The prohibition of unfair trading practices

In Germany, the UTP Directive has been transposed into the Agrarorganisationen-und Lieferketten-Gesetz (Agricultural Organisations and Supply Chains Act,"AgrarOLkG"), which entered into force on 9 June 2021.

Unfair trading practices

Unfair trading practices are contractual clauses and practices that are considered unfair and unacceptable in business relationships between large commercial and governmental buyers of agricultural, fishery and food products and smaller suppliers in terms of turnover.

The AgrarOLkG contains a catalogue of certain commercial practices, which are always considered unfair in the relationship between large commercial and official buyers and smaller suppliers. These include:

• Payment terms later than 30 days for perishable agricultural, fishery and food products and later than 60 days for other agricultural, fishery and food products.
• Return of unsold agricultural, fishery and food products, without payment of the purchase price and disposal costs for products that can no longer be used
• Short-term cancellations for perishable agricultural, fishery and food products
• Participation of the supplier in the buyer’s storage costs through payments or price discounts
• Unilateral changes to contractual conditions by the buyer, for example delivery and payment conditions, quality standards, prices, etc.
• Assumption of certain costs by the supplier, for example as a result of quality reductions or customer complaints for which the supplier is not responsible.
• Payments or discounts for the costs of listing products (does not apply to costs of listing when products are launched on the market)
• Threat of retaliation
• Refusal to confirm a verbally concluded contract in text form

In addition to these trading practices, which are always unfair, there are trading practices that are only permissible in the relationship between large commercial and government buyers and smaller suppliers if they have previously been "clearly and unambiguously" agreed between the parties. These include payments or discounts for:

• the listing of agricultural, fishery and food products when they are launched on the market
• the marketing of the agricultural, fishery or food products supplied, including offers for sale, advertising, discounts in the context of sales promotions and making them available on the market
• setting up sales premises

Scope of application of the prohibition of unfair trading practices

The AgrarOLkG prohibits large commercial and official buyers of agricultural, fishery and food products from exploiting the economic imbalance in relation to their suppliers, who are smaller in terms of turnover, through unfair trading practices.

The prohibition of unfair trading practices protects not only farmers, but all suppliers of agricultural, fishery and food products, i.e. in particular also suppliers of the food processing industry. However, only suppliers with an annual turnover of no more than 350 million euros are subject to the protection of the AgrarOLkG.

Buyers who are subject to the prohibition of unfair trading practices are, in addition to food traders, in principle all buyers of agricultural, fishery and food products, insofar as they are not consumers, i.e. also the food processing industry in demand. However, only buyers who have an annual turnover of more than 2 million euros are subject to the prohibitions of the AgrarOLkG.

Furthermore, the prohibition of unfair trading practices only applies if, at the time of the conclusion of the contract, the annual turnover of the buyer is higher than the annual turnover of the respective supplier, whereby the following lump sums apply:

Level	Annual turnover supplier	Annual turnover buyer
1	up to 2 million euros	over 2 million euros
2	over 2 million to 10 million euros	over 10 million euros
3	over 10 million to 50 million euros	over 50 million euros
4	50 million to 150 million euros	over 150 million euros
5	150 million to 350 million euros	over 350 million euros

When calculating turnover, the annual turnover of the supplier's entire group of companies counts and in particular not only the turnover with agricultural, fishery and food products. To determine the turnover level of the respective business partner, suppliers and buyers are obliged to provide each other with information.

The prohibition of unfair trading practices also applies to purchasing authorities.

Limited initially until 1 May 2025, the ban on unfair trading practices also protects larger, i.a. producer-owned, businesses in the dairy, meat, fruit, vegetable and horticultural sectors. Suppliers of dairy and meat products and fruit, vegetable and horticultural products; including potatoes, whose annual turnover does not exceed 20 percent of the buyer's annual turnover are covered. However, this only applies if the suppliers of the aforementioned products achieve an annual turnover of no more than 4 billion euros in the respective sales segment in Germany.

