UNFAIR TRADING PRACTICES IN THE FOOD SUPPLY CHAIN REGULATIONS

SUBSIDIARY LEGISLATION 117.42

UNFAIR TRADING PRACTICES IN THE FOOD

SUPPLY CHAIN REGULATIONS

18th June, 2021

LEGAL NOTICE 266 of 2021, as amended by Legal Notice 171 of

2024.

(1)

The title of these regulations is the Unfair Trading

Practices in the Food Supply Chain Regulations.

(2)

The scope of these regulations is to transpose and

implement Directive (EU) 2019/633 of the European Parliament and

of the Council of 17 April 2019 on unfair trading practices in business-

to-business relationships in the agricultural and food supply chain, as

may be in force from time to time.

(3)

These regulations shall apply according to sub-

regulations (4) and (5), and the responsibilities, functions, obligations

and rights provided according to these regulations shall only be

applicable accordingly

Provided that the Board shall consider all complaints

received for investigation and in such cases the Board may only issue

recommendations

Provided further that these regulations shall not apply to

agreements between suppliers and consumers.

(4)

These regulations apply to certain unfair trading

practices which occur in relation to the sale of agricultural and food

products whenever the supplier and, or buyer is based in Malta, and

when such sales are effected by

(a)

suppliers which have an annual turnover not

exceeding two million euro (€2,000,000) to buyers which have

an annual turnover of more than two million euro (€2,000,000);

(b)

suppliers which have an annual turnover of more

than two million euro (€2,000,000) and not exceeding ten

million euro (€10,000,000) to buyers which have an annual

turnover of more than ten million euro (€10,000,000);

(c)

suppliers which have an annual turnover of more

than ten million euro (€10,000,000) and not exceeding fifty

million euro (€50,000,000) to buyers which have an annual

turnover of more than fifty million euro (€50,000,000);

(d)

suppliers which have an annual turnover of more

than fifty million euro (€50,000,000) and not exceeding one

UNFAIR TRADING PRACTICES IN THE FOOD SUPPLY CHAIN

hundred and fifty million euro (€150,000,000) to buyers which

have an annual turnover of more than one and hundred fifty

million euro (€150,000,000); and

(e)

suppliers which have an annual turnover of more

than one hundred and fifty million euro (€150,000,000) and not

exceeding three hundred and fifty million euro (€350,000,000)

to buyers which have an annual turnover of more than three

hundred and fifty million euro (€350,000,000)

Provided that the annual turnover of the suppliers

and buyers referred to in paragraphs (a) to (e) shall be

understood in accordance with the relevant parts of the Annex to

Commission Recommendation 2003/361/EC of 6 May 2003

concerning the definition of micro, small and medium-sized

enterprises and in particular Articles 3, 4 and 6 thereof,

including the definitions of "autonomous enterprise", "partner

enterprise" and "linked enterprise", and other issues relating to

the annual turnover

Provided further that these regulations shall also

apply in relation to sales of agricultural and food products by

suppliers which have an annual turnover not exceeding three

hundred and fifty million euro (€350,000,000) to all buyers

which are public authorities.

(5)

These regulations shall also apply to services, insofar as

explicitly referred to in regulation 8, provided by the buyer to the

supplier.

(1)

For the purposes of these regulations, unless the

context requires otherwise, the following definitions shall apply

"Act" means the Supplies and Services Act;

"agricultural and food products" means products listed in Annex

I to the Treaty on the Function of the European Union, as well as

products not listed in that Annex, but processed for use as food using

products listed in that Annex;

"Board" means the board established according to regulation 3;

"buyer" means any natural or legal person, irrespective of that

person's place of establishment, or any public authority in the European

Union as defined under the European Union Act, who buys agricultural

and food products and the definition "buyer" may include a group of

such natural and legal persons;

"Directive" means the Directive (EU) 2019/633 of the European

Parliament and of the Council of 17 April 2019 on unfair trading

practices in business-to-business relationships in the agricultural and

food supply chain, as may be in force from time to time;

"perishable agricultural and food products" means agricultural

and food products that by their nature or at their stage of processing

are liable to become unfit for sale within thirty (30) days after harvest,

production or processing;

