New act on unfair trading practices in the food supply chain

The Act implements Directive on unfair trading practices in business-to-business relationships in the agricultural and food supply chain (Directive 2019/633). Being a minimum directive, the Directive imposes a number of minimum requirements on the Member States. However, the Danish Act is based on a “fairness for all” principle, and its scope is therefore wider than the minimum requirements in the Directive, leading to an over-implementation.

According to section 1, the Act applies to the sale of agricultural and food products, where the supplier or the buyer - or both - are established in the European Union. Where both parties are established in Denmark and the products are to be delivered in Denmark, this does not give rise to doubt. But where one or more of the parties are established outside Denmark, and/or the food products are to be delivered outside Denmark, application of the rules will be subject to a specific assessment. The same applies where the parties have agreed on a choice-of-law clause, which may in some cases be affected by the specific circumstances.

The Danish rules will generally apply regardless of the size of the parties, except the rules on payment periods where the Act introduces certain turnover-based thresholds. The parties’ turnover will be calculated at group level in accordance with the Directive.

In the Act, a distinction is also made between perishable and non-perishable agricultural and food products. Perishable agricultural and food products, i.e. products that by their nature or at their stage of processing are liable to become unfit for sale within 30 days after harvest, production or processing, are subject to stricter rules.

Unfair trading practices

According to the Act, the following will amount to unfair trading practices:

• Payment made later than 30 or 60 days after the stipulated date (after the end of the agreed delivery period or delivery date depending on whether the products are delivered on a regular or non-regular basis), where the buyer’s annual turnover exceeds EUR 2 million. A distinction is made between suppliers having an annual turnover in excess of EUR 350 million and those having a turnover below this amount, and between perishable and non-perishable food products.
• Cancellation of orders for perishable products at less than 30 days’ notice and sometimes at longer notice.
• Unilateral changes by the buyer of the contract terms affecting the timing, terms of payment, etc.
• Requirement by the buyer for payments which are either not related to the sale of the supplier’s agricultural or food products or which are related to deterioration or loss of products occurring on the buyer’s premises through no fault or negligence of the supplier.
• The buyer’s refusal to confirm in writing the terms of a supply agreement (in certain circumstances)
• Unlawful acquisition, use or disclosure by the buyer of the supplier’s trade secrets
• Acts of commercial retaliation carried out - or threatened to be carried out - by the buyer if the supplier exercises its rights, including by filing a complaint with the enforcement authorities, etc.
• Requirement by the buyer for compensation for the cost of examining customer complaints (in certain circumstance)

Further, some trading practices will be permitted only if previously agreed in clear and unambiguous terms, for instance where the buyer returns products without paying for them, and where the buyer demands payment for advertising etc.

Enforcement and entry into force

The enforcement authority is the Danish Competition and Consumer Authority. The Authority has the power to initiate and conduct investigations on its own initiative or following a complaint, including to carry out unannounced on-site inspections. The Authority may also issue administrative fine notices and even notify the police.

The Act enters into force on 1 July 2021 and will apply to agreements entered into after this date.