furthermore, as mentioned above, the harmonization pursued by the Directive is minimal, so that the Member States remain free to introduce more stringent national provisions, with the sole limitation of the compatibility of such rules with the functioning of the internal market. It will probably be the ex-post verification of the implementation of the directive and the results obtained, as provided for in Article 12, that will induce the Commission to raise the standard of protection in the fight against unfair commercial practices in the agri-food sector by the adoption of new regulatory measures.
50 It should be noted that the Commission proposal only envisaged the possibility of financial penalties.
8. The Commission’s Report on the implementation of the Directive
The Directive had to be transposed by 1 May 2021, and the internal implementing provisions had to become applicable by 1 november 2021 at the latest (the application to be extended also to supply agreements in place at the date of publication of the implementing legislation, the content of which has to be brought in line with the Directive within 12 months of the publication of the internal implementing rules)51.
The Commission prepared a first record of the state of play regarding the transposition of the Directive by the Member States into national law (although without providing an assessment of transposition measures) in its Report of 27 October 202152, updated to the 31st july 2021. By that date, only 15 out of 27 Member States53 had transposed the Directive, of which eight by introducing new specific legislation, while the other eight by amending existing legislation, or by integrating implementing measures into more far-reaching legislative measures. Only France and Slovakia have provided for the application of the legislation irrespective of the size of the companies concerned (subsequently joined by Italy, which transposed the Directive with the 2019/20 European Delegation Act54 and the subsequent Legislative Decree no. 198/2021 of 8 november 2021).
It is interesting to note that the 15 Member States that had transposed the Directive by the 31st of july 2021 designated an administrative, rather than a judicial, enforcement authority, and the most designated an independent administrative authority and established financial penalties for breaches of the prohibitions laid down in the Directive.
51 Thus Article 1(4) of the Directive.
52 Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the state of transposition and implementation of EU Directive 2019/633, COM (2021) 652, 27 October 2021.
00 Xxxxxxxx, Xxxxxxx, Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx, netherlands, hungary, Croatia, Luxembourg, Germany, Lithuania, Malta, Sweden, Slovakia.
54 Law no. 53 of 22 April 2021, Delegation to the Government for the transposition of European directives and the implementation of certain EU acts - European Delegation Law 2019-2020. See X. Xxxxxxxxxx, The implementation of Directive no. 633 of 2019 in the Italian experience, in This Volume.
9. Conclusions
It is hard to understand the enthusiasm shown by the agricultural sector and the attention that the proposal and subsequent adoption of the Directive have constantly received, including from the media. Fortunately, Parliament’s intervention during the procedure for the adoption of the act has significantly broadened the subjective and objective scope of the new rules and included many types of unfair practices that the Commission proposal did not cover at all.
In fact, the Directive cannot be considered as a general instrument for combating unfair commercial practices in the agri-food chain, but rather as an instrument for combating only certain practices, and in particular well- identified cases. Moreover, for six of these practices, the prohibition is not absolute, deriving from the fact that they are not clearly and unequivocally provided in the contract. The practices listed, moreover, cannot be said to be always prohibited even when falling within the ‘black list’ of Article 3(1), since for the prohibition being applicable it is necessary that the undertakings involved in the commercial relationship at issue fall within the turnout thresholds laid down in the Directive: in particular, practices adopted if the contracting undertakings are both micro-enterprises are never prohibited. nor can the directive be considered as a specific safeguard for the agricultural sector, since, as we have seen, its provisions also benefit food businesses, whether they are producing or merely marketing.
This admittedly minimalist approach is not surprising, given that the
Commission was essentially forced by the Parliament and the Council to adopt a proposal that was not in its wheelhouse and that, in any case, this is the first regulatory intervention: as such, it is susceptible to subsequent amendments, also on the basis of the ex post evaluation that will be made four years after its application. The amendments made by Parliament have, in any case, undoubtedly made this minimal form of intervention to protect the weaker party more effective.
There is no doubt, therefore, that despite the harmonization brought about by the Directive, Member States remain the main actors in the fight against unfair practices in the sector. Moreover, the creation of enforcement authorities, imposed by the directive, even for those States that do not yet have them, could lead to the development of fruitful cooperation between them, thus filling a significant gap in the current situation, in which each authority – where it exists – acts as a monad for the application of its own national law, with no exchange of information with authorities in other
Member States on their respective practices and the concrete cases at issue. The fact remains that, beyond the more or less incisive ways in which one intends to tackle the issue of unfair practices in the agri-food supply chain, regulatory action aimed at combating unfair practices is limited in scope to individual contractual relationships or, at most, to groups of contractual relationships, and is aimed at removing or preventing the application of contractual clauses or practices that strongly and unjustifiably penalize the weaker party, without, however, being able to affect the real source of the problem, i.e. the disparity of bargaining power that in practice characterizes
bargaining in the agri-food market.