"public authority" means national, regional or local authorities,

bodies governed by public law or associations formed by one (1) or

more such authorities or one (1) or more such bodies governed by

public law;

"recommendations" means suggestions issued by the Board to

anyone concerned in an investigation, but said suggestions shall not

include any order or obligation;

"Sectoral authorities" means the departments, or other public

bodies, responsible for fisheries, aquaculture and agriculture;

"supplier" means any agricultural producer, fisherman or any

natural or legal person, irrespective of their place of establishment,

who sells agricultural and food products and the term ‘supplier’ may

include a group of such agricultural producers, fishermen or a group of

such natural and legal persons, such as producer organisations,

organisations of suppliers and associations of such organisations.

(2)

Save as otherwise provided in this regulation, the

definitions of the Act and the Directive shall apply to these

regulations

Provided that should a definition be provided in the

Directive, such definition shall prevail and apply accordingly for the

purposes of these regulations.

(1)

There shall be an Unfair Trading Practices

(Agriculture and Fisheries) Board, acting as the enforcement authority

for the purposes of the Directive, in accordance with these regulations.

(2)

The Board shall consist of seven (7) members, appointed

by the Minister responsible for trade upon a recommendation by the

Minister responsible for agriculture and fisheries, being

(a)

an advocate having at least five (5) years

professional experience who shall preside over the proceedings

of the Board and have a casting vote in addition to his original

vote in case of equality of votes;

(b)

a representative of the department responsible for

agriculture;

(c)

a representative of the department responsible for

UNFAIR TRADING PRACTICES IN THE FOOD SUPPLY CHAIN

fisheries and aquaculture;

(d)

a representative of the department responsible for

commerce;

(e)

a member, whether a public officer or not, having

adequate expertise in matters relating to the markets concerned,

its operators, the situation of suppliers and the trading practices

involved as affecting suppliers based in Malta in particular; and;

(f)

two (2) other members recommended by the

Minister responsible for fisheries and agriculture

Provided that the Board shall be assisted by a

registrar who shall assist the Board as its secretary and shall be

responsible for its documentation and for all communications

necessary according to these regulations, as may be instructed

by the board

Provided further that the registrar shall not be a

member of the Board and shall not have the right to vote in its

proceedings

Provided further that the Board shall decide on its

matters by simple majority and provided that at least four (4)

members are present or otherwise express their vote in writing,

and said four (4) members shall always include the

representative of the department responsible for agriculture or

the representative responsible for fisheries and aquaculture

according to the specific sector relevant to the case being

discussed

Provided further that the members of the Board

shall not be entitled to vote if they have a conflict of interest or

were involved in any investigation or complaint in any capacity

beyond that of member of the Board.

(3)

All representatives referred in sub-regulation (2) shall be

nominated by the respective body, and all members of the board shall

serve for a period of three (3) years from the date of appointment

Provided that all members may resign their position by a

notice in writing submitted to the Minister.

(4)

The Minister responsible for agriculture and fisheries may

determine any remuneration due to Board members and the registrar,

unless the same are public officers who may serve on the Board by

virtue of their office.

(5)

The Board shall have all powers, functions and

responsibilities to be given to an enforcement authority or performed

by it according to the Directive, in particular those under Articles 6

and 8 of the Directive

Provided that any sanctioning shall be according to the

provisions of these regulations.

(6)

The Board may require and shall receive the

assistance of sectoral authorities in performing an investigation, and

for so doing may give such directions as may be reasonable for the

purposes of an investigation

Provided that for such assistance, the Board shall liaise

with the relevant head of department or any delegated appointed by the

latter to liaise with the Board for the purposes of these regulations

Provided further that assistance according to these

regulations shall also include the exercise of any power given to the

relevant department, or its officers, at law.

(7)

The Board may request and shall be provided with any

information held by the sectoral authorities and from any person in any

manner involved, concerned or regulating the sectors affected by the

Directive or having an interest therein

Provided that all information so requested shall be

deemed confidential for all intents and purposes at law and may not be

disclosed by the Board unless required by these regulations, by the

Directive or by any other law, or unless such disclosure is ordered by

any competent authority.

