This year we expect the European Commission to propose a revision of the Unfair Trading Practices Directive. This Directive governs what can and cannot be put into a contract between businesses in the agri food supply chain. It prohibits practices that may be negotiated to the detriment of the weaker, smaller supplier or requires documentation of the benefits that can flow from agreeing certain terms that may appear unfair but bring a win to both parties.
EuroCommerce representing retail and wholesale across the EU is sharing its members experience to ensure that the changes to the legislation remains true to its aim. That is to improve the position of small farmers and small processors.
As it is a Directive, it has been transposed into national laws in varying forms across the EU. In Cyprus, this includes a general abuse of economic dominance, granted additional exceptions to rules based on business size, gave some protection to buyers and introduced new prohibited practices. Whereas other countries have stuck to the letter of the Directive and others have made changes by protecting more actors including large manufacturers, banning additional practices or protecting buyers as well as suppliers.
While experience across the whole of the EU has been limited, and enforcement and awareness of the rules remains low, a call for more to be done to support farmers means that change is coming.
Working together with our members, that includes the national associations such as the Cyprus Chamber of Commerce and Industry, we are working hard to explain how the chain operates in collaboration with its suppliers to deliver what consumers expect. Retailers and wholesalers need to sell what people want to buy and if they get this right, more sales are good for them and their suppliers, small and large alike.
EuroCommerce and its members mission is clear, we must retain the focus on what the Directive aims to achieve. What is at stake if larger players receive protection or more prohibitions are placed on what can be agreed in contracts, is the ability for negotiations to benefit consumers.
Why? If you reduce what can be negotiated it is just a negotiation of a price. As McKinsey in its latest State of Grocery 2026 report, produced in collaboration with EuroCommerce, notes that that moving beyond transactional negotiations can jointly create growth, when negotiations turn more towards strategic category partnerships with joint innovation, exclusive products, more comprehensive data sharing, supply chain collaboration, and retail media collaboration.
As competition is tough between retailers, it is the consumer who gets the benefit as the outcome of a good deal is passed on. Low margins mean money is made on volumes. Food price inflation is being felt across the whole of consumer's baskets, so the better the price of the basket, the better for business. Consumers have been down trading and while some groups are willing to spend more, those of low income are still turning to discounters and promotions to get better value for money.
With the majority of products that retailers and wholesalers sell being processed, there are few direct relations with farmers - with most farmers selling to other farmers or to the processing industry. The theory that the benefit of restricting what can be done in contracts with retailers will flow back as better income for farmers remains unproven. In fact, reports from the German Monopoly Commission essentially debunk the theory.
Much of what is being discussed for inclusion in a revised Directive are cause for concern. Changing the architecture to protect large manufacturers will benefit those that already enjoy large profit margins. Prohibitions that are difficult to know exactly what could be unravelled in a contract or which seek to stop farmers systematically selling below their production costs, create legal uncertainty. This deters good deals even if both sides might see something in it for them. Competition, not restricting the development and availability of private labels, and the freedom to use the size and choice available in the Single Market is only good for consumers in terms of price and choice.
More competitive retail and wholesale is a positive story for consumers, the millions of workers in the sector and ultimately for the EU. Retailers and wholesalers are drivers of innovation, something seen in the growth of private label that allows differentiation and satisfies customers looking for healthier, more sustainable or free from products. We need retailers and wholesalers to remain in good health as they are the point of call when things take a turn for the worse, like the Covid crisis and recent blackouts.
Farmers are also critical to the diversity of food we enjoy in Europe. Many challenges they face are structural linked to climate change, water scarcity, high costs, lack of investment and administrative burden. Their long term resilience is not about governing what can and cannot go into contracts, but requires better organisation at farm level (e.g. in producer organisations), targeted support, better access to finance, digitalisation and technology and collaboration across the chain.
We await what will come from the Commission and hope we are heard, so farmers remain the focus and consumers and the Single Market remain protected.
*By Leena Whittaker, Director, Competitiveness, Associate of the Cyprus Chamber of Commerce and Industry
