Briefing on Cross-Border Enforcement of the Unfair Trading Practices Directive

The European Parliamentary Research Service has recently released a Briefing, by Nikolina Šajn, on the European Commission’s proposal for a regulation on cooperation among enforcement authorities responsible for the enforcement of Directive (EU) 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain.

Background

The proposal aims at improving farmers’ position in the agri-food supply chain, building on Directive (EU) 2019/633 on Unfair Trading Practices (UTP). In that respect, the proposed regulation lays down new rules under which the enforcement authorities of EU Member States (designated pursuant to the UTP Directive) should better cooperate and coordinate actions with each other, overcoming the principle of territoriality (Article 1 and Recital 3).

The abstract of the Briefing, titled Cross-border enforcement of the Unfair Trading Practices Directive, reads as follows:

The 2019 Unfair Trading Practices (UTP) Directive sought to address imbalances in bargaining power between suppliers and buyers of agricultural products. The directive was primarily aimed at protecting farmers, as a weaker party, selling their products to big supermarkets and food processing companies. However, experience has shown that the directive does not always provide a sufficient legal basis for mutual assistance in cross-border investigations. The Commission’s proposal for a new regulation on cross-border cooperation among authorities responsible for the enforcement of the UTP Directive is part of EU efforts to improve farmers’ position in the agri food supply chain. It would enable cooperation between enforcement authorities in cases of unfair trading practices where suppliers and buyers are in different Member States. Farmer associations have welcomed the proposal but are calling for a more substantial revision of the directive, in particular a ban on buying agricultural products below production cost. Retailers meanwhile are highly critical, saying that the proposal risks fragmenting the single market.

Private International Law Perspective

The draft regulation mainly focuses on establishing public enforcement rules and “is without prejudice to the Union and national rules on private international law, in particular rules related to court jurisdiction and applicable laws” (Article 2(2)).

However, some EU substantive rules on cross-border enforcement could have an indirect impact on conflict of laws, according to the positions of the interested parties reported in the report. Indeed, several industry representatives claim that “the proposal raises serious legal concerns for the single market as it could undermine businesses’ right to choose the law and jurisdiction applicable to their contracts” (EuroCommerce and, similarly, Independent Retail Europe).

Other stakeholders argue that the draft regulation “should help address practices such as forum shopping, ‘where some operators, particularly retail alliances, have located in certain jurisdictions to avoid the application of UTP laws’” (European Brands Association). This seems to open up avenues for exploration for PIL experts.