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Statutory innovations concerning business-to-business relationships in the agricultural and food supply chain

Jun 04, 2021 - Newsflashes

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Introduced in the Chamber of Deputies on 7 August 2020, the bill n° 7646 on business-to-business relationships in the agricultural and food supply chain (hereinafter the “Bill”) was voted on 20 May 2021. Published in Mémorial A403 on 1st June 2021, the law of 1st June 2021 on business-to-business relationships in the agricultural and food supply chain [1] (hereinafter the “Law”) will enter into force on 1st September 2021. The purpose of the Law is to transpose into Luxembourgish law the Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain.

The purpose of the Law is “to balance the relationships between the producers of food products and the distributors in order to protect the suppliers of these products against disadvantageous trade practices implemented by the various commercial actors in the food supply chain” [2], thus limiting itself to relations between professionals [3].

Scope of the Law

Article 3 of the Law governs the prohibition of unfair trading practices among which it is possible to find various practices concerning in particular “payment deadlines, unannounced cancellation of orders, unilateral modification of supply agreements, payment requests that are not related to the sale of products or the return of unsold products. Some of the prohibitions of these practices are of public order (black list). Other practices are prohibited in the absence of contrary contractual provisions (grey list)” [4].

Attribution of a new mission

The Law designates, in its Article 4, the Competition Council (hereinafter the “Council”) as “the authority responsible for enforcing the prohibitions provided for in Article 3”. Thus conferring on the Council investigative and sanctioning powers [5]. The attribution of this new mission to the Council seems appropriate, since it allows it to impose sanctions against trade practices threatening competition.

Recently, the Council issued an additional opinion [6] on the Bill as amended. Although the Council agrees with the amended Bill, it indicates some concerns that should be taken into consideration. The latter relate to procedural issues and the dissuasive impact of the Law. It may be interesting to assess the deficiencies highlighted by the Council in order to understand both their scope and possible future implications.

Procedural deficiencies

Among its comments, the Council criticises the silence of the Bill “concerning the adoption of decisions by the Council (in particular with regard to the designation and composition of the “decision-making board”) and their publication, appeals against decisions sanction and rejection of complaint, limitation periods, access to the file and any hearing granted to the parties” [7].

These procedural deficiencies may give rise to some concerns and raise questions about the necessary contributions “for greater clarity, readability and legal certainty” [8].

Dissuasive aspect

Article 5 of the Law concerns the powers of the Council, granting it in particular the power to take “a decision finding a violation of the prohibitions set out in Article 3 and ordering the buyer to put an end to the prohibited commercial practice”. In terms of fines, Article 5 (3) of the Law provides that “the Competition Council may impose a fine of 251 to 120 000 euros on those who violate Article 3”.

The Council indicates, however, that it “regrets that the range of fines in the event of violation of the prohibitions set out in Article 3 of the Bill has not been revised upwards, for example by being calculated according to a ceiling threshold as a percentage of turnover” [9]. By doing so, it may seem legitimate to question the effectiveness of the dissuasive aspect of this new Law.

  • [1] http://legilux.public.lu/eli/etat/leg/loi/2021/06/01/a403/jo
  • [2] Explanatory statement, bill transposing the Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain
  • [3] Article 1 of the law of 1st June 2021 on business-to-business relationships in the agricultural and food supply chain
  • [4] Explanatory statement, bill transposing the Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain
  • [5] Article 5 of the law of 1st June 2021 on business-to-business relationships in the agricultural and food supply chain
  • [6] Additional opinion of the Competition Council, 10 May 2021, n° 2021-AV-03
  • [7] Other comments, additional opinion of the Competition Council, 10 May 2021, n° 2021-AV-03
  • [8] Other comments, additional opinion of the Competition Council, 10 May 2021, n° 2021-AV-03
  • [9] Other comments, additional opinion of the Competition Council, 10 May 2021, n° 2021-AV-03

For further information and/or advice on competition issues, feel free to contact our competition team:

This publication is for general guidance only and does not constitute definitive legal advice.