The «fair price» in agri-food chain
Summary: 1. Introduction – 2. Farmers fair price and regulation of market relationship in the CAP reform 2014-20 – 3. The role of Producer Organizations in agricultural sector – 4. Contractual schemes for the sale of agricultural products and price formation – 5. Regulatory action to ban unfair commercial practices – 6. Intervention on prices and market balance in the implementation of Member States.
1. Introduction
The topic of the fair remuneration of farmers shall be considered the basis of the special regulation of agriculture in the Treaty, founded on the general goals laid down in Art. 39 of the Treaty of Rome (and currently, without any change, in the Treaty on the functioning of the EU). Indeed, Art. 39 TFUE mentions the «fair standard of living of the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture» as one of the five objectives of the Common Agricultural Policy (CAP), related to the first one, «increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour».
Legal tools to join the CAP objectives changed among the years, starting with a price policy, that supported farmers through the withdrawal of unsold products at an administrative price system defined by the EU Commission, gradually replaced by the decoupling payments1. Direct payments system has been remarkably weakened, mainly in the latest years, in the perspective to address agriculture to the market, face to the international obligation in the framework of WTO.
1 j. XxxXxxxx, X. Xxxxxxxx (eds), Research Handbook on EU Agricultural Law, EE Cheltenham, 2015.
At the same time, as consequence of the MacSharry agricultural policy reform the EU introduced, in the ’90, a very relevant set of rules aimed at enhancing quality products, with the goal to promote the competitiveness of agricultural products and at the same time support farmers income, considering the higher prices of PDO and PGI as well as organic products on the market. Until today, the Regulation 1151/2012, on quality systems pointed out the role of these special trademarks as a tool to increase the earnings of farmers2.
From this point of view, European rules on quality products of geographical origin, in accordance with CAP objectives declared in Art. 39 TFUE, achieves a synthesis between the interest of agricultural producers (to the profitability of products with quality added value, linked to the origin of a specific territory) and the growing consumers expectation on quality agricultural products.
The relevance of profitability of the use of denomination of origin for farmers and first processors, located in the territorial area interested by the sign, is clearly highlighted by Regulation 1151/12 by specifying the goals to achieve with the establishment of PDO and PGI signs, based on the ratio of the legislation on quality schemes.
Indeed, the quality scheme based on PDO and PGI represents a way to achieve the goals through a competitive tool reserved to the producers and directly managed by themselves, as expressly stated by Art. 4, laying down that the use of signs guarantees a fair return for the quality of their products (besides the protection of names as intellectual property right within the EU, and the clear information to consumers).
In the last years, as far as the financial measures by direct payments decrease and the EU opens to the external market, the question of the balance of value and of the need to ensure profitable price for the supply of agricultural raw materials, become the leitmotif of the structural interventions for market governance since the CAP regulation of December 2013, until the Directive on unfair trading practices in business-to-business relationships in the agricultural and food supply chain and finally with the amendments to CMO regulation laid down by Regulation 2021/2117.
2 I. Xxxxxxx, La politica della qualità dei prodotti agroalimentari dell’UE, in X. Xxxxxx-I. Canfora-X. Xx Xxxxx-X. Xxxxx (eds), Trattato diritto alimentare e dell’Unione Europea, Xxxxxxx, Milano, 2021 p. 425 ff.
2. Farmers fair price and regulation of market relationship in the CAP reform 2014-20
In order to understand the tools aimed at ensure a fair price for agricultural producers, it is necessary to start from the analysis of the legal framework about the supply chain relationships.
For this purpose, it will be useful to summarize the stages leading to the CAP reform 2014-20, considering that it produced a substantial break with the past «legal instrumentarium» as regards to the structure of supply chain relations at the European level.
A significant effect on agricultural productions prices, especially commodities, may be determined by various causes: the liberalization of markets, the ability of processors and distributors to acquire raw materials on foreign markets at lower prices than the European ones, the elimination of domestic quota measures, the reshaping of support measures in terms of the distribution of funding between the first and second pillars of the CAP (in the relationship between direct payments and rural development measures). Moreover, this scenario mainly affected the farmers resilience, particularly in relation to small enterprises.
The European Union dealt with the price crisis by an experimental regulatory model, in dairy sector. Indeed, in this sector, the cancellation of milk quotas – a protectionist mechanism that ensured guaranteed outlets for production and consequently an adequate remuneration of the sale price of milk at the barn – strongly affected the situation of producers supplying raw milk to buyers.
