Trading practices in the agri-food chain: More regulation does not necessarily deliver better outcomes – the French and Spanish experience

France and Spain offer useful lessons for the revision of the EU Unfair Trading Practices Directive. Both have strengthened enforcement and contractual obligations, but their more prescriptive rules have also increased costs, legal uncertainty and Single Market fragmentation, without clear evidence of higher farmer incomes. As EU citizens are increasingly concerned about their cost of living, the impact of measures on food prices is absent from policy considerations. The EU should therefore focus reform on effective enforcement, legal clarity, a strong single market and protection for the most vulnerable suppliers and farmers, rather than extending regulation into pricing and commercial negotiations. 

What have France and Spain achieved? 

Over the few past years, France and Spain have strengthened their regulatory framework on commercial relations in the agri-food chain. Enforcement, increased awareness and written contracts aim to improve contractual discipline and support the Directive’s original purpose: protecting small farmers and suppliers by limiting specific contractual practices. 

The limits of the French and Spanish models 

However, both countries have progressively expanded their legislation beyond preventing certain trading practices on farmers and into the broader regulation of commercial negotiations. Rules on buying above production costs, pricing mechanisms, negotiation timelines and contractual conditions now play a significant role in both systems.  

These rules are difficult to apply consistently. Costs vary across farms, sectors and regions, while reliable benchmarks are often unavailable. This creates legal uncertainty for regulators, courts and businesses and increases paperwork and reliance on legal advice for compliance. 

Have farmers benefited? 

A central justification for stricter regulation is the desire to improve farmers’ incomes. However, the benefits for farmers remain unclear.  

A study by Dusseldorf Competition Economics shows that countries with more extensive regulation do not achieve higher producer prices than countries with more moderate regulatory frameworks. Research by Areté for the European Commission and the High Council for Food, Agriculture and Rural Areas also show that any improvements in certain sectors cannot be clearly attributed to the legislation rather than wider market developments. In many sectors, no measurable positive impact on farmer remuneration has been identified.  

Many pressures on farm incomes – including climate change, input costs, labour shortages, investment needs and market volatility – cannot be solved through rules governing negotiations between businesses. These challenges require broader agricultural and economic policies, not further expansion of legislation of trading practices. 

The cost to competitiveness and consumers 

The French and Spanish experiences demonstrate that extensive regulation comes with significant costs. 

Prescriptive regulation requires investment in legal advice, compliance systems, training, auditing and contract management. It can also reduce the flexibility businesses need when prices and supply conditions change rapidly. These costs affect the whole food chain, limit resources for investment, innovation and price competition, and may ultimately contribute to higher consumer prices. The latter risks running contrary to the objectives of the Treaty (Article 39 TFEU), namely ensuring supplies reach consumers at reasonable prices. All this, without generating better incomes for farmers.  

Implications for the Single Market 

An important lesson concerns the European Single Market. 

National divergence is a particular risk for the Single Market. Applying French rules to products destined for France even when negotiations occur elsewhere creates barriers to cross-border sourcing, increases legal and transaction costs and reduces economies of scale. The burden is especially high for small and medium-sized companies with limited compliance resources. 

What should Europe learn? 

There is limited evidence that broader intervention in pricing mechanisms and commercial negotiations delivers significant benefits for farmers. From the French and Spanish experiences it is shown that such interventions can increase compliance costs, reduce flexibility and create barriers within the Single Market. There is also untapped potential from recent changes in the Common Market Organisation, where farmers are encouraged to cooperate to improve their position in the chain. 

The EU should draw three conclusions from the French and Spanish experience: enforce the existing rules consistently; provide legal certainty for suppliers and buyers; and preserve common conditions for cross-border trade. Any proposal to regulate production costs, prices or commercial negotiations should proceed only where evidence shows a clear benefit for farmers that outweighs the costs to competitiveness, consumer welfare and the Single Market.