Many European supermarkets and fruit companies benefit financially from operations based outside the EU – such as tropical fruit plantations – yet evade responsibility for their impact on employment conditions, wage levels and environmental practices, often by subcontracting their operations, using subsidiary companies or suppliers
These subsidiaries and subcontractors however frequently violate core labour rights and environmental legislation. Too often people whose lives have been negatively affected by corporate practices have little or no opportunity to assert their rights in either their own country or in the country in which a company has its headquarters. In addition, people can face serious intimidation for taking action, for example, workers can be sacked for simply becoming a trade union member.
It is the responsibility of individual states to hold companies accountable by introducing and enforcing legislation which can be used to ensure that economic activities along their supply chains do not negatively impact on communities in producer countries. However only a handful of countries have even minimum legal instruments to hold companies partly responsible for the social and environmental impacts of their activities (e.g. France).
At the international level steps have been taken to address the role and responsibility of the private sector in sustainable development and poverty eradication. Examples include the OECD’s Guidelines for multinational companies, the ILO Conventions and Declarations, the International Bill of Human Rights and the United Nations Guiding Principles on Business and Human Rights. Although these initiatives are a valued step towards corporate accountability and are agreed by states who take responsibility for implementing them, there are few existing legal instruments that can be used to ensure that corporations adhere to these standards. They are not a substitute for a proper legally binding regulation of multinational companies’ operations. States therefore still urgently need to adopt legally binding legislation at the national, regional and international levels, in consultation with civil society, including independent trade unions.
Concerns about buyer power have already been raised in a number of EU countries. Some Member States have tried to address Unfair Trading Practices by introducing laws to, for example, regulate supplier-retailer relations; to ban below-cost selling; to stop predatory pricing and price discrimination; and to diminish dependency in trade relations.
These national initiatives are positive steps that go some way towards addressing Unfair Trading Practices which can occur due to the power imbalance between retailers and suppliers.
However their impact is limited due to the international nature of retail sourcing and selling. Throughout the EU, retailing is increasingly becoming dominated by a small number of supermarket chains. While there is anti-monopoly legislation to stop major producers abusing market dominance, there is no EU legislation specifically designed to tackle abuses of supermarket buyer power.
These retailers are fast becoming ‘gatekeepers’ who control farmers and other suppliers’ only real access to EU consumers.