Amendment to the Food Market Act progressin

1/15/2021

The pending amendment to the Food Market Act has been the topic of much discussion. The Food Market Act, which entered into force in 2019, will be reformed to meet the minimum conditions required by the EU’s UTP Directive. The minimum conditions laid down in the Directive must be applied in all Member States from the beginning of November 2021. The proposal submitted to by the Government to Parliament on 29 October 2020 will add the unfair trading practices set out in the Directive, the consequences of violating compliance with their monitoring and prohibitions to Finland’s Food Market Act. An adopted legislative proposal would represent an essential step toward harmonised food market legislation at the EU level. The reform of the Act will be just the thing to clarify the common rules on fair trading practices in the food supply chain. The purpose of the legislative reform is to improve the functioning of the food market and to safeguard the position of the disadvantaged party in the agricultural products and food markets in relation to a stronger actor. A balanced food market is in everyone's interest.

After the Act enters into force, prohibited procedures will include payment periods that are exceedingly long, last minute cancellations of orders, unilateral changes to terms and conditions, payments unrelated to sales, commercial retaliation as well as the illegal use of trade secrets. The amendments also contain prohibited actions that are prohibited unless otherwise specifically agreed. These include charging the seller for costs related to the return, storage, inclusion in the product range and marketing of purchased products. In addition, the buyer cannot refuse to confirm the purchase agreement in writing at the seller's request.

The scope of the Food Market Act is simpler than that of the Directive, as the prohibitions apply to all sales of agricultural products and foodstuffs when the buyer has a higher turnover than the seller and the buyer's turnover exceeds EUR 2 million. The new law will facilitate increased trust between actors in the food supply chain and reduce the business risks of small food companies. The legislative proposal that promotes relations between actors in the food supply chain may also improve the position of consumers and facilitate the entry of new operators into the sector.

In particular, the illegal use of trade secrets has been the focus of public attention. The illegal use of trade secrets includes the production of cheaper copies of popular products, which will now be prohibited without permission. Confidential information is already protected under the Trade Secrets Act, and the provisions in the Food Market Act on the protection of trade secrets are based on this Act. In other words, the reform of the Food Market Act will not prohibit the sale and production of private label products. The reform will improve supervision and the Ombudsman's ability to intervene in prohibited trade practices, one of which is the unlawful use of trade secrets.

The Food Market Ombudsman acting as the supervisory authority may issue a notice related to a prohibited procedure, a public warning, prohibit the continuation of a procedure and submit a request to the Market Court for the imposition of penalties in connection with violation of requirements. The expansion of powers and the notable reinforcement of the sanctions system can be seen as a deterrent for the manifestation of prohibited trade practices. The new powers strengthen the position of the Ombudsman, speed up and clarify the legal process and the common rules of the food market.

The revised Food Market Act will facilitate an improved culture of discussion in the field. The active efforts of the supervisory authority to visit the actors also lowers the threshold to contact the Ombudsman. It is positive that the actors in the field have increasingly taken initiative and contacted the Ombudsman directly.