Regulating unfair trading practices in the EU agri-food supply chain: A case of counterproductive regulation?

Unfair trading practices (UTPs) imposed by parties with superior power in the context of a vertical relationship are an issue at the periphery of competition law, private law, and, sometimes, sectoral regulation. For a long time, the mainstream competition law approach has been to relegate such issues to other areas of law and regulation. In the EU, where complaints about the prevalence of such practices in the agricultural and food supply chain have been voiced for decades, the approach of the European Commission has been to pursue a strict separation between competition issues and fair-trading issues. This article questions the reasonableness of such a strict division of labour. Taking the sum of various initiatives undertaken to regulate UTPs in the agri-food supply chain as a case study, it argues that the effect of limiting competition law enforcement on this issue has been counterproductive. The article firstly explains the background of the problem and the issue of UTPs in the agri-food supply chain. Secondly, it maps the various legislative developments which have taken place at the EU Member State level. Thirdly, by referring to Grabosky’s (1995) regulatory studies typology of counterproductive regulation, the article focuses attention on some of the perverse side effects which arise when regulation of power imbalances and UTPs occurs at the national level in the context of an integrated market like the EU. In light of the analysis, it expresses doubt that these pitfalls will be fully corrected by Directive 2019/633 on UTPs in the food supply chain. The conclusion is that national legislative developments have not been able to make up for the lack of supra-national enforcement of EU competition law on this issue and have possibly even exacerbated the problem at hand. The article concludes that supranational competition law enforcement can play a key role in addressing the fundamental problems underlying business-to-business unfair trading practices. It argues that this role cannot be played by other instruments in the context of an integrated market with multi-level governance. This article shows that while competition law may not be capable of solving all the problems with UTPs, it remains indispensable in safeguarding the proper functioning of the internal market as well as the interests of consumers and taxpayers