From Farm to Fairness: Unpacking the Dutch Unfair Trading Practices Act for the Agri-Food Supply Chain

In 2021, the Dutch Unfair Trading Practices Act for the Agri-Food Supply Chain (Wet oneerlijke handelspraktijken landbouw- en voedselvoorzieningsketen) was introduced, implementing Directive (EU) 2019/633 (“UTP Directive”) into Dutch law. This legislation aims to tackle unfair trading practices (“UTPs”) in business-to-business relationships in the agricultural and food supply chains. More than two years have passed since the entry into force of the UTP Act, and although initial enforcement by the ACM appeared slow, it has visibly intensified recently. For example, in December 2023, the ACM announced that food company Vion agreed to amend certain contracts with pig farmers, after the ACM voiced concerns over non-compliance with the UTP Act.

As the UTP Act and enforcement by the ACM are gaining traction, and (significant) turnover-based fines by the ACM have become a realistic possibility, this article offers an in-depth overview of the UTP Act, covering:

• The origins and context of the UTP Act and UTP Directive;
• The scope and key definitions of the UTP Act;
• Prohibited practices under the UTP Act and related sanctions; 
• Enforcement of the UTP Act, including its public and private aspects, as well as alternative dispute resolution;
• Potential future amendments to UTP legislation and a comparison with other EU Member States’ UTP legislation;
• Resources for further information on the UTP Act and UTP Directive.

I. Legislative trajectory and context

1. What are the primary objectives of the UTP Directive and the UTP Act?

The UTP Act aims to strengthen the bargaining power of agricultural producers and fishermen against large buyers. The UTP Directive was specifically adopted to tackle UTPs in the agri-food supply chain, since such practices are considered likely to have a negative impact on the living standards of the agricultural community.

2. When did the UTP Act enter into force?

The UTP Act, which implements the UTP Directive, entered into force on 1 November 2021. New contracts concluded after that date that fall within the Act’s scope of application must comply with its provisions. As of 15 April 2022, also contracts that were entered into before 1 November 2021 have to comply with the UTP Act.

3. What rules, if any, governed UTPs in the Netherlands prior to the UTP Act?

Prior to the UTP Act, there were no specific rules applicable to the (alleged) UTPs in the agricultural sector, except for legislation relating to late payments. Additionally, some (alleged) unfair practices could have been addressed through already existing legislation and other initiatives, including:

• Competition law; 
• Civil law, which includes general provisions on fairness and reasonableness of contracts, prohibitions on fraud, mistake, misuse of circumstances, and the doctrine of precontractual liability; 
• Rules for tackling misleading and comparative advertising;
• Consumer law prohibitions for certain unfair commercial practices and contract terms, as the ‘reflexive’ application of some consumer law provisions already allowed small businesses in some cases to invoke protections that were granted to consumers; and
• Self-regulatory initiatives to promote fair business practices in the agri-food supply chain that have been experimented with, such as the European Supply Chain Initiative, which ceased operations in 2019. 

4. Does the UTP Act implement stricter measures to combat UTPs than those laid down in the UTP Directive?

Although the UTP Directive allows EU Member States to maintain or introduce national rules which go beyond those set out in the Directive to combat UTPs, the Dutch government took a ‘verbatim’ approach, implementing only the minimum requirements laid out in the UTP Directive.

II. Scope of application and definitions

5. Which entities and business relationships are covered by the UTP Act?

The UTP Act’s scope of application covers a diverse group of businesses that buy or sell agricultural and food products. Specifically, the UTP Act covers business relationships between suppliers of agri-food products and larger buyers. The Act uses turnover thresholds as a proxy to determine potential asymmetries between parties and to determine the application of the rules. The following table outlines these turnover thresholds:

The agricultural and food products to which the rules apply are listed in Annex I of the Treaty on the Functioning of the European Union. The rules apply to these products and to foods in which these products are incorporated. Moreover, specific rules apply to perishable products.