The pilot experience of Regulation 261/2012 (called «milk package») laid down special rules defining a new discipline for agrifood chain relationships and gave rise to an innovative experience for CAP regulation, since it identified a set of regulatory tools. In particular, Regulation no. 261/2012 included regulatory tools later taken up in the text of the CMO of December 2013: by defining the role of producer organizations in managing contractual relations, the functions of interbranch organizations, the transparency in price monitoring, later transformed into systems for calculating average European prices, futures market measures, and finally by reporting risks of unfair trade practices affecting agricultural producers.
The relevance of the Milk sector regulation lies in the fact that this set of rules was the basis of the CAP 2014-20. Indeed, it was extended to other sectors by the Common Market Organization (CMO) Regulation no. 1308/13, and later consolidated as a model of market regulation by
the mid-term reform, laid down in 2017, by Regulation no. 2393/2017.
In order to grasp the perspective of development of the regulatory system, it is useful to go back over the economic context, from which the Commission is moving to propose the new market regulation framework, as summarized by the recitals to the act.
Indeed, the reform is intended to the price stabilization in the face of falling prices «to the lower safety net level» (recital 2 Reg. 261/2012).
A first piece of evidence, consisting of the low concentration of supply (size and fragmentation of farms in relation to buyers of raw materials) is identified as the cause of the «imbalance in bargaining power in the supply chain (...) that can lead to unfair commercial practices», particularly in relation to the time of the price determination: «farmers may not know at the moment of delivery what price they will receive for their milk because frequently the price is fixed much later by dairies on the basis of the added value obtained, which is often beyond the farmer’s control» (recital 5 to Reg. 261/2012).
Moreover, goes on the preamble to Regulation 261/12: «There is thus a problem of price transmission along the chain, in particular as regards farm-gate prices, the level of which generally does not evolve in line with rising production costs. (...) value added in the dairy chain has become increasingly concentrated in the downstream sectors, especially dairies and retailers, with a final consumer price that is not reflected in the price paid to milk producers» (recital 6).
It can be seen, therefore, how the issue of price formation of agricultural products, related to the persistence of farms in the European territory, is a crucial topic in the legal thought about the new regulation of agri-food markets3.
Acknowledged that the dispersion of value affects the food chain in milk sector (extended to the whole Common Market organization by Reg. 1308/13) shall be identified legal instruments aimed at strengthening producers association to concentrate supply and obtain more competitive prices, as well as establishing interbranch relations between business operators and transparent contractual relations. Actually, the update of regulatory framework of contractual relationships in terms of formal transparency, it is not in itself a guarantee to reduce the abuse of buyer power, since it is the imbalance of bargaining power between enterprises
3 See X. Xxxxx, La sostenibilità economica delle imprese agricole tra dinamiche di mercato e rapporti contrattuali di filiera, in La sostenibilità in agricoltura e la riforma della XXX, X. Xxxxxx-X. Xxxxxx (xxx), Xxxx, 0000, p. 91 ff.
which affects the value of the exchange4.
Indeed, the significant imbalance in bargaining power between farmers and buyers is answered in the instruments listed above, mainly by the (voluntary) establishment of groups of farmers in the form of producer organizations (PO). Indeed POs are theoretically more incisive in negotiations; however they may not, always be found to be adequate or sufficient, in any context, to determine the proper functioning of the agrifood supply chain.
Therefore, firstly in milk sector emerged the need for a European-based regulation of the functions assigned to the players involved in the supply chain, as well as the framework of contractual relations and supply contracts. The reason that guided this path was both the need to ensure the functioning of the agricultural supply, as well to guarantee a uniform framework of supply chain relations in the interest of farmers, with the
final goal to obtain a fair return from the supply of agricultural products.
All these aspects are grounded on the fundamental objectives enshrined in the Treaty, related to the need to preserve agricultural activities in the whole territory of the European Union; moreover they reappear in the farm to fork strategy outlined by the Commission in 2020 based on the establishment of «sustainable food systems».
As discussed over, such interventions are decisive in ensuring an adequate income for agricultural producers, in the light of the objectives of the CAP, defined by Art. 39 TFEU and unchanged in their enunciation since the wording of the 1957 Treaty of Rome, insofar as they aim – in the context updated to the post-2020 reform – to ensure a fair standard of living for the agricultural population, linked to increase in agricultural productivity.
It is, moreover, a perspective that increasingly tends to highlight the competitiveness of agricultural enterprises as economic players active in market dynamics, precisely because they are linked to the regulation of the supply chain, as outlined in the Common Market Organization.
