Cross border rules for every country  

The European dairy industry has welcomed a provisional deal struck in November by the European Union (EU) Council of Ministers and the European Parliament on new rules to combat cross-border unfair trading practices (UTPs) such as late payments or cancelled orders in the agrifood sector. However, industry executives are concerned that a continuing upper limit for protection set at €350 million turnover annually creates a perverse incentive for dairy buyers to work with larger companies, harming smaller producers, rather than aiding them. The new reforms are designed to buttress a 2019 directive on unfair trading practices, which will itself be reviewed comprehensively in the coming year (2026). 

However, Laurens van Delft, director for trade and economics at the European Dairy Association (EDA), said given EU regulations are directly applicable to member states, while directives have to be implemented via national legislation, the new reforms should help tackle cross-border unfair trading practices issues in practice “by making cross-border enforcement more effective.” 

MEPs and ministers will now finalise the text, including the implementation date. When in force, it will mean that “national authorities would be better equipped to investigate and act when buyers are established in another member state,” he said. 

The regulation aims to improve cooperation between EU authorities responsible for enforcing rules on UTPs in the agricultural and food supply chain and is part of the EU’s efforts to support dairy farmers’ position in the supply chain, said a Council communiqué. 

It explained how the regulation lays down rules on how EU regulators cooperate in combating unfair trading practices in cross-border business-to-business relationships, boosting cooperation where suppliers and buyers are in different member states or outside the EU, to better protect European food producers. 

The regulation introduces a mutual assistance mechanism to enable enforcement authorities to ask for and exchange information or collaborate on investigations related to unfair trading and notify decisions on such problems, said the Council. 

It also introduces rules on covering costs in cases of mutual assistance, data protection and confidentiality of information, as well as establishing a special mechanism for coordinated action over large-scale cross-border unfair trading involving at least three EU countries. 

The new regulation follows concerns arising from the April 2019 directive on combating UTPs in the agricultural and food supply chain, notably the imbalance of power between suppliers and buyers of agricultural products, with the goal being to protect farmers, including dairy producers, who sell their products to large supermarkets and food processing companies. 

The EU executive, the European Commission, considered that the cross-border dimension of UTPs needed to be addressed. Noting that around 20% of agricultural and food products consumed in an EU member state come from another country, it published its proposal for the regulation introducing rules on transnational cooperation to combat UTPs on 10 December 2024. 

The regulation now needs to be agreed by Council and Parliament before formal adoption. A European Commission report released 1 December, noted progress in reducing overdue payments, but called for stronger enforcement, cross-border cooperation, and better awareness of existing rules, as some suppliers, fearing retaliation, are reluctant to file complaints. These concerns will feed into a more general review of the 2019 directive which will be tagged next year (2026). 

For the dairy sector, the EDA’s van Delft emphasised that while the regulation was an improvement, “it is not a game changer,” and that the EDA was preparing for revisions to “hopefully improve the UTP directive.” 

Indeed, European dairy trade organisation Eucolait secretary general Jukka Likitalo does not think the new regulation might not have significant impact for dairy producers, noting, “I certainly do not expect it to reshape supply chains or to improve the bargaining position of farmers.” 

Dutch multinational dairy cooperative FrieslandCampina’s manager corporate media relations, Jan-Willem ter Avest, told DII it would be “premature to provide detailed comments on the EU’s new deal regarding unfair trading practices.” The European Commission did not respond to requests for comment from DII on this issue. 

Major change may come with the full directive review, however, with van Delft arguing a priority would be to remove the €350 million turnover threshold, which “excludes many dairy processors and creates a discriminatory incentive for buyers to contract with larger suppliers not covered by the directive.” This call has also been voiced by the European food and drink industry organisation FoodDrinkEurope (FDE). 

The EU dairy industry wants full harmonisation of unfair trading rules across the EU following the directive review. The EDA says that fragmented national interpretations are “one of the main unintended negative effects of the current framework.” Van Delft said that more alignment would ensure legal certainty and prevent loopholes in cross-border situations. 

The EDA also wants a “neutral, trusted mediator and EU-level contact point,” as confidentiality and the fear of retaliation remain major barriers to the reporting of unfair trading. Van Delft said a neutral intermediary would make the system more accessible, especially for smaller players. 

Finally, van Delft said harmonised sanctions, with “strong but proportionate penalties across member states, were essential to ensure real deterrence.” He added that in general, the cross-border enforcement deal could help level the playing field, especially for smaller dairy suppliers who are more vulnerable to commercial pressure. “Greater consistency between member states reduces the legal and administrative complexity they face when operating across borders or dealing with buyers in other countries.” 

While supportive of the new cross-border regulation. Leena Whittaker, director for competitiveness at the European organisation representing retailers and wholesalers, EuroCommerce, singled out concerns over legal certainty, regarding when exactly authorities can cooperate and on which rules, when they are not the same across the EU. She explained that these issues should be addressed when the Commission makes new proposals on UTP legislation next year, while also backing removing the €350 million threshold. 

Whittaker said EuroCommerce’s former concerns over the proposal related to single market fragmentation resulting in less cross-border trade in the EU, meaning fewer customers for farmers and eventually less choice and higher prices for consumers. But “as these concerns were addressed… consumers should not be worse off.” 

She argued to DII that dairy retail alliances already comply with relevant UTP rules, “so they would not need to adapt their procurement strategy,” and that the regulation also does not change rules on sanctions which are determined by national UTP laws in each country. 

A FoodDrinkEurope spokesperson told DII, “Europe’s food and drink industry is pleased to see agreement between the co-legislators on the need to tackle cross-border UTPs.

“We urge national policymakers to double down on those unfair trading practices carried out by alliances of buyers that have a cross border purchasing strategy, typically large retail buying alliances. This would make a measurable impact towards ensuring fairer, more consistent enforcement across the EU food supply chain.”