Spanish competition authority comments on the health of the food supply chain

A few days ago the Spanish competition authority released its Report on the proposed amendment of the Act 12/2013 on Measures for a better functioning of the food supply chain (see here).

The authority recognizes that this is a relevant sector because it represents a relevant proportion of the Spanish economy but very complex and vulnerable because of the high atomization of market players, market seasonality and cost volatility.

Against this background, the authority stresses (again) that the food sector is asymmetrically configured, with small producers that have limited bargaining power against the larger up-stream players, often generating situations of economic dependency. In this context, the Report includes some considerations and recommendations of which the following three stand out:

First, the proposed legislation extends its scope of application to virtually all food contracts, disregarding the previous requirement that an imbalance situation exists between the parties. The competition authority recommends that this amendment is reconsidered insofar as it may imply an unjustified restriction of the parties’ commercial freedom.

Second, the authority suggests a clarification and simplification of the applicable legal regime, given the complexity of the regulatory framework, to ensure legal certainty for market players. The authority also calls to increased cooperation between the different authorities with responsibilities in the food sector and a clarification of the competencies and monitoring capabilities. Currently, different norms and organisms oversee the sector activity, including legislation on unfair trading practices and competition legislation.

And third, the authority considers that the term allowed to adapt existing contracts to the new legal regime is too short (six months) and half of that provided for in Directive (EU) 2019/633 which this reform aims to transpose (12 months) so it recommends that this choice is reviewed and justified.

The proposed legislation is still under review, so it remains to be seen whether the competition authority’s considerations will be taken into account in the final text.