Unfair Trade Practices

The European Commission defines B2B unfair trade practices (UTP) as practices that grossly deviate from good commercial conduct, are contrary to good faith and fair dealing, and are unilaterally imposed by one of the trading partners.

UTP in the food supply chains, retailers, and processing units reduces suppliers' welfare and creates gains retained by the market intermediaries that are not forwarded to the consumer.

The traditional general preview of the consumer protection legislation is the prevention of UTP, where the legislation is designed in a manner to prevent businesses or trade associations from disseminating false or misleading information about any product (on its label or through marketing campaigns) to adopt strategies to support fair trade commodities(e.g. in the commodities supply chain management). 

• In general, the trading behaviour that has been listed as UTP include 

• Refusing to put specific terms in writings

• Imposing unfair terms and clauses in deals

• Unilaterally terminating a business relationship without prior notice in the short term. 

• Contractual sanctions that are implemented in a non-transparent manner and are disproportionate to the damages

• Withholding essential information or revealing sensitive information 

• Preventing a partner from making legitimate marketing claims

The regulations are made locally in every country under the consumer protection act that provides rules to act against firms that engage in conduct that is misleading or deceptive, where they falsely represent the goods of a particular standard and falsely represents about the goods related to the performance characteristics or have misleading warranties, or remedies related to the goods or services. 

In the EU, Unfair Contract Terms Directives require that before concluding a consumer contract, the buyer should be made aware of the incorporation of the standard terms into the contract. The contract terms are examined by a judge and declared void if it is unfair.

This type of control constitutes a limitation on freedom of contract. 

Some conditions/ categories identified by the B2B UTP 2013 Green Paper are-

• Retroactive misuse of unspecified incomplete contract terms

• A trading partner's unpredictable transfer of risk to the counterparty

• A trading partner's use of confidential information

• unfair termination of a commercial relationship

• The AMTF 2016 list added the following in the conditions– 

• Unduly  late payment

• Unfair shifting of business risks to another partner 

• Unilateral changes to contracts 

• Unfair termination of the contract on short notice. 

• The USDA includes the following conditions as well – 

• Paying premiums without written justification 

• Restricting tournament-style payment

• Limiting the buyer's ability to require capital investments by the supplier 

In the EU, the consumer scoreboard is the system that investigates and monitors markets from the consumer's perspective.

The report provides information on price, complaints, satisfaction, safety, and switching in consumer retail markets.