EU directive to tighten regulations on retail chains

Competition

Agricultural and food suppliers will be protected from unfair trading practices by a EU directive applicable from November 1, 2021, at the latest, and while current Hungarian regulations are also quite strict, preparations must be made, says Péter Sükösd, head of DLA Piper Hungaryʼs competition law practice.

Among other aspects, excessive payment deadlines, last-minute cancellation orders, unilateral contract modifications, imposing non-sale payments, and threats of commercial retaliation have all been blacklisted, according to Directive 2019/633 of the European Parliament and the Council on unfair trading practices in business-to-business relationships in the agricultural and food supply chain.

The so-called UTP (Unfair Trading Practices) directive would protect suppliers from unfair trading practices throughout the European Union to a wider extent than ever before.

EU member states must adopt and publish the laws, regulations and administrative provisions necessary to comply before May 1, 2021. The provisions need to be applied by November 1 of the same year. 

Typical cases of unfair commercial practices covered by the regulation are excessively long payment deadlines, last-minute cancellations, unilateral contract modifications, imposing non-sales payments on suppliers, and threats of commercial retaliation.

DLA Piperʼs Sükösd says that the current domestic system of laws, in particular Act XCV of 2009 on the prohibition of unfair distribution practices in relation to suppliers of agricultural and food products, overlaps much with the directive and, in many cases, tightens up the issues covered.

Even so, there are several important substantial differences between the two pieces of legislation, he adds. For example, the EU directive covers wholesalers selling to resellers. Moreover, contrary to the directive, the Hungarian regulation also provides, for example, a legal framework for the application of bonuses, a prohibition on selling below purchase price, discriminatory pricing, and the application of most favorable terms.

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