After all, the objective laid down by Art. 39, «to ensure a fair standard of living for agricultural producers», can be broadly interpreted, referring
4 About the opportunities and limits of the new trend, inaugurated by EU law on negotiations carried out by producer groups consult X. xxxxxxxxxx, L’associazionismo dei produttori agricoli e il tabù dei prezzi agricoli nella disciplina europea della concorrenza. Considerazioni critiche sul reg. n. 261 del 2012 in materia di latte e prodotti lattiero caseari, in Riv. Dir. Agr., in particular p. 191 ff. See also: I. Xxxxxxx, Raggiungere un equilibrio nella filiera agroalimentare. Strumenti di governo del mercato e regole contrattuali, in Cibo e diritto. Una prospettiva comparata, X. Xxxx Xxxxxxxxx-X. Xxxxxxxxx (xxx), xxx. 0, Xxxx, p. 237 ff.
to the whole context in which agricultural production activities are located: for the aspects here discussed, it undoubtedly affects the supply chain as the place where contractual relations for the supply of agricultural products, but also the territorial sphere in which agricultural enterprises themselves are located. This perspective emerges significantly in the legislative drafting of the Directive 2019/633 on unfair trading practices in the agricultural and food supply chain, that represents the last act among the regulatory instruments related to the CAP 2014-205.
Furthermore, the distorting effect of unfair behavior of processing and distribution agribusiness operators in the supply chain, causing detriment in particular to agricultural producers, has long been reported. In this regard it is not surprisingly that a EU Commission study summarized the development perspective of agriculture outlining the need to increase aggregations between producers as well as to correct distortions in the supply chain, with regard to the different stages of supply6.
The regulatory framework arising from the adoption of the CAP 2014- 20, definitively increased the role of producers organized into groups as an integral part of the agrifood system, as proactive part of its regulative frame- work. Indeed, producers organizations as subjects empowered with the functioning of supply relationships governance, as far as groups of producers enhancing quality products, have been progressively assigned functions of governance of the system of supply chain relations. At the same time, new special competition rules have been defined, aimed at strengthening the bargaining power of the recognized organizations of agricultural producers7. Indeed, the role of producer organizations is focused primarily on the purpose of increasing supply concentration functions and price bar- gaining; but also on the related goal to define rules of conduct that affect profiles not exclusively related to the mere supply of goods on the market: this other goal, not secondary in the functioning of the market, complete the role given to the producers organizations in the agrifood system, since it can contribute to improve the value of products and the internal orga- nization of groups of farmers, with the effect to improve the efficiency and
5 To recap the political framework about the adoption of the Directive, read P. De Castro, La direttiva UE contro le pratiche commerciali sleali nel settore agroalimentare. Cosa cambia per le imprese e i consumatori italiani, Bruxelles, European Parliament, 2019. 6 Agricultural Markets Task Force Improving market outcomes. Enhancing the position of farmers in the supply chain, European Commission, november 2016.
7 See Art. 152 of Regulation 1308/2013, as amended by Regulation 2017/2393, as discussed in I. Canfora, Organizzazione dei produttori agricoli, in Digesto, priv. Civ. agg. XI, 2018, p. 355.
making them more competitive.
In this framework, the provision of interbranch organizations, as the conjunction ring between the recognized organizations of agricultural pro- ducers and the organizations of processors and/or distributors is designed to contribute to the achievement of objectives of the functioning of the supply chain, among which are highlighted, according to the amendments of Regulation 2021/2117, also the initiatives related to sustainability, becoming a justifying cause of the special discipline on competition (Art. 210bis Regulation 1308/13, introduced by Regulation 2021/2117).
Overall, the abovementioned market instruments represent the ordinary set of rules aimed at the governance of the supply chain, in accordance with CAP 2014-20 (and currently with CAP 2023-27), based on the role of business operators and on a new framework of contractual relations8.
3. The role of Producer Organizations in agricultural sector
The organizations of agricultural producers (POs), subjects whose constitution is entrusted to the voluntary choice of aggregation by agricultural producers belonging to the same production sector, in a specific geographical area, play an important role in regulating the agri- food market, which can affect in the sense of strengthening the bargaining power in the formation of the price with the buyer, a processing or distribution company (Reg. 1308/13, Art. 152 ss). These are in particular the functions related to the marketing of products and the placing of production on the market, ranging from production planning, to the optimization of production costs, to the concentration of supply up to the possibility of negotiating contracts for the offer of agricultural products. Carrying out contractual negotiations on behalf of the members represents one of the key functions of the POs. It is not a binding condition for recognition – except for certain sectors (dairy, fruit and vegetables and oil and table olives) in which the concentration of supply is considered strategic. In any case, for all POs that undertake to place the products of the members on the market, the European legislation provides for some significant advantages in terms of the applicable legal rules, related to the exemption from the application of the competition rules, an essential
8 I. Canfora, Rapporti tra imprese e ripartizione del valore nella filiera agroalimentare, in
Riv. Dir Alimentare, 2022.
perspective for strengthening the role of POs as intermediaries in the agri- food chain. In fact, the POs recognized «by way of derogation from Article 101 par. 1 TFEU» can legitimately «plan production, optimize production costs, place on the market and negotiate contracts concerning the offer of agricultural products, on behalf of the members»9. The negotiation activity includes the definition of the sale price of the agricultural production of the members: circumscribing its contents and methods significantly affects the application of the general competition rules, without prejudice to the rule according to which the agreements cannot have the effect of applying identical prices (Art. 209, par. 2 Regulation 1308/13)10.
