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The European Commission has launched an investigation into relationships in the supply chain to see if retailers use unfair trading practices to get the best deals from their suppliers.

Brussels has published a consultation paper asking for comments from the food industry, including on the protection afforded to manufacturers and producers by national laws and the impact of any power imbalance on the EU retail market.

Claire Bury, director of capital and companies at the Commission, emphasised “no decisions have been made” but she signalled Brussels believes there could be an abuse of power in the supply chain and is prepared to act.

“The kind of behaviour that we see is that when a retailer is contracting a supplier, there is not enough information about the contract terms or the terms are changed halfway,” Bury explained. Small suppliers can be obliged to accept unfair trading practices because they are afraid to complain for risk of losing customers, she added.

Bury also highlighted a common practice for retailers to reduce payments to suppliers when they make low sales or pay discounts.

While some EU countries have laws in place to address these issues, others do not, Bury said. She suggested there may be a need for EU-wide legislation guaranteeing minimum protection for suppliers. Brussels is conducting a final assessment of the problem and will accept comment from stakeholders until the end of April.

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By GlobalData