Udvalget for Fødevarer, Landbrug og Fiskeri 2013-14
KOM (2013) 0037 Bilag 2
Offentligt
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NOTAT
30. April 2013
Green paper on unfair trading practices in the business-to-business
food and non-food supply chain in Europe
General remarks
The
Danish government supports the European Commission’s focus on
providing an appropriate framework for more efficient markets in the
business-to-business supply chain.
In the opinion of the Danish government the trade between the actors in
the supply chain is generally well-functioning. Most trade is based on
good, solid, long-term relations where trust is a key factor and annual
contracts and payment terms are respected. The Danish government how-
ever also recognizes that markets in some respects do not function in an
optimal way and the UTPs described in this Green Paper are among the
main reasons.
As presented in the Green Paper general competition law addresses many
of the issues concerning UTPs. Some behaviour is not covered by the
current legislation but the Danish government is worried that increased
regulation may have unwanted negative consequences on contractual
freedom and make otherwise well-functioning markets more rigid.
That being said, the European Commission may have a role in facilitating
voluntary agreements between the actors of the food and non-food supply
chain that can reduce current impediments to more well-functioning mar-
kets.
1. Do you agree with the above definition of UTPs?
It can be hard to give a precise definition of an unclear concept
such as UTPs. Overall the Danish government however agrees
with the definition used in the Green Paper. There may be a thin
line between fair and unfair practices and care should be taken be-
fore practices that are a normal part of cooperation between trad-
ing partners
are labelled as “unfair”.
In this context the Danish
government stresses that it is important to clearly distinguish be-
tween illegal behaviour from dominant firms and unfair practices.
2. Is the concept of UTPs recognised in your MemberState? If yes,
please explain how.
The relationship between producers and suppliers has received
some attention in Denmark. Several suppliers express that retail-
ers have started to force tougher conditions on them. Ambiguous
contract terms, retroactive contract changes and transfer of com-
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mercial risk seem to be the most common examples. The experi-
ence of the Danish government is however that payment condi-
tions and annual agreements are generally respected. In Denmark,
no specific regulatory framework for UTPs exists.
3. In your view, should the concept of UTPs be limited to contractu-
al negotiations or should they include the pre- and/or the post-
contractual phase as well?
The experience of the Danish government is that suppliers primar-
ily experience what they see as unfair treatment during the annual
negotiations between suppliers and retailers. There are however
also examples of suppliers that report that strong retailers intro-
duce non-agreed fees and fines during the year. The concept of
UTPs should therefore not only be limited to the contractual nego-
tiations.
4. At what stage in the B2B retail supply chain can UTPs occur?
See answer to question 3.
5. What do you think of the concept of "fear factor"? Do you share
the assessment made above on this issue? Please explain.
The Danish government has experienced that companies have
been reluctant to complain due to among others a fear of retalia-
tion from their stronger trading partners.This is seen in the rela-
tionship between suppliers and retailers.
6. In your experience, to what extent and how often do UTPs occur
in the food sector? At which stage of the commercial relationship
do they mainly occur and in what way?
The Danish government does not have sufficient information on
how often unfair practices occur but the impression is that the
agreed terms with some exceptions are followed in most trade re-
lationships.
The examples of UTPs that are listed in the Green Paper are to a
large extent however also observed in Denmark. Some suppliers
report that they are faced with retrospective margin claims and
other claims that is not part of actual contract. Other examples are
marketing fees for activities that are carried out and producers of
private label products that demand to receive information about
the suppliers’ input prices.
Risk sharing may in some cases im-
prove market efficiency but there are examples of risk transfer
that may only benefit the stronger party.
7. Are UTPs present in non-food retail sectors as well? If so, please
provide concrete examples.
The examples of UTPs that have been highlighted in Denmark are
all from the food sector. Sectors that deal with perishable goods
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may be more exposed to unfair practices but there is no reason
why UTPs should not be present in other sectors in our view.
8. Do UTPs have an adverse impact in particular as regards the
ability of your company to invest and innovate? Please provide
concrete examples and quantify to the extent possible.
Not applicable.
9. Do UTPs affect consumers (e.g., through influencing prices,
product choice or innovation)? Please provide concrete examples
and quantify to the extent possible.
The behaviour ofretailers may be the result of short term thinking
that could lead to a smaller product choice and less innovation.
The Danish government however is not able to give concrete ex-
amples of this.
10. Do UTPs have an impact on EU cross-border trade? Do UTPs
result in a fragmentation of the Single Market? If yes, please ex-
plain to what extent UTPs impact the ability of your company to
trade cross-border.
Not applicable.
11. Do the national regulatory/self-regulatory frameworks in place
sufficiently address UTPs in some Member States? If not, why?
The Danish government is not able to assess the efficiency of the
frameworks that are in place in other Member States.
12. Is the lack of specific national regulatory/self-regulatory frame-
works addressing UTPs a problem in jurisdictions where they do
not exist?
In Denmark no specific regulation of UTPs exists. The Danish
government view is that general competition and marketing law
addresses many of the issues concerning UTPs along the supply
chain.
13. Do measures that seek to address UTPs have effects only on do-
mestic markets or also on cross-border trade/provision of ser-
vices? If so, please explain the impact on the ability of your com-
pany to trade cross-border. Do the differences between national
regulatory/self-regulatory frameworks in place result in fragmen-
tation of the Single Market?