Moreover, depending on the sectors and types of market, and also in relation to individual national experiences, the role of groups is an important, although not decisive, tool for responding to the imbalance of power in negotiations on the formation of the sale price of products. In fact, the possibility to establish recognized groups is left to private autonomy, albeit encouraged by incentive legislation. So, we can expect, in the future, a wider use of such legal schemes even in Member States or regional areas less interested in their implementation until now11.
4. Contractual schemes for the sale of agricultural products and price formation
Another regulatory instrument aimed at improving the functioning of the agri-food chain, introduced by the CAP reform 2014-20, is represented by the provision of a uniform regulation, at European level, of contracts for the first sale of agricultural products, as per Art. 168 of reg. (EU) 1308/13. Indeed, the legislative choice to apply a binding contractual framework
9 Art. 152, par. 1 bis Regulation (EU) 1308/13.
10 On which see the interpretative position of the Court of justice in the judgment of 14 november 2017, case C-671/15. On this point, cf. X. xxxxxxxxxx, Dal caso “indivia” al regolamento omnibus, Dir agroalim. 2018, p. 115 ff. An amendment or the declaration of nullity of agreements entered into by POs (if a violation of the competition rules is ascer- tained, in contrast with the objectives of agricultural policies) will produce effects only after notification to the companies, without prejudice to the effects already produced. Refer to I. Canfora, La cessione dei prodotti tramite le organizzazioni di produttori, in Trattato di diritto alimentare italiano e dell’Unione Europea, X. Xxxxxx-I. Canfora-X. Xx Xxxxx-X. Xxxxx (eds), Milano, 2021, p 147; I. Canfora, Organizzazione dei produttori agricoli, in Digesto, priv. Civ. agg. XI, 2018, p. 355 ff.
11 As discussed in: I. Canfora, La PAC 2023-2027: un nouvel équilibre dans les relations contractuelles au sein de la filière agroalimentaire, in Revue de droit rural, 3/2003, dossier 17.
in all member countries has remained incomplete, for a number of reasons12.
In this regard, a consideration must be made. The rules that affect contractual transparency, in a situation where the imbalance between parties does not depend on the simple information gap on the conditions of the contractual structure, as happens for consumer contracts, have limited effects in themselves. In fact, the imbalance in the agri-food chain concerns the different power between the parties, mainly concerning the ability to support negotiations that lead to an adequate economic result, as regards the conditions of the supply contract and the profitability of the sale price.
Therefore, in the absence of provisions that actually affect the formation of prices, an issue to which we will return shortly, provisions of a formal nature, which guarantee the transparency of the contractual content, do not appear to be decisive for the underlying issue highlighted above13.
That said, the weakness of the initial regulatory framework should also be considered: the introduction of a uniform contractual scheme for all contracts for the sale of agricultural products was originally left to the choice of Member States; the obligation to standardize the content of the national legislative framework to the provisions of the European regulation occurred in the event that the State had chosen to regulate contracts for the first sale of agricultural products within the national territory. Subsequently, as a result of the 2017 CAP mid-term review, the provision was corrected by introducing the possibility, for individual agricultural producers or producer organizations, to directly enforce the obligation of form and content provided for by Article 168 of the Regulation (EU) 1308/13.
A step forward, in terms of effectiveness with respect to the need to intervene on the balance of value in the agri-food chain, was recently taken with a new amendment to the provision, provided for by Regulation (EU) 2021/2117. The regulation intervenes, albeit with caution, on the methods of forming the price and determining indicators that make the value corresponding to what can be expected from a transfer contract that meets parameters of fair remuneration for agricultural producers.
In fact, the latest version of the standard now provides that the price
12 Refer to I. Xxxxxxx, Raggiungere un equilibrio nella filiera agroalimentare. Strumenti di governo del mercato e regole contrattuali, in Cibo e diritto. Una prospettiva comparata, X. Xxxx Xxxxxxxxx-X. Xxxxxxxxx (xxx), xxx. 0, Xxxx, p. 237.
13 On this topic, see X. Xxxxxxxxxx, La problematica dei prezzi dei prodotti agricoli: strumenti normativi tra antichi problemi e nuove crisi, in Riv. Dir. agrario, 2020, p. 783 ff.
