New grocery regulations to rebalance relationships in the food sector

A new set of regulations have been signed into law by the Minister for Jobs, Enterprise and Innovation, Richard Bruton, aimed at rebalancing relationships between different players in the grocery goods sector.

The regulations are also aimed at ensuring that dealings in the sector are fair and sustainable and operate in the interests of jobs, consumers and sustainable safe food.

The Competition and Consumer Protection Commission (CCPC) has substantial powers under the Consumer Protection Act 2007 to enforce compliance with these regulations.

This includes a graded system of penalties up to a fine of €100,000 or two years in prison, as well as a provision explicitly enabling suppliers to take proceedings for damages (including exemplary damages) in the Circuit Court.

Among the areas covered by the regulations, which cover food and drink products, include:

  • Grocery goods contracts will be required to be in writing;
  • Contracts cannot be varied or terminated except with express consent of both parties;
  • Suppliers cannot be obliged to obtain goods/services from a third party from whom a retailer/wholesaler receives payment for this arrangement;
  • Provisions to deal with ‘force majeure’, non-performance due to circumstances beyond the parties’ reasonable control;
  • Suppliers can require retailer/wholesaler to provide forecast of the goods that will be needed;
  • Prohibition on suppliers being required to pay for stocking/listing goods; for promotion; for marketing costs; for better positioning on shelves; for advertising; for wastage; for shrinkage – except in strictly specified circumstances, based on free agreement between the parties, based on written contract, and based on an objectivement measurement of costs born by the retailer/wholesaler;
  • Suppliers must be paid for goods within 30 days;
  • Measures to ensure compliance by retailers/wholesalers, including – requirement that staff be designated and trained as responsible for compliance; requirement for retailers/wholesalers to submit an annual compliance statement; requirement for records to be retained by each retailer/wholesaler.

These regulations will enter into force on April 30, 2016 to allow retailers and wholesalers enough time to ensure that their systems and procedures are in order to allow them abide by the regulations.

The European Commission is also examining the issues of relationships in the food chain and that there may be some initiatives forthcoming in 2016, according to the Department of Jobs.

The Minister for Jobs said that there is potentially a real inequality between these players which can be abused in a manner that is not in the interests of jobs, consumers or sustainable safe food.

“I am now signing an initial set of regulations into law which delivers on the Government’s commitment in the Programme for Government and will guard against abuse.”

In response to the new regulations, IFA National Chairman Jer Bergin has acknowledged the signing of the grocery regulations into law, but said the effectiveness of the regulations will depend on robust monitoring and oversight by the CCPC.

“We have waited the lifetime of this Government to have this initial set of regulations signed into law.

They contain important safeguards for suppliers, including the prohibition on a requirement to pay for promotion; contracts in writing; and payment within 30 days.

“However, the absence of a ban on below-cost selling is a serious weakness.”

Meanwhile, Food and Drink Industry Ireland (FDII) has said that the new regulations will help address the major imbalance in the relationship between major grocery retailers and suppliers.

FDII Director Paul Kelly said that the regulations present a unique opportunity to create a fair trading environment in the Irish grocery sector, it is now up to the CCPC to effectively and efficiently enforce the rules.

Isolde Goggin, Chairperson of the CCPC, said that the new regulations are an important addition to the enforcement tools the CCPC has at its disposal and it is committed to using all of its powers to create a culture of compliance in the grocery sector to benefit consumers and businesses.