New retailer regulations published, as IFA says impact on price is key

The Minister for Jobs, Enterprise and Innovation, Richard Bruton, has published the Competition and Consumer Protection Bill 2014, after he secured Government agreement on the text of the legislation last week.

The legislation has two main components that impact on the agri-food industry: 1. Merge the National Consumer Agency and Competition Authority and deliver improvements in competition law to create a watchdog with real teeth; and, 2. Regulate certain practices in the grocery goods sector aimed at ensuring balance and fairness between the various players in the sector – suppliers, retailers and consumers.

Reacting to the announcement that regulations are to be introduced to ensure fairness in the food chain, IFA President Eddie Downey said the real test of the new legislation would be a fairer return to producers which covers the cost of production and leaves a margin to reward their work and investment.

“IFA has campaigned for a long time on this issue, and the fact that the Government has finally published the legislation is progress. It is a first step and the legislation must be passed through the Oireachtas quickly. It must be sufficiently robust to restore equity to the food supply chain and curb the dominance of the retail multiples. The latest figures released show the three major multiples control over 80% of the grocery market.”

The IFA Executive Council will meet next week and analyse the legislation in detail. The Council will be bringing forward farmers suggestions to ensure its effectiveness. In addition, IFA will meet with the Department of Agriculture, which will have a specific role in this area.

Eddie Downey said: “The retail multiples are over dominant in the food supply chain and some of them are engaged in unfair and predatory pricing practices, which are impacting very negatively on the viability of primary producers. Strong and effective legislation, both at national and EU level, is needed to ensure producers are paid a fair price which reflects production costs and leaves an acceptable margin.”

The IFA President warned that without proper enforcement powers, the role of the new Commission as envisaged in the legislation will be toothless. “There is little point in the Government fulfilling its promise if it doesn’t provide the necessary back-up to tackle the retailers”.

Click below to view regulations:

Retailer Regulations

The Bill gives the Minister the power to make Regulations to specify certain procedures that must be followed in commercial relationships between undertakings in the grocery goods sector. It is aimed at preventing certain practices such as unilateral alteration of contracts by retailers, requiring ‘hello money’ for space on supermarket shelves, suppliers being required to bearing the cost of promotions by retailers or for wastage or shrinkage.

It was considered that Regulations would be more appropriate than a Code of Practice as these will have full Legislative force and be enforceable at law by the CCPC.

The powers of investigation and enforcement available to the CCPC in the event of breaches of the Regulations are substantial (see below).

The Minister’s intention is to draft Regulations to be in force as soon as practicable after the enactment of the Bill. It is the intention to liaise closely with the Department of Agriculture, Food and the Marine and to take into account the contributions to the Oireachtas during the passage of the legislation when drafting these Regulations. One option open to the Minister is to introduce an initial series of Regulations reflecting some of the powers open to him and assess how these work in practice in the market after a period of time before amending or adding to them.

Among the matters which the Minister has the power to make Regulations are:

  • the form of contract to be entered into (e.g. that they must be in writing) by a grocery goods undertaking for the supply of grocery goods to relevant grocery goods undertakings;
  • the circumstances in which a contract may be varied, terminated or renewed;
  • the circumstances in which the arrangements of the contract for supply and delivery of grocery goods may be varied;
  • the manner in which specific terms such as payment or sale of goods on promotion are to be incorporated into contracts for the sale or supply of grocery goods;
  • the manner in which payment for the resolution of a customer complaint may be determined between grocery goods undertakings;
  • the conditions under which retailers may or may not require suppliers to obtain any goods, services or property from a third party where the retailer obtains any payment for such an arrangement;
  • provisions relating to delays and failures due to circumstances outside the reasonable control of a party;
  • limitation on the circumstances in which payment may be sought from a grocery goods undertaking for shrinkage, wastage or marketing costs;
  • the circumstances in which a relevant grocery goods undertaking may or may not charge a consideration for listing grocery goods;
  • set out the manner in which forecasts for the supply of grocery goods are to be prepared and communicated;
  • specify the circumstances in which a relevant grocery goods undertaking may or may not seek payment from a supplier to secure better positioning or an increase in the allocation of shelf space for that supplier’s goods;
  • to prohibit a relevant grocery goods undertaking from directly or indirectly compelling a grocery goods undertaking to make any payment or consideration for the promotion or advertisement of grocery goods on that party’s premises;
  • provide for further arrangements regarding promotions of grocery goods;
  • specify limitations for compelling grocery goods undertakings by relevant grocery goods undertakings to participate in promotions or similar activities in support of grocery goods;
  • specify the arrangements for the preparation of an annual compliance report with these regulations by the relevant grocery goods undertaking and for submission to the statutory authority;
  • provide for the maintenance of records and the period for which those records are held relating to compliance activities by the relevant grocery goods undertaking;
  • the manner and timeframe in which payments for grocery goods supplied to relevant grocery goods undertakings are to be made;
  • designation and training arrangements for staff in relevant grocery goods undertakings; and,
  • the nature and type of documents that must be retained by a relevant grocery goods undertaking and the length of time they should be kept.

Publishing the legislation, Minister Bruton said: “We are introducing strong regulations and powerful new investigation and enforcement powers to ensure fairness between suppliers and retailers in the grocery goods sector. There is potentially a real inequality of arms between these players which can be abused in a manner that is not in the interests of jobs, consumers or sustainable safe food.”

He added: “Relationships will continue to be based on commerce and prices will continue to be set by hard negotiations – this is in the interests of consumers. However new legal requirements for record-keeping and the inclusion of certain terms in written contracts together with strong enforcement powers will ensure that these relationships are fair and sustainable.”

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