(resulting from the written supply contract) is alternatively: fixed and established in the contract and / or «calculated by combining various factors established in the contract, which may include objective indicators, which can be based on prices and relevant production and market costs, as well as indices and methods of calculating the final price, which are easily accessible and understandable and which reflect changes in market conditions, quantities delivered and the quality or composition of agricultural products delivered: such indicators can be based on relevant prices and production and market costs; to this end, the Member States may establish the indicators, according to objective criteria and based on studies concerning production and the food chain; the contracting parties are free to refer to such indicators or to any other indicator they deem relevant» (emphasis added).
The provision reaffirms the principle of freedom in the formation of the price, specifying that it is the faculty of the parties to use or not indicators in the formation of the price and the choice of which of them to use in the transaction; just as it provides for an option – and not an obligation – for the Member States to set such indicators, with the consequence that the application of these parameters is left to a choice of internal legislative policy.
having said that, the introduction of this provision may represent an opportunity to intervene in correcting imbalances in the distribution of value along the supply chain, not only in the interest of equitable remuneration of agricultural producers, but also in the perspective of intervening on critical factors, for example through the valorization of the costs linked to wages and duly declared work. In this regard, the link between low remuneration of the price of agricultural products and the risk of increasing illegality in employment relationships in agriculture, as highlighted most recently in the Italian national Plan against work exploitation and gang-master system (2020-2022)14, can be mentioned.
5. Regulatory action to ban unfair commercial practices
The regulatory framework for business relationships in the agri-
14 Cfr. I. Canfora-X. Xxxxxxx, Lavoro irregolare e agricoltura. Il Piano triennale per il contrasto allo sfruttamento lavorativo, tra diritto nazionale e regole di mercato nella nuova PAC, in Dir. agroalim., 2021, p. 39 ff.
food sector, defined by European regulations through the instruments for the functioning of the common organization of the market, finds its completion with the Directive on unfair trading practices in the agricultural and food supply chain, no. 2019/633, implemented by Italy through Legislative Decree 8 november 2021, no. 198, issued on the basis of the criteria defined by Art. 7 of the law delegation 22 April 2021, no. 53.
Indeed, if we take into account the need to intervene on the balance of relations in the supply chain – especially in a regulatory framework in which private economic actors play a decisive role in the governance of the market – the simple attention given to instruments aimed at strengthening, through the establishment of groups and the contractual rules mentioned above, the first segment of relations in the agri-food chain (agricultural enterprises-first buyer) may be insufficient on its own to correct distortions of downstream economic operators, such as large-scale organized retailers, which have a much greater economic and contractual power than even producers associations.
Price decisions are generally made by large retailers, not only regarding the price fixing to the consumer, but also regarding the price of the supply of goods. The discounts on consumer prices end up being «discharged» on economic operators who do not have the ability to impose themselves in bargaining: firstly on agricultural enterprises, as a result of organizational decisions in the relationships of the supply chain that are beyond their control, as well as small and medium-sized enterprises processing agricultural products, which are included in Directive no. 2019/633, which covers the whole context of business relations in the agri-food sector.
Directive no. 2019/633 intervened, in fact, to establish balancing rules in the market for the agri-food chain as a whole, with the aim of hitting the distortions that mainly affect agricultural producers: it is stated in recital 10 that «The protection provided by this Directive should benefit agricultural producers and natural or legal persons that supply agricultural and food products, including producer organizations, whether recognized or not, and associations of producer organizations, whether recognized or not, subject to their relative bargaining power». From the list of subjects representing the agricultural part (including the POs themselves, which up to now we have seen as the main response of European law in order to ensure a balance in the negotiations for the supply of agricultural raw materials), it therefore appears that the level of distortions that may occur in the agri-food chain, because of the presence of subjects with bargaining power such as to impose unfair conditions on economic operators upstream of agri-food production, is able to neutralize even the «ordinary» tools
introduced and implemented by Regulation no. 2013/1308 over the years.
The Directive provides for a minimum list of prohibited practices to be transposed into the laws of the Member States, some of which are still prohibited (such as: payment beyond the terms of the law, abrupt cancellations of orders, unilateral changes to the terms of the agreement, request for payments for services not related to the sale, attribution of payments for loss of products, etc.), other prohibited if they have not been the subject of negotiations between the parties (see Art. 3 of the Directive). Since this is a minimal corrective action, Member States have been allowed to intervene in their national legislation and to introduce further
cases to be prohibited ex lege.
This choice, although it may appear to be a desire not to impose excessive restrictions on competition, is undoubtedly an important element in the context we are examining. In fact, in addition to the list of expressly prohibited practices, the Directive provides for a uniform system of reaction to unfair practices, which requires, for example, the definition of a law enforcement authority at national level, as well as the protection of the complainant’s confidentiality, to avoid commercial retaliation by economic operators sanctioned for violation of the rules.
