The "black list" of the Draft Law on Trade Practices includes unjustified and "overnight" cancellation of the purchase of agricultural products, and it is precisely this practice that farmers complain about.
Government of Serbia adopted the Bill on commercial practices that should improve the functioning of the internal market and create preconditions for more stable and transparent price formation. If that law is adopted, agricultural producers, including dairy farmers, should have a protection mechanism against unfair trade practices. They could potentially report milk purchasers to the Commission for the Protection of Competition.
The law envisages the introduction of clear rules and precise definitions of illegal trade practices that are considered unfair and are therefore on the "black list", and those that are conditionally allowed and are on the "grey list".
The "black list" includes practices such as unjustified cancellation of orders, and it is precisely this practice that some dairy farmers complain about. The only question is whether, in the case of a low purchase price of milk, the dairies will easily prove the justification of the cancellation, that is, how the State Commission will interpret it. That's why it was a few days ago Department of Agriculture promised to be the guarantor for contracts with a notice period between dairy farmers and milk purchasers, which in Serbia are mostly large companies that make the finished product. This implies the introduction of a notice period of 15 to 30 days, which will prevent the practice of dairies canceling purchases "overnight".
There is also a unilateral amendment of the contract, i.e. a ban on the practice of suppliers, i.e. buyers of milk, arbitrarily changing conditions in terms of frequency, method, place, time or scope of delivery, quality standards or prices. And that is one of the burning problems dairy which witness buyers driving down milk prices suddenly leaving producers in a "take it or leave it" situation.
Slobodan Vidojevića from the Association of Milk Producers "Šajkača" told "Vreme" that milkmen were not informed about this possibility if the new law is adopted.
"Of course we would report them if possible. It is also important for us who will decide whether the purchasers are dishonest. It is a state commission after all, and at the moment we do not have much confidence in all of them," Vidojević told Vreme.
If such a bill passes the Serbian Parliament, it will potentially further protect dairies in two articles. In the first, Article 7, "unless proven otherwise, unfair trade practices exist if the buyer does not accept the supplier's perishable agricultural product without providing proof of this." The burden of proof is on the buyer, not the farmer, and the Commission has the power to initiate proceedings and sanction unfair practices.
Article 8 is even more important and prohibits commercial retaliation.
"Any form of commercial retaliation or threat of retaliation by the buyer against the supplier for exercising his contractual or legal rights and obligations, i.e. if he refused to accept formal or informal offers and conditions of the buyer, is prohibited, especially if the retaliation refers to the removal of the supplier's products from the offer or the buyer's actions, reduction of the ordered quantity or frequency of orders, or delay in the acceptance, reception and processing of orders or products," the bill reads.
The "black list" also includes payments that are not related to sales, that is, the merchant may not request payments that are not directly related to the sale of the supplier's products.
That list also includes payment for product damage, which means that it is prohibited to pass the cost of product damage or loss onto the supplier if it happened at the merchant's facility and was not the supplier's fault.
Also on the "black list" are payments for investigation of complaints, i.e. the request that the supplier pay the costs of processing complaints customers which are not directly related to the supplier's negligence and so-called trade retaliation, i.e. the threat or undertaking of commercial countermeasures if the supplier exercises its legal rights or cooperates with supervisory authorities.
They are allowed on the "grey list" only if they have been previously agreed upon in a clear and unambiguous written contract.
These include the return of unsold goods, i.e. the possibility for the trader to return unsold products to the supplier only if this has been agreed in writing.
There is also a listing fee, i.e. a "ticket" or fee for including a product in the store's assortment, and marketing and advertising costs, i.e. a charge to the supplier for advertising its products by the retailer.
On the "gray list" are also the costs of promotion, that is, the collection of costs for discounts on products within the framework of promotional actions and the arrangement of space, that is, the requirement that the supplier bear the costs of equipping the premises where his products are sold.
The proposal of the aforementioned law provides for the possibility of rewarding "insiders", that is, natural persons who provide the Commission for the Protection of Competition (which will supervise the "black" and "gray" lists) with key evidence of traders' violations.
The government in Serbia boasts that the Draft Law on Trade Practices is largely based on the solutions already implemented in to the European Union, but with a significant expansion of the scope of products and solutions that are not present in other European legislation.
The majority of laws in the EU cover unfair trading practices only for agricultural and food products, while this bill extends the coverage of products significantly, thus helping more suppliers to improve their position in relation to traders.
The law, in addition to agricultural and food products, also includes products of special importance for supplying the market, including household chemicals, personal hygiene products, cosmetics and others, as well as products of special importance for agricultural production - means for feeding and protecting plants and soil improvers.
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