Not applicable.
14. Do you consider further action should be taken at EU level?
The Danish government can support initiatives that will improve
cross border trade. Forcing additional legislation on the food and
non-food supply chain may have with negative consequences on
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contractual freedom and make otherwise well-functioning markets
more rigid.
The EU may however have a role in stimulating voluntary agree-
ments such as a code of conduct between suppliers and retailers.
Such an initiative has already been taken by the High Level Fo-
rum for a better functioning food supply chain, who has had their
mandate extended to the end of 2014 to pursue voluntary agree-
ments with organisations representing the food supply chain in
Europe.
15. Where it exists, does UTP regulation have a positive impact? Are
there possible drawbacks/concerns linked to introducing UTP
regulation, for example by imposing unjustified restrictions to
contractual freedom? Please explain.
As mentioned earlier the Danish government is not able to assess
the efficiency of the schemes that are in place in other Member
States. In Denmark there is a general tradition of little regulation
on contractual freedom and a belief that competition law suffi-
ciently covers most of the issues related to UTPs. Further regula-
tion could create more rigid markets where the dynamics that
characterize a well-functioning market is unnecessarily hampered.
16. Are there significant discrepancies in the legal treatment of UTPs
between Member States? If this is the case, are these discrepan-
cies hindering cross-border trade? Please provide concrete ex-
amples and quantify the impact to the extent possible.
The Danish government does not possess the required knowledge
about other
countries’ legal treatment of UTPs that is required to
answer this question.
17. In case of such negative impacts to what extent should a common
EU approach to enforcement address the issue?
Not applicable.
18. Should the relevant enforcement bodies be granted investigative
powers, including the right to launch ex officio actions, impose
sanctions and to accept anonymous complaints?
National competition authorities already have many of the pro-
posed remedies. The right to accept anonymous complaints may
have a positive effect on the will of the weaker party to complain
but the EU Commission should be careful not to introduce
measures that will significantly reduce the due process of the
stronger actors.
19. Does the above list detail the most significant UTPs? Are there
other types of UTPs?
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The practises listed in the answer to question 6 are the most com-
mon in Denmark.
20. Could setting up a list of prohibited UTPs be an effective means
to address the issue? Would such a list have to be regularly up-
dated? Are there possible alternative solutions?
The Danish government supports the creation of a list of loyal
practices but setting up the list ought to happen in cooperation
with trade organizations and should be introduced on a voluntary
basis.
21. For each of the UTPs and corresponding possible fair practices
identified
above,
please:
a)
Indicate whether or not you agree the analysis of the Com-
mission. If applicable, provide additional information.
The general and very broad list of practices that is found in chap-
ter 5 of the Green Paper probably describes the issues that all
member states are facing. The Danish government agrees with the
overall analysis of each category of practice. It is however noted
that the transfer of risk in some cases can improve market effi-
ciency - even if more risk is transferred to the weaker part in a ne-
gotiation. An example of this is the use of listing fees that in some
cases may lead to a more efficient allocation of shelf space for
new products by reducing the inefficiency that can be caused by
asymmetry in information between suppliers and retailers. It is
therefore important to be very precise in the definition of which
risk transfers the Commission sees as unfair. The examples given
in the Green Paper are however good examples of risk transfer
that is harmful for market efficiency.
b)
Explain whether the UTP is relevant for the sector in which
you are active.
Not applicable.
c)
Explain if the corresponding possible fair practice could be
applied across the board in different sectors?
The Danish government considers it plausible that some of the
fair practices could be applied across the board.
d)
Explain if the UTP should be prohibited per se or if its a s-
sessment should be made on a case by-case basis.
The Danish government find assessment on a case-by-case basis
very hard to implement and resource demanding to enforce for all
described practices. A general code of conduct could be sufficient
in reducing much of the mentioned undesirable practices.
22.
As regards specifically Territorial Supply Constraints, please ex-
plain:
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a)
What would you consider to be objective efficiency grounds
justifying a supplier not to supply a particular customer? Why?
The Danish Government considers this issue sufficiently covered
by the Guidelines on Vertical Restraints.
b)
What would be the advantages and disadvantages of pro-
hibiting territorial supply constraints (as described above)? What
practical effects would such a prohibition have on how companies
set up their distribution systems in Europe?
The Danish Government considers this issue sufficiently covered
by the Guidelines on Vertical Restraints.
23. Should the above possible fair practices be embodied in a frame-
work at EU level? Would there be any disadvantages to such an
approach?
Fair practices might just as well be part of the framework but the
main focus should be on the more specific types of practices that
should not be part of the B2B supply chain.
24. If you consider further action should be taken at EU level, should
this be a binding legislative instrument? A non-binding? A self-
regulatory initiative?
The Danish government would prefer a self-regulatory initiative
that could be facilitated by the European Commission, and no leg-
islative instruments. Such an initiative has already been taken by
the High Level Forum for a better functioning food supply chain,
who has had their mandate extended to the end of 2014 to pursue
voluntary agreements with organisations representing the food
supply chain in Europe.
25.
This Green Paper addresses UTPs and fairness of B2B relation-
ships in the B2B food and non-food supply chain. Do you think
that any important issues have been omitted or under-represented
in it?
We do not consider there to be omitted or underrepresented is-
sues.