(8)

In the exercise of its functions according to these

regulations, the Board shall act independently and not be subject to the

control of any other person or authority in said exercise and in its

conclusions on any complaint and, or investigation.

(1)

The Board shall act as the enforcement authority

according to the Directive and these regulations, with a view to

advancing the purposes of the Directive according to its subject matter

and scope, and without prejudice to the generality of the foregoing it

shall

(a)

discuss, suggest and publish best practices to be

adopted by sectoral authorities and operators to avoid the

possibility of, or halt the continuation of, practices which are

contrary to the Directive or which hinder its purposes;

(b)

suggest minimum requirements for complaint

forms to be received by it from market operators;

(c)

provide advice to the sectoral authorities for the

purpose of achieving the goals of the Directive and these

UNFAIR TRADING PRACTICES IN THE FOOD SUPPLY CHAIN

regulations;

(d)

generally assist, coordinate and instruct the

sectoral authorities for the purposes of these regulations, in

relation to any complaint, investigation or query submitted

according to these regulations;

(e)

indicate to the sectoral authorities any evidence

that it might be deemed advisable to gather for the purposes of

any investigation according to these regulations;

(f)

provide recommendations on the manner in which

a sectoral authority may exercise its functions so as to hinder the

development or continuation of prohibited practices;

(g)

initiate and conduct investigations on its own

initiative or on the basis of a complaint falling within the scope

of the Directive;

(h)

investigate any complaint on any alleged unfair

trading practice as received from a supplier and determine

whether the complaint falls under the scope of the Directive;

(i)

provide its decision on any investigation falling

within the scope of the Directive to those concerned by it,

whether such decision resulted from a complaint, or whether it

was initiated according to its own discretion;

(j)

give all those orders as may be given by an

enforcement authority according to the Directive, in particular

the order to stop any prohibited practice; and

(k)

act as the single contact point for the purposes of

the Directive.

(2)

The Board, and a sectoral authority acting upon its

instructions, may

(a)

require the provision of any information and, or

document from any person which they deem relevant to any

investigation; and

(b)

conduct inspections on the premises of any

operator.

(3)

Without prejudice to any confidentiality obligations under

these regulations, the Directive and at law, the Board shall publish its

decisions and may do so at regular intervals, whether individually or as

part of a collection of decisions.

(4)

When acting as the single contact point and as an

enforcement authority, the Board shall do all that is required by the

Directive to fulfil said function, inclusive of submission of reports as

referred in the Directive, as well as participating in all discussions with

the European Commission, as provided by the Directive.

(5)

For the purposes of sub-regulation (4) the Board may

require that it be provided with any information or documents known

or held by the sectoral authorities, if it deems it necessary or expedient

to fulfil those purposes.

Save as otherwise provided in these regulations, the

Board shall regulate its own procedures and meet at least once each

calendar year.

(1)

Suppliers may submit complaints on alleged

unfair trading practices to the relevant sectoral authority or to the

Board

Provided that a sectoral authority shall, upon receipt,

refer the complaint to the Board

Provided further that a complaint shall be considered

only if the supplier and, or the buyer are based or operate in Malta or

the alleged unfair trading practices are performed, in whole or in part,

in Malta.

(2)

Complaints shall be submitted in writing, and the

complainant shall sign the complaint

Provided that nothing in this regulation shall be

construed as hindering any person from providing anonymous

information to the Board or a sectoral authority, and likewise nothing

in this regulation shall be construed as hindering the Board in

investigating any such information at its own discretion and according

to these regulations.

(3)

The Board shall inform the complainant that it is

considering his complaint at the latest within twenty (20) working

days from receipt of the complaint, and it shall update the complainant

on the status of the investigation and the outcome thereof at reasonable

intervals and upon the conclusion of the investigation.

(4)

Without prejudice to regulation 5, the Board may allow,

or require, the complainant to amend his complaint so as to clarify the

complaint itself, the facts relevant to it or to the practices complained

of.

