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Regulations to protect small food suppliers

Regulations that recently came into force are aimed at leveling the playing field between smaller suppliers and larger buyers throughout the agricultural and food-supply chain, according to at ByrneWallace LLP partner Helen Gibbons.

The EU (Unfair Trading Practices in the agricultural and food supply chain) Regulations 2021 came into effect on 1 July, transposing into Irish law the minimum requirements of an EU directive on unfair trading practices.

In a note on the firm’s website, Gibbons says that the new rules apply to sales where at least one of the parties to the transaction are established in the EU.

“As such, the regulations provide the same protections to non-EU suppliers as EU suppliers selling into the EU,” she says. They also apply to non-EU buyers — including those from the key UK market — who are purchasing from EU suppliers.

Weaker bargaining power

All supply agreements entered into on or after 28 April 2021 must have complied with the regulations by 1 July 2021. Those involved in contracts concluded before 28 April, however, have until 28 April 2022 to make any necessary changes to their contracts.

The ByrneWallace lawyer says the new rules are intended to protect suppliers who may have weaker bargaining power in negotiating contractual terms with larger wholesale or retail buyers.

“The protections are for the benefit of the smaller supplier only and do not apply where the supplier’s size exceeds that of the buyer,” she points out.

Gibbons describes the definition of suppliers in the regulations as “expansive”, extending to natural and legal persons (including groups of them) who sell agricultural and food products.

'Black' practices

She lists a number of ‘black’ practices that are prohibited under the new rules — including unilateral contract changes by the buyer, and commercial retaliation against suppliers for exercising their legal rights.

Other ‘grey’ practices are allowed — but only if agreed “in clear and unambiguous terms” between the parties.

The ByrneWallace lawyer says that the Minister for Agriculture, Food, and the Marine is currently designated to enforce the regulations, although it is envisaged that a National Food Ombudsman will be established for this purpose.

The enforcement authority will have powers to instigate and conduct investigations, and individuals or companies could face substantial penalties or prosecution for offences committed under the regulations.