Agri-food supply chain

The law applies to transactions between suppliers and buyers established in Luxembourg.

The transactions that fall within the scope of the law are sales of agricultural and food products and certain services ancillary to the sale of these products.

A supplier benefits from legal protection against unfair practices by its buyer if their respective commercial powers are unequal. The existence of such an economic imbalance is assessed on the basis of the relative difference between the respective turnover figures of the supplier and buyer (see table below).

Suppliers concerned

Any agricultural producer or any natural or legal person, producer organisation, supplier organisation or association of such bodies selling agricultural and food products is protected against unfair practices by more powerful buyers.

Examples:

• agri-food processors;
• producer organisations;
• distributors/wholesalers;
• farmers;
• cooperatives etc.

Buyers concerned

Any natural or legal person, any public body in the EU or any group of natural or legal persons falling into this category who buys agricultural and food products is prohibited from using the unfair practices listed by law.

Examples:

• agri-food processors;
• producer organisations;
• distributors/wholesalers;
• public bodies;
• retailers;
• florists.

Assessment of the buyer's power in relation to that of the supplier

Suppliers are protected against unfair practices by buyers who have a higher turnover than them according to the following sliding scale:

The turnover taken into account includes the turnover of any linked or partner enterprise, in accordance with the criteria of Recommendation 2003/361/EC concerning the definition of micro, small and medium-sized enterprises.

Suppliers with a turnover in excess of EUR 350 million are not protected. They are deemed to have sufficient financial clout to negotiate their commercial terms independently.

Supplier protection applies only to the supply of agricultural and food products listed in Annex I to the Treaty on the Functioning of the European Union (Pdf) (TFEU), as well as to products not listed in said Annex but which are processed for use in human nutrition using products listed in said Annex.

Examples of products covered by Annex I of the TFEU:

• fruit and vegetables;
• cereals;
• livestock;
• ham;
• cheese;
• milk etc.

Examples of products processed using these products:

• chocolate;
• dairy products;
• sauces;
• ready-to-eat meals etc.

In commercial relations between suppliers and buyers of unequal size and power, the law provides for:

• 10 specific commercial practices that are prohibited in all circumstances (black list); and
• 6 practices that are in principle prohibited, unless they have been agreed upon in advance in clear and unambiguous terms (grey list).

As of 1 June 2022, all existing contracts between suppliers and buyers must comply with the law.

BLACK LIST: 10 practices prohibited in all circumstances

1. Payment after 30 days for perishable goods
2. Payment after 60 days for non-perishable goods
3. Short-term cancellation of orders for perishable goods
4. Unilateral modification of the supply agreement by the buyer
5. Transferring the cost of investigating customer complaints to the supplier
6. Payments not related to the sale of products required by the buyer from the supplier
7. Refusal, by the buyer, to confirm in writing the terms of a supply agreement, despite the supplier's request
8. Unlawful acquisition, use or disclosure of the supplier's trade secrets
9. Commercial retaliation or threat of retaliation by the buyer
10. Transfer of the risk of loss and/or deterioration of the products to the supplier, without the loss or deterioration resulting from their negligence or fault

GREY LIST: 6 practices prohibited without clear prior agreement

1. Return of unsold products to the supplier without payment
2. Payment requested from the supplier for advertising made by the buyer
3. Payment requested from the supplier for the buyer's promotional activities
4. Payment requested from the supplier for the marketing of the products by the buyer
5. Payment requested from the supplier for the remuneration of the staff responsible for fitting out the premises used to sell the products
6. Payment requested from the supplier for storing, displaying or listing products or for making them available on the market