(5)

Submission of complaints according to these regulations

shall be subject to a fee of fifty euro (€50) payable to the Board.

The Secretary of the Board, or any other public officer as may

be delegated by the Board from amongst those referred under sub-

regulation (2) of regulation 11, shall be responsible for the processing

and collection of said fee.

(1)

Upon the request of the complainant, the Board

and the relevant sectoral authority shall take the necessary measures for

the appropriate protection of the identity of the complainant or anyone

else concerned, and for the appropriate protection of any other

information the disclosure of which is specifically indicated by the

complainant as harmful to his interests or to those of anyone else

concerned.

(2)

Whenever the provisions of this regulation are applicable,

the Board may abstain from taking any decision if that would risk

revealing the identity of a complainant or would risk disclosing any

other information in respect of which the complainant considers that

such disclosure would be harmful to his interests or to those of anyone

else concerned

Provided that the complainant shall identify the relevant

information according to sub-regulation (1).

(1)

The following unfair trading practices shall be

prohibited

(a)

without prejudice to sub-regulation (2), the buyer

pays the supplier, where the supply agreement provides for the

delivery of products

(i)

if said delivery is on a regular basis and it

concerns perishable agricultural and food products, later

than thirty (30) days after the end of an agreed delivery

period in which deliveries have been made or later than

thirty (30) days after the date on which the amount

payable for that delivery period is set, whichever of those

two dates is the later;

(ii)

if said delivery is on a regular basis and it

concerns other agricultural and food products, later than

sixty (60) days after the end of an agreed delivery period

in which deliveries have been made or later than (60) days

after the date on which the amount payable for that

delivery period is set, whichever of those two dates is the

later;

(iii) if said delivery is not on a regular basis and

it concerns perishable agricultural and food products,

later than thirty (30) days after the date of delivery or later

than thirty (30) days after the date on which the amount

payable is set, whichever of those two dates is the later; or

(iv) if said delivery is not on a regular basis and

it concerns other agricultural and food products, later

than sixty (60) days after the date of delivery or later than

sixty (60) days after the date on which the amount

payable is set, whichever of those two dates is the later

Provided that for the purposes of the

payment periods in sub-paragraphs (i) and (ii), the agreed

delivery periods shall in any event be considered not to

exceed one (1) month

Provided further that for the purposes of

sub-paragraphs (i) to (iv), where the buyer establishes the

amount payable, the payment periods provided for in

sub-paragraphs (i) and (ii) shall start to run from the end

of an agreed delivery period during which the deliveries

have been made, while the payment periods provided for

in sub-paragraphs (iii) and (iv) shall start to run from the

date of delivery

Provided further that paragraph (a) shall be

without prejudice to the consequences of late payments

and remedies as provided according to the Commercial

Code, which shall apply, by way of derogation from the

payment periods set out in the Commercial Code, on the

basis of the payment periods set out in these regulations

Provided further that paragraph (a) shall be

without prejudice to the option of a buyer and a supplier

to agree on a value sharing clause within the meaning of

Article 172a of Regulation (EU) No 1308/2013;

(b)

the buyer cancels orders of perishable agricultural

and food products at such short notice that a supplier cannot

reasonably be expected to find an alternative means of

commercialising or using those products

Provided that a notice of less than thirty (30) days

shall always be considered as a short notice;

(c)

the buyer unilaterally changes the terms of a

supply agreement for agricultural and food products that

concern the frequency, method, place, timing or volume of the

supply or delivery of the agricultural and food products, the

quality standards, the terms of payment or the prices, or as

regards the provision of services insofar as these are explicitly

referred to in sub-regulation (2);

(d)

the buyer requires payments from the supplier that

are not related to the sale of the agricultural and food products

of the supplier;

UNFAIR TRADING PRACTICES IN THE FOOD SUPPLY CHAIN

(e)

the buyer requires the supplier to pay for the

deterioration or loss, or both, of agricultural and food products

that occurs on the buyer's premises or after ownership has been

transferred to the buyer, where such deterioration or loss is not

caused by the negligence or fault of the supplier;