6. What are UTPs?

The UTP Act does not define UTPs, but merely lists specific trading practices that are prohibited when used by a buyer against a supplier (see question 7 below). According to the UTP Directive, UTPs generally include practices that:

• grossly deviate from good commercial conduct, are contrary to good faith and fair dealing and are unilaterally imposed by one trading partner on the other; 
• impose an unjustified and disproportionate transfer of economic risk from one trading partner to another; or
• impose a significant imbalance of rights and obligations on one trading partner. 

Practices can still be manifestly unfair even when both parties agree to them.

III. Prohibited practices

7. Which specific UTPs are prohibited by the UTP Act?

a. Does the UTP Act establish a general norm or prohibition on UTPs?

b. Which UTPs are per se banned (black-listed) under the Act?

c. Which UTPs are prohibited unless agreed beforehand in a clear and unambiguous manner?

The UTP Act does not contain a general prohibition on UTPs. Instead, the UTP Act contains two lists with specific UTPs: (i) a black list of UTPs that are per se prohibited and (ii) a grey list of UTPs, which are lawful if they have been clearly and unambiguously agreed beforehand between the supplier and the buyer in a written agreement. 

8. How does the application of the UTP Act differ from (traditional) competition law, meaning the cartel and abuse of dominance prohibitions as laid down in the TFEU and Dutch Competition Act (Mededingingswet)?

The UTP Act and traditional competition law, such as the cartel and abuse of dominance prohibitions laid down in the TFEU and the Dutch Competition Act, serve distinct but complementary roles in regulating market conduct. The UTP Act is specifically tailored to address unfair practices in business-to-business relationships within agri-food sectors, focusing on protecting smaller suppliers from exploitative behaviors by larger entities. By contrast, traditional competition law operates on a broader scale, targeting activities that distort market competition across sectors. The UTP Act lists specific prohibited practices, as shown under the previous question, while competition laws concern themselves with a potentially much broader range of practices. Moreover, unlike the prohibitions laid down in competition law, the UTP Act does not require the perpetrator to be dominant or the practice to amount to a restriction of competition.

9. What are the potential consequences of using a prohibited UTP?

Under the UTP Act, the use of prohibited practices can lead to several consequences:

• Public enforcement: Suppliers facing alleged UTPs may report violations of the UTP Act to the ACM. The ACM can launch investigations and take various measures, including issuing a decision establishing a violation as well as imposing an administrative fine or a cease and desist order, with penalties for non-compliance. These enforcement powers include the following:
  • To formally recognize and declare that a violation of the UTP Act has occurred.
  • To impose administrative fines. The maximum administrative fine the ACM can impose is either €900,000 or 10% of the offender’s annual turnover, whichever is higher. If a party has been found in violation of similar regulations within the past five years, the maximum fine can be increased by 100%.
  • To impose orders subject to penalty payments for violations and to issue autonomous orders aimed at promoting compliance with the Act.
  • To publish enforcement decisions, including for the imposition of administrative sanctions or binding instructions.
• Private enforcement: Suppliers affected by UTPs can seek redress through civil litigation. Parties may claim damages or seek other remedies in civil court.
• Alternative dispute resolution: The Dutch Foundation for Consumer Complaints Boards (Geschillencommissie) offers an accessible alternative to public and private enforcement. The Disputes Committee can issue binding decisions and can award damages.

IV. Enforcement

A. Public enforcement

10. Which authority is responsible for enforcing the UTP Act in the Netherlands?

The ACM is responsible for enforcing the UTP Act. 

11. Who can file complaints with the ACM, and what does the complaint procedure entail?

Stakeholders can file complaints regarding violations of the UTP Act with the ACM. The complaint procedure involves several steps.

Complaints can be filed by:

• Individual suppliers.
• Trade associations, associations or groups of suppliers on behalf of their members.
• Any other organization with a legitimate interest in representing suppliers, if it is an independent non-profit legal entity.