The prohibition of unfair trading practices is already applicable if either the supplier or the buyer is based in the European Union.

Legal consequences of violations of the prohibition of unfair trading practices

Large commercial and government buyers of agricultural, fishery and food products who use unlawful contractual terms and conditions vis-à-vis smaller suppliers or behave unfairly - regardless of what has been agreed in the contract - for example by

• fail to make payments owed (purchase prices or removal costs) or fail to make them on time (without having a right to refuse performance),
• demand services (storage costs, payments or price reductions) to which they are not entitled in the absence of a valid agreement,
• refuse to confirm verbally concluded delivery agreements in text form,
• obtain, use or disclose trade secrets without the supplier’s consent,
• threaten retaliation against suppliers who exercise their contractual / legal rights,

violate a legal prohibition that is subject to a fine.

The Bundesanstalt für Landwirtschaft und Ernährung (Federal Office for Agriculture and Food, “BLE”) may take up such infringements following complaints from market participants, ex officio or on the basis of requests for administrative assistance from implementing authorities of other EU Member States. The BLE may issue the orders necessary to remedy the infringement and prevent future infringements.

In addition, the BLE can impose fines of up to 750,000 euros. The BLE takes its decisions in agreement with the Bundeskartellamt (Federal Cartel Office, “FCO”).

The BLE may publish its decisions and the names of the respective buyer concerned on its website.

Contracts containing prohibited unfair trading practices may be partially invalid. Large commercial and official buyers of agricultural, fishery and food products cannot then invoke such contract clauses against their smaller suppliers. The civil courts decide on the validity of contracts.

Legal protection options for suppliers

Suppliers affected by unfair trading practices may lodge a complaint with the BLE. At the supplier's request, associations of which the supplier is a member and, at the supplier's request, organisations, which have a legitimate interest in representing the supplier also have the same right of complaint. Such organisations are, for example, district farmers' associations with legal capacity and other producers' associations with legal capacity at Land or federal level. Cross-market associations (e.g. inter-branch associations), on the other hand, have no right of filing a complaint because they lack the legitimate interest to (solely) represent suppliers.

In order for the BLE to investigate the complaint, the complaint must state which prohibited trading practices the buyer is alleged to have violated against the supplier.

The BLE then examines whether there has been an infringement and whether it will initiate proceedings in this regard. The BLE keeps the complainant informed about the status, progress and outcome of his complaint. If the BLE initiates proceedings, it may conduct further investigations to clarify the facts. If it comes to the conclusion that there has been a violation of the prohibition of unfair trading practices, it shall issue appropriate orders to put an end to the infringement and prevent future violations. It may also impose fines on buyers who have infringed the prohibition of unfair trading practices.

In addition to the option of submitting a complaint to the BLE, suppliers affected by unfair trading practices can agree with the buyer to use alternative dispute resolution procedures, including recourse to an ombudsman's office.

In addition, the affected persons have recourse to civil law.

Identity protection and confidentiality

The BLE is aware that suppliers affected by unfair trading practices are usually confronted with buyers who are stronger in the market and on whom they are economically dependent.

The BLE will therefore protect the identity of the complainant and any other information that he or she considers sensitive. The AgrarOLkG gives the BLE a legal basis for this. The only requirement is a corresponding request by the complainant stating which information from the complaint is to be treated confidentially.

If the BLE, in an individual case, reaches the conclusion that it could not complete the investigation of the complaint without disclosing confidential information of the complainant, it shall inform the complainant accordingly. The complainant can then decide on how to proceed: If he or she agrees to the disclosure of the information, the procedure may continue; if he or she does not agree, it will be discontinued.

Queries Contact person / Contact:

In case of queries or complaints regarding unfair trading practices, please contact the team of Unit 516:

Telephone: +49-228-6845-3606
Fax: +49-30-1810 6845-330
E-Mail: 516@ble.de

Federal Office of Agriculture and Food - Unit 516 -
Deichmanns Aue 29
53179 Bonn
Germany

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