(f)

the buyer refuses to confirm in writing the terms of

a supply agreement between the buyer and the supplier for

which the supplier has asked for written confirmation save if the

supply agreement concerns products to be delivered by a

member of a producer organisation, including a cooperative, to

the producer organisation of which the supplier is a member, if

the statutes of that producer organisation or the rules and

decisions provided for in, or derived from, those statutes contain

provisions having similar effects to the terms of the supply

agreement;

(g)

the buyer unlawfully acquires, uses or discloses

the trade secrets of the supplier within the meaning of Directive

(EU) 2016/943 of the European Parliament and of the Council of

8 June 2016 on the protection of undisclosed know-how and

business information (trade secrets) against their unlawful

acquisition, use and disclosure;

(h)

the buyer threatens to carry out, or carries out, acts

of commercial retaliation against the supplier if the supplier

exercises his contractual or legal rights, including by filing a

complaint with enforcement authorities or by cooperating with

enforcement authorities during an investigation;

(i)

the buyer requires compensation from the supplier

for the cost of examining customer complaints relating to the

sale of the supplier's products despite the absence of negligence

or fault on the part of the supplier;

(j)

trading practices falling under the provisions of the

proviso of paragraph (c) of sub-regulation (3).

(2)

Paragraph (a) of sub-regulation (1) shall not apply to

payments

(a)

made by a buyer to a supplier where such

payments are made in the framework of the school scheme

pursuant to Article 23 of Regulation (EU) No 1308/2013;

(b)

made by public entities providing health care

according to article 26D of the Commercial Code;

(c)

made under supply agreements between suppliers

of grapes or must for wine production and their direct buyers

Provided that specific terms of payment for the

sales transactions are included in standard contracts which have

been made binding pursuant to Article 164 of Regulation (EU)

No 1308/2013 before 1 January 2019, and that this extension of

the standard contracts is renewed from that date without any

significant changes to the terms of payment to the disadvantage

of suppliers of grapes or must, and that the supply agreements

between suppliers of grapes or must for wine production and

their direct buyers are multiannual or become multiannual.

(3)

The following practices shall be prohibited unless they

have been previously agreed in clear and unambiguous terms in the

supply agreement or in a subsequent agreement between the supplier

and the buyer

(a)

the buyer returns unsold agricultural and food

products to the supplier without paying for those unsold

products or without paying for the disposal of those products, or

both;

(b)

the supplier is charged payment as a condition for

stocking, displaying or listing its agricultural and food

products, or of making such products available on the market;

(c)

the buyer requires the supplier to bear all or part

of the cost of any discounts on agricultural and food products

that are sold by the buyer as part of a promotion

Provided that this trading practice shall be

prohibited, notwithstanding an agreement as aforesaid, unless

the buyer, prior to a promotion that is initiated by the buyer,

specifies the period of the promotion and the expected quantity

of the agricultural and food products to be ordered at the

discounted price;

(d)

the buyer requires the supplier to pay for the

advertising by the buyer of agricultural and food products;

(e)

the buyer requires the supplier to pay for the

marketing by the buyer of agricultural and food products;

(f)

the buyer charges the supplier for staff for fitting-

out premises used for the sale of the supplier's products.

(4)

Upon determining that a prohibited practice according to

this regulation is in effect between a supplier and a buyer, the Board

shall order their immediate cessation.

Where a payment is required by the buyer for the

situations referred to in paragraphs (b), (c), (d), (e) or (f) of sub-

regulation (3) of regulation 8, if requested by the supplier, the buyer

shall provide the supplier with an estimate in writing of the payments

per unit or the overall payments, whichever is appropriate, and, insofar

as the situations referred to in paragraphs (b), (d), (e) or (f) of sub-

regulation (3) of regulation 8 are concerned, shall also provide, in

writing, an estimate of the cost to the supplier and the basis for that

estimate.

Notwithstanding any other law, any prohibition according

to regulation 8 shall constitute overriding mandatory provisions which

are applicable to any situation falling within the scope of those

prohibitions, irrespective of the law that would otherwise be applicable

to the supply agreement between the parties.

