Retail legislation must include ban on below-cost selling- IFA

IFA President Eddie Downey said the proposed new legislation to regulate retailers must include a ban on below-cost selling and other abuses by retailers, in order to rebalance power in the food supply chain and protect farmers and suppliers.

He said, “Enterprise Minister Richard Bruton must learn from the lessons of the past and introduce regulations that will stop the outrageous discounting by retailers that occurred in the fruit and vegetable sector last Christmas, and stop such abuses for good”.

Eddie Downey said the Competition and Consumer Protection Bill fails to include a prohibition on below-cost selling and there is no provision to put limits on the use of own-brands by retailers, nor any compulsion on retailers to disclose profits in the Irish market.

The IFA has engaged Michael Cush SC to advise the Association on the Competition and Consumer Protection Bill, which is scheduled to go to the Oireachtas Select Committee on Jobs, Enterprise and Innovation today.

IFA is calling for the new legislation to include a provision whereby the Minister must have regard to the economic viability and sustainability of primary producers in regulating the retailing sector.

Regulations must be introduced to address unfair trading practices and prohibit ‘hello money’, ‘pay to play’ money, Long Term Agreements (LTAs) which provide for the payment by suppliers of substantial ‘off-invoice rebates’ and also to prohibit contracts that compel suppliers to incur costs using third party suppliers specified by the purchaser.

“The Bill has also failed to provide for ‘Retention of Title’ for goods delivered until such time they are paid for and does not address the erosion of production prices resulting from the use of tendering rather than contract negotiation for the supply of certain produce,” said Mr. Downey.

IFA is calling for an independent Ombudsman, similar to the Groceries Code Adjudicator in the UK, to oversee and implement the proposed new grocery regulations governing the retail trade. “The independent Ombudsman must be able to investigate complaints and sanction compensation for suppliers who have been wronged.”

Eddie Downey said, “Following this legal consultation, IFA has submitted amendments to the Bill, which will address the key issues of concern to producers in relation to the new proposed legislation. IFA believes that the real test of the new legislation will be a fairer return to producers, which covers the cost of production and leaves a margin to reward their work and investment”.

As the proposed legislation stands, farmers supplying food to companies with a turnover of less than €50m will not be required to have a contract, which is a real concern, especially for fresh produce producers. IFA has submitted an amendment to replace this €50m with €10m, to include others in the food chain.

IFA wants to see provision for payments to be made to suppliers within 30 days.

Eddie Downey said, “The publication of this legislation, which IFA has long campaigned for, is progress and is a first step. However, the legislation does not address a number of key issues that IFA has identified as necessary 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.”

“On the proposed merger of the National Consumer Agency and the Competition Authority into a new Authority called the Competition and Consumer Protection Commission, IFA‘s position has always been that an independent Ombudsman should be appointed by Government to oversee and implement this legislation. IFA is concerned that the proposed new Authority will not be sufficiently independent to provide anonymity and confidentiality to suppliers who make complaints,” said the IFA President.

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