In addition, in providing for the extension to further cases by the Member States, if they are compatible with the rules relating to the functioning of the internal market, Art. 9 par. 2 allows to prohibit at national level specific unfair commercial practices that may be more or less relevant depending on the market areas in the European Union.
Such a rule represents an important opportunity for States, which leads them to identify specific situations in national markets and to adapt their law enforcement tools to national reality, allowing stricter national rules (provided they are compatible with the functioning of the internal market) to be maintained or introduced.
If we look at the Italian experience, in fact, it is immediately evident that the choice of the national legislator has been oriented towards adopting spe- cific and additional provisions that have an immediate impact on the eco- nomic balance in the sector, aimed at counteracting the dispersion of value to the detriment of weaker companies in the chain of contractual relations. In the Italian experience, as far as the case is concerned, if we examine the text of the delegated law and the subsequent D. Lgs. no. 2021/198 that has implemented it, the innovations introduced at national level are in fact the prohibition of double-down auctions, the classification of sales below production costs as an unfair commercial practice and the introduction of specific rules on sales below cost in the food sector: cases corresponding to
recurrent practices which had been denounced by several parties at national level and which, not surprisingly, have a direct impact on price formation and therefore on the distribution of value in the sector15.
In particular, the definition, among unfair trading practices, of the sale of agricultural and food products at prices below production costs – as species of the genus of unfair practices consisting in imposing contractual conditions that are excessively burdensome for the seller – refers, together, to the need for a transparent determination of production costs, as well as the identification, at national level of average production costs: aspect, the latter, which in Italy is entrusted to ISMEA (“Istituto di Servizi per il Mercato Agricolo Alimentare”) and which acts as a parameter in assessing the violation of the prohibition16.
In this regard, it is appropriate to stress the importance of these aspects in the balance of contractual relations. Indeed, the consideration of production costs related to the fair price is referred to both as a criterion for determining the price clause at the stage of the negotiations, in the aforementioned amendment of Art. 168 of Regulation no. 2013/1308 (directly applicable in our legal system), as well as an element useful to qualify unfair conduct of business operators in the agrifood chain (for the purpose of art 5 lett. b, Legs. Decree 2021/198).
As for the definition of the law enforcement authority, the choice to concentrate in the Ispettorato centrale qualità repressione frodi (ICQRF) of Ministero dell’agricoltura, della sovranità alimentare e delle foreste all the functions of intervention against unfair commercial practices in the agricultural and food sector, as a designated law enforcement authority at national level (Art. 8, D. Lgs. 2021/198) is reflected in the choice to carve out a new space for the competition rules of the agri-food sector. This is in line with the choice made by the European Union Directive, based on Art. 43 TFEU17, that outline the peculiarity of the functioning of agricultural
15 For a more precise analysis of d.lgs. no. 2021/198, see I. Canfora-X. Xxxxxxx, Pratiche sleali, equilibrio del valore e legalità dei rapporti di lavoro nella filiera agroalimen- tare, in Dir. Lav. Rel. Ind., 2022, p. 135 ff.
16 I. Canfora-X. Xxxxxxx, Pratiche sleali, equilibrio del valore e legalità dei rapporti di lavoro nella filiera agroalimentare, cit., p. 146. Regarding the relevance of the price determination and the criteria for setting average production prices, following the first definition of ave- rage production cost, in accordance to Art. 10-quater of l. no. 2019/44, X. xxxxxxxxxx, Prezzi dei prodotti agricoli nei rapporti di filiera e rispetto dei costi medi di produzione tra illusioni ottiche ed effettiva regolazione del mercato, in Riv. Dir. Agr, 2019, p. 559.
17 See X. Xxxxxxxxx, La Direttiva (UE) 2019/633 tra PAC e mercati, in Riv. Dir. Alim. 2021, p. 7
and food markets, by adopting regulatory measures against unfair acts of business operators affecting the entire agri-food sector.
6. Intervention on prices and market balance in the implementation of Member States
The measures aimed at a fair distribution of value which affect price formation do not therefore deny private autonomy in the free determination of the content of the contract, so far as they are intended to adapt the market balance or to correct abuses in terms of the economic value of trade, in situations of structural inequality between the parties in the contractual relations18.