(1)

Without prejudice to sub-regulation (7), if the

Board determines that an unfair trading practice falling within the

scope of the Directive is in place to the detriment of a supplier, it may

draw up a report on the facts relevant to the complaint and, or

investigation, and the findings thereof, and said report shall include a

description of the relevant unfair trading practices and a quantification,

by way of estimate, of the damages suffered and to be suffered by the

suppliers up to the cessation of the unfair trading practice.

(2)

For the purposes of sub-regulation (1) the Board may

invite the parties concerned to a mediation procedure in front of the

Board so as to come to an agreed report and a quantification of

damages.

(3)

If the parties concerned agree with the conclusions of the

report referred in this regulation and the damages therein estimated,

they may come to a written agreement approved, witnessed and signed

by a duly authorised representative of the Board, and by which said

damages are liquidated in satisfaction of all claims related to the unfair

trading practices between the concerned parties

Provided that said agreement shall allow for partial

payments to be made as may be agreed and approved according to this

regulation

Provided further that said agreement may provide for

daily penalties for events of default

Provided further that upon the expiry of any term

provided in said agreement or in default of any payment therein agreed,

the agreement shall be considered as an executive title for all intents

and purposes at law.

(4)

Any mediation procedure or agreement according to this

regulation shall be subject to a temporary cessation of the practice

determined as being an unfair trading practice while the mediation is

underway and during the relevant period of the agreement reached.

(5)

Should the parties concerned agree as provided

according to sub-regulation (3), and should the unfair trading practice

concerned have been definitely ended, no further action of any nature

whatsoever, inclusive of proceedings according to regulation 12 or any

other law, shall lie against the party otherwise liable.

(6)

In the absence of any agreement according to the

preceding sub-regulations, the Board shall proceed to finalise its report

and provide it to the concerned parties and anything done according to

these regulations shall be without prejudice to any right pertaining to

the concerned parties.

(7)

The supplier and, or the buyer, may contest the finding,

or lack thereof, of an unfair trading practice by the Board by

application to the Administrative Review Tribunal within twenty (20)

days from said finding being final according to these regulations, and

for such purposes the Administrative Review Tribunal shall be deemed

to have jurisdiction according to law

Provided that if the Administrative Review Tribunal

determines that an unfair trading practice has occurred, it shall also

liquidate the damages suffered by the supplier, with interest according

to law.

(1)

Any person who hinders or obstructs, in any

manner whatsoever, the Board or a sectoral authority, as well as any

person appointed by the same, in the exercise of their functions

according to these regulations, or fails to collaborate in an

investigation according to these regulations, shall be guilty of an

offence and be liable to a fine (multa) not exceeding two thousand

three hundred and twenty-nine euro and thirty-seven cents

(€2,329.37).

(2)

Any person who when ordered by the Board to cease an

unfair trading practice persists in such a practice, and failing an

agreement according to regulation 11, shall be guilty of an offence and

be liable to a fine (multa) not exceeding two thousand three hundred

and twenty-nine euro and thirty-seven cents (€2,329.37) or a fine

calculated on the profit made by the offender in connection with the

transaction in contravention to these regulations

Provided that when the fine is so calculated, it may not

exceed five times the profit made by the offender.

(3)

Any criminal proceeding according to this regulation

shall only be initiated upon a complaint by the Board.

(1)

Judicial and legal representation of the Board shall

vest in its chairperson, or any other member as duly authorised by the

Board.

(2)

The Board shall be assisted by such staff, being public

officers, as may be assigned to it by the Minister responsible for

fisheries and agriculture.

(1)

All supply agreements in force upon the coming

into force of these regulations and falling within the scope of these

regulations shall comply with the provisions of these regulations within

one (1) calendar year from the date of entry into force of these

regulations.

(2)

The Board may order operators to comply with the

provisions of these regulations before the end of the period referred in

sub-regulation (1) and in the absence of such order, all operators shall

comply with the provisions of the Directive within said period.

(3)

Any person who fails to comply with the provisions of

sub-regulations (1) and (2) shall be guilty of an offence and mutatis

mutandis shall be liable to the fines (multi) provided under sub-

regulations (1) and (2) of regulation 12.