For those complainants who wish to keep their identity confidential, complaints can be filed anonymously. Following a complaint, the ACM may first discuss the reported issue with the complainant, advising on possible actions the supplier can take or steps the ACM might undertake. To initiate an investigation and a formal decision by the ACM, the complainant typically needs to fill out a complaint form, although the ACM can also start an ex officio investigation. If the ACM finds sufficient grounds for the complaint, it intends to start, conduct, and complete an investigation within a reasonable time frame. In cases where the ACM deems the complaint lacks sufficient grounds, it will inform the complainant of the reasons.

12. What investigative powers are granted to the ACM?

In the course of investigating prohibited UTPs, the ACM can compel buyers, suppliers, and others to provide information. The ACM is also empowered to conduct unannounced inspections at relevant locations as part of its investigation, in accordance with national rules and procedures. In cases of investigations with cross-border dimensions, the ACM cooperates with the designated enforcement authorities of other EU Member States.

13. Which cases have already been handled by the ACM under the UTP Act?

As of now, the number of cases handled by the ACM under the UTP Act appears to be limited. This limited activity can perhaps be attributed to the lack of awareness among stakeholders about the UTP Act. This lack of awareness is reflected in the findings of a survey commissioned by the ACM and published in 2023. Since then, the ACM has continued its efforts in educating suppliers about the Act and actively works to improve awareness among suppliers through presentations and discussions at various organizations. According to the ACM, there are multiple ongoing investigations by the ACM based on the initial complaints received, and the outcomes of these investigations are expected to be published soon.

To date, one case handled by the ACM under the UTP Act has been publicly disclosed. This case involved Vion, which is part of Vion Food Group, a pork and beef processing company, who was alleged to have unilaterally changed contracts with pig farmers. Following media reports, the ACM launched an investigation into a possible violation of the UTP Act by Vion. After the ACM found that Vion’s agreements with pig farmers were potentially non-compliant with the Act, Vion offered commitments to the ACM. These include a commitment to:

1. no longer unilaterally modify contracts;
2. provide an amended agreement to its pig farmers, in which Vion agrees to: 
   • submit proposed changes to contracts to pig farmers for approval;
   • discuss reasonable solutions, when the farmer does not agree with the proposed change;
   • abide by a one-year notice period, when such discussions do not result in a reasonable solution.

Vion’s commitments are currently being market-tested and, depending on the outcome of that market test, will be made binding by the ACM.

B. Private enforcement

14. To what extent does private enforcement play a role under the UTP Act, and are additional tools provided for private entities to address UTPs?

Prior to the UTP Directive and the UTP Act, general contract law may, in some instances, have provided a basis for parties who faced certain UTPs to seek redress in civil courts. However, the effectiveness of general contract law in addressing UTPs was considered to be limited by the European Commission due to certain practical challenges. A notable issue in private enforcement of UTPs is the ‘fear factor’, where a weaker party in a commercial transaction may be reluctant to lodge a complaint or initiate legal proceedings. The UTP Directive and the UTP Act are therefore designed to be enforced predominantly by public authorities, such as the ACM. This public enforcement approach, where suppliers can file their complaints anonymously or (trade) associations and other organizations can file complaints on behalf of suppliers, is intended to mitigate any alleged ‘fear factor’. 

Nevertheless, suppliers have the option to seek redress in civil courts, either independently or in conjunction with administrative decisions by the ACM. Civil litigation can be used to seek remedies like compensation for damages or a cease and desist order.

C. Alternative dispute resolution

15. What alternative dispute resolution mechanisms regarding UTPs are available?

The UTP Act provides for alternative dispute resolution through the Disputes Committee, which specifically introduced a complaints board regarding UTPs in the agriculture and food supply chains. This alternative dispute resolution mechanism, which started on 1 January 2022, is available to address individual disputes between suppliers and buyers regarding UTPs.

16. What kinds of disputes can be referred to the Disputes Committee, and what is the procedure?

The Disputes Committee handles disputes between agricultural producers and companies purchasing these products, whenever the UTP Act applies. Suppliers can file complaints about the practices specified in the UTP Act. However, suppliers must first attempt to resolve the dispute amicably before approaching the Committee. Buyers can also refer disputes to the Committee.