Even before the entry into force of Directive no. 2019/633, this aspect was also clarified by the Court of justice with the judgment of 13 September 2019 that dealt with Lithuanian antitrust law, to protect farmers in price formation19. The Lithuanian national legislation introduced measures aimed at modulating the setting of prices in the milk sector in order to combat unfair practices by purchasers who imposed lower purchase prices on farmers, unable to engage in effective negotiations in the supply of raw milk, for reasons of size and also for the concrete difficulty of aggregating in groups: in this situation, the price negotiation process did not appear to be developing in the free play of competition, but was imposed by dominant buyers who took advantage of the fragmentation of producers and product characteristics, highly perishable, to impose excessively low purchase prices. Indeed, as the Court of justice states, the principle of free pricing applies under conditions of effective competition; if, on the other hand, situations of imbalance arise, Member States are also entitled to intervene by means of provisions which may influence the functioning of the internal market, provided that such measures are appropriate to ensure the objective and do
18 See X. Xxxxxx, L’abuso nella contrattazione di impresa nella filiera agroalimentare, in Dir. Agroalimentare, 2019, p. 259 ff.; I.Canfora, Le pratiche commerciali sleali nella filiera agroalimentare alla luce della giurisprudenza della Corte di Giustizia dell'UE, in Dir. agroalimentare, 2023, p. 43.
19 EU Court of justice, 13 november 2019, C-2/18, Lietuvos Respublikos Seimo. Regarding the judgement, see the observations of X. Xxxxxxxxxxx, Dal B2C al B2B: una prima lettura della dir. (UE) 2019/633 tra diritto vigente e in fieri, in Nuove leggi civ. comm., 2020, p. 220 ff.
not exceed what is necessary to achieve it20.
Similarly, our Autorità Garante della Concorrenza e del Mercato (ACGM), in a case involving recurrent unfair practices in the milk market for the production of Pecorino Romano cheese, also prohibited practices which resulted in the payment of below-cost prices to agricultural producers. This against a market contingency that evidenced an imbalance in the system of the chain, with immediate repercussions on the profitability of prices, with reference to the same coverage of production costs by farmers21.
The imbalance in value may indeed depend on contingent situations, as evidenced by the intervention on the crisis of national PDO production, but also practices rooted in certain market segments.
It is clear, anyway, that circumstances which complement the criteria of unfair practices are more easily identifiable and codifiable as prohibited practices at a national level, with regard to the types of situations encountered in market practice and which are brought about by economic operators, situations that would be complex to identify and to regulate in a uniform way at Union level.
Therefore, the real disruptive factor of Directive no. 2019/633 is given by Art. 9, which provides for the adoption of stricter rules and a catalogue of further prohibited practices to enhance the functions of the institutional structures specifically identified in implementation of the Directive. This provision, in the context of a dialogue between national experiences, could lead to a gradual widening of cases, both at national and European level, also in view of the transnational nature of trade in the agri-food markets.
20 Principle thus reaffirmed in the subsequent judgment of Court of justice of the European union, 11 March 2021, in Case C-400/19, European Commission/Hungary, paragraphs 36 and 37: «In that regard, it should be noted at the outset that, although the Commission does not allege infringement of a specific provision of Regulation no 1308/2013, but infringement of that regulation as a whole, the fact remains that, in the absence of a pricing mechanism, the free formation of selling prices on the basis of fair competition is a component of that regulation and constitutes the expression of the principle of free movement of goods in conditions of effective competition (see, to that effect, judgment of 13 november 2019, Lietuvos Respublikos Seimo narių grupė, C-2/18, EU:C:2019:962, paragraph 37 and the case-law cited). however, the establishment of a CMO does not prevent the Member States from applying national rules intended to attain an objective relating to the general interest other than those covered by that CMO, even if those rules are likely to have an effect on the functioning of the common market in the sector concerned, provided that those rules are appropriate for securing attain- ment of the objective pursued and do not go beyond what is necessary for attaining that objective (see, to that effect, judgment of 13 november 2019, Lietuvos Respublikos Seimo narių grupė, C-2/18, EU:C:2019:962, paragraphs 30 and 56, and the case-law cited)». 21 ACGM, AL21 – Prezzi del latte in Sardegna, Provvedimento n. 27805 of 12 june 2019.
nor is it to be assumed that such a rule would lose the unity of the vision of the agri-food market.
As has been said, in fact, situations of market imbalance can come to the attention of law enforcement authorities, in particular economic areas evaluated at national level, within the framework outlined by Directive no. 633/2019. Moreover, the national importance of the market also emerges in the provisions of Regulation no. 2013/1308 as amended by Regulation no. 2021/2117, which recalls criteria for pricing in first-sale contracts based on relevant production and market prices and costs, to be determined by the Member States.
Proper price formation and value balance in the agri-food chain therefore become the subject of a growing plurality of interventions, in the future organization of the agri-food market: they are important aspects of the public interest in the face of a structural imbalance, which threatens to produce distortions both to the detriment of the weakest operators, and ultimately of the operation of the production chain in its complexity, not being able to renounce to a fair and sustainable organization of the agri- food chain that requires the presence of productive agricultural enterprises in the European territory.