Unfair trading practices
The Act on Prohibition of improper trade methods between companies in the agricultural and food production chain aims to counteract unfair trading practices, and to reduce imbalances in bargaining power between suppliers and buyers. The Act includes rules regarding delivery and payment terms. The Swedish Competition Authority has been designated as the enforcement authority supervising the Act.
Unfair trading practices in the agricultural and food supply chain
Unfair trading practices (UTP) can consist of unfair contract terms or unfair behaviours in contractual relationships.
Significant imbalances in the bargaining power between suppliers and buyers of agricultural and food products are common in the agricultural and food supply chain. These imbalances can be caused by larger and more powerful trading partners imposing disproportionate advantages, which increase the imbalance between rights and liabilities for the parties. This is referred to as unfair trading practices.
There is no precise definition of the term ‘unfair trading practice’ in the legal Act, but it can be described as a contractual term or a behaviour in a business relationship that deviates from good commercial conduct, and that is unilaterally imposed upon the other party. Unfair trading practices may occur at any stage of the sale of an agricultural or food product – before, during or after a sales transaction.
The purpose of the Act on Prohibition of Unfair Trading Practices
The Act implements an EU directive into Swedish national law, with the aim of protecting suppliers of agricultural and food products against certain unfair trading practices, which are listed in the Act.
There may be major imbalances in the bargaining power between suppliers and buyers of agricultural and food products within the agricultural and food supply chain. These imbalances can, in turn, lead to use of unfair trading practices, when a larger or more powerful trading partner seeks to impose certain practices or contractual arrangements which are to their advantage. Some practices might be manifestly unfair even when both parties agree to them. The aim of the Act is to reduce the occurrence of such practices which are likely to have a negative impact on the financial position of the agricultural suppliers.
The prohibition on using unfair trading practices applies to any buyer of agricultural and food products with an annual turnover of over EUR 2 million.
Supervision, investigatory actions and sanctions
In our supervisory work, we have the possibility to request information, conduct interviews and request access to the buyer’s premises. If we conclude that one or more unfair trading practices are used, we may impose a sanction fee.
Meet with us
Do you want to find out more about the legislation, what happens when we receive information or complaints about unfair trading practices and how an investigation is conducted, for instance? Please contact us to book a meeting.