The Disputes Committee offers a lower-threshold alternative to court proceedings. There is a fee of €250 (excluding VAT) for submitting a complaint to the Committee. The procedure does not require legal representation. Suppliers can submit complaints themselves or through a representative, and they may choose to remain anonymous.

After a complaint is submitted to the Disputes Committee, the Committee reviews the complaint to ensure it falls within its scope and that the supplier has attempted to resolve the issue with the buyer beforehand. The buyer is then informed of the complaint and given an opportunity to respond. Subsequently, an oral hearing can be held. After the hearing, the Committee deliberates and makes a decision, which is communicated to both parties and typically published on the Disputes Committee’s website in an anonymized form. As of January 2024, one interim decision has been published. In response to a supplier’s complaint concerning a buyer’s lack of transparency in milk pricing and unilateral price determination, the Committee, through its interim decision, offered the buyer the chance to develop a milk pricing benchmark model, under the guidance of an independent external expert. Following this, the supplier will be given the opportunity to review and respond to the proposed model.

17. What are the possible outcomes of cases brought before the Disputes Committee?

The possible outcomes of cases brought before the Disputes Committee under the UTP Act include:

• Awarding of damages: The Committee can decide to award compensation to the complainant for damages suffered due to UTPs.
• Establishing payment obligations: The Committee can establish a requirement for the offending party to make specific payments. 
• Facilitating settlements: The Committee may facilitate a settlement, but this only occurs if both parties agree. 
• Upholding previous offers: If the buyer had made an offer before the complaint was filed and the Committee deems it reasonable, it can rule that the buyer must honor this offer.

The Committee aims to issue a(n interim) decision within 90 days after taking up the case, and decisions are typically published on the Disputes Committee’s website in an anonymized form.

V. Changes in UTP legislation and a comparison with other EU Member States

18. Are there any proposals for amendments or policy changes regarding UTP legislation in the Netherlands?

Currently, there are no formal proposals for amendments to the UTP Act (or the UTP Directive). However, the European Commission will conduct an evaluation of the UTP Directive by 1 November 2025, focusing on the effectiveness of national measures against UTPs. This evaluation will be based on annual reports from enforcement authorities, such as the ACM, which will include details such as the number of complaints received and investigations conducted. Following this evaluation, additional UTPs may be designated.

In terms of policy changes, the ACM has attempted to increase public awareness of the UTP Act, for example by organizing seminars. The ACM is actively engaging in educating suppliers about their rights under the UTP Act and the enforcement role of the ACM. 

19. How does the implementation of the UTP Directive in the Netherlands compare with its adoption in other EU Member States, and are there notable differences?

The implementation of the UTP Directive in the Netherlands adheres to the minimum requirements of the Directive, a ‘verbatim’ approach. By contrast, some other EU Member States have significantly extended the Directive’s scope when implementing the rules in their national legal systems. These expansions include a broader scope of application (e.g., covering all suppliers regardless of turnover, protecting buyers against UTPs too, and extending UTP legislation to other sectors) and adding more practices to the lists of black- and grey-listed UTPs. This has led to a patchwork of UTP regulations across EU Member States. 

VI. Other resources

20. What resources are available for businesses seeking to understand their rights and obligations under the UTP Act?

A survey conducted in late 2022 on behalf of the ACM about, amongst others, awareness of the UTP Act among food manufacturers and suppliers covered by the UTP Act showed that an overwhelming majority of respondents was unfamiliar with this legislation. The ACM’s website provides guidance and an explanation video. Moreover, the European Commission offers information and useful resources on its website about the UTP Directive and its national implementations.

This article was published in the Competition Newsletter of January 2024. Other articles in this newsletter:

• Competition law in 2024: putting theory into practice
• European Court of Justice plays hardball in Sports rulings
• FDI screening guidance: shedding some light in the darkness