Regulating the food chain: Belgium implements new rules for the agricultural and food supply chain

The Belgian Parliament has adopted the Law of 28 November 2021 implementing 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 "Directive" and the "Law"). 

The concerned entities will have 12 months to adapt their existing agreements to the contents of the Law from its publication, namely until 15 December 2022, and all new agreements adopted after 15 December 2021 should already comply with the rules described below.

Scope

The Law is sectoral and, in the supply chain of agricultural and food products as defined under Annex I to the TFEU (including those products processed for use as food or feed), applies to the contractual relationships between buyers and suppliers of such products (referred to below as the "Products"), provided that the supplier has a yearly turnover of less than €350,000,000. 

The supplier's turnover is defined in accordance with the rules determining SMEs in the EU Commission Recommendation 2003/361/CE of 6 May 2003. 

The law, which contains mandatory provisions, will apply as soon as the buyer, the supplier, or both are established in Belgium. 

We set out below how the forbidden practices set out in the Directive have been implemented in the Law. While the Law implements the Directive faithfully, the government is granted the possibility to adopt (royal) decrees, thereby allowing them to amend or compliment the list of forbidden practices below, following a proposal of the ministers of Economy, Middle Classes, and Agriculture.

Black list of forbidden practices

The following practices are unfair in all circumstances, and are subject to enforcement by the designated regulator: 

• Payment terms: late payment of more than 30 days after their delivery for Products delivered on a regular basis. For deliveries that are not regular, the maximum allowed payment term is until whichever is the later date: 30 days after the date of delivery or later than 30 days after the date on which the amount payable is set. While implementing some limited exceptions, the Law is stricter than the Directive since it does not distinguish payment terms between perishable (30 days) and not perishable (60 days) Products; 
• Abrupt order cancellation: the buyer cancels an order of agricultural and food products at such short notice that the supplier cannot reasonably be expected to find an alternative means of commercialising or using those products. According to the Law, "short notice" is a term of less than 30 days;
• Unilateral changes to the terms of a supply agreement for agricultural and food products (such as the  frequency, timing, volume of supply or delivery, quality standards, payment, or services referred to in the grey list below;
• Payment requests from the buyer that are not related to the sale by the supplier of agricultural or foods products (for example; requiring the supplier to contribute to the costs for the opening of a new affiliate of the supplier); 
• The supplier is requested to pay for product deterioration or loss, or both, outside of any negligence or fault of the supplier and occurring in the buyer's premises or after product ownership was transferred to the buyer; 
• Refusal from the buyer to confirm in writing the terms of a supply agreement (except where the terms are set out in writing by a statutory document (or a document derived there-from) from a producer organisation of which the supplier is a member); 
• Unlawful acquisition by the buyer of trade secrets from the supplier. Trade secrets is de-fined by reference to the law of 30 July 2018 on the protection of trade secrets implementing the EU Directive on that matter;
• Threats or the actual carrying out of acts of commercial retaliation against the supplier if the supplier exercises any of its rights, including by filing a complaint with enforcement authorities or by cooperating with enforcement authorities during an investigation;
• The buyer requires compensation from the supplier for the cost of examining customer complaints regarding the sale of the supplier's products, outside of any negligence or fault from the supplier. 

Grey list of forbidden practices

The following practices are forbidden unless previously agreed upon by parties in clear and unambiguous terms in the agreement between the supplier and the buyer: 

• Return of unsold products by the buyer to the supplier without paying for these products or their disposal, or both; 
• Charging payment to the supplier for stocking, displaying, listing or making the products available on the market; 
• Requiring the supplier to bear all or part of the costs on discounts, rebates, on products sold by the buyer as part of a promotion. This practice will not be considered unfair if, prior to the promotion, the buyer has specified its duration and the quantity of Products that the buyer will purchase at reduced prices. Beforehand, the buyer will be requested to provide a written estimate of the amount to be paid by the supplier, or elements for calculation of this estimate, and the supplier will have to expressly agree to these costs; 
• Requiring the supplier to pay for the advertising of the Products by the buyer; 
• Requiring the supplier to pay for the marketing of the Products by the buyer; 
• Charging the supplier for staff for fitting-out premises used for the sale of the supplier's products.

Enforcement and Dispute Resolution

Clauses constituting an unfair practice as described above will be deemed null and void. The agreement between the buyer and the supplier remains in force if it can survive without the null clause. 

The Belgian Ministry of Economy (SPF Economie; FOD Economië) was appointed as the enforcement authority for Belgium and is competent for the complaints and enforcement of the Law as further described in the Directive. The regulator is vested with several enforcement powers, from the imposition of a fine to the publication of the sanction against the buyer, and can act based on com-plaints or on its own initiative.

While the legislator encouraged the parties to recourse to alternative dispute resolution systems in case of issues, as proposed by the Directive, there are no rules at this stage providing for a mandatory mediation or other ADR mechanism between parties.

 
What about the already existing B2B laws? 

Readers must not forget that the already existing Belgian B2B legislation (introducing the notion of the "abuse of economic dependence" under Belgian law, specifying rules around unfair trade practices between enterprises and listing forbidden clauses in B2B agreements), will apply to B2B agreements, alongside the Law, which will complement the rules specifically applicable to those in relation to the supply chain for Products.