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Draft Grocery Goods regulations published for consultation       printable version

23 Dec 2014: posted by the editor - Ireland

Draft regulations aimed at regulating certain practices in the grocery goods sector and following on from the enactment of the Competition and Consumer Protection Act 2014 have now been published for consultation.

The draft regulations are aimed at rebalancing relationships between different players in the grocery goods sector, and ensuring that dealings in the sector are fair and sustainable and operate in the interests of jobs, consumers and sustainable safe food. They are being issued for consultation and submissions are being sought from interested parties before 27th February 2015.

Among the areas covered by the draft regulations are:

Requirement for grocery goods contracts to be in writing

Requirement for good faith, transparency, openness and fairness in grocery goods dealings

Restrictions on unlilateral changes to grocery goods contracts

Restrictions on payment for shelf space, marketing costs, advertising costs, wastage, shrinkage

Requirement for records to be retained for inspection and regular compliance statements to be made

These regulations deliver on an important commitment in the Programme for Government.

Minister for Jobs, Enterprise and Innovation, Richard Bruton said:  “Earlier this year through the Competition and Consumer Protection Act we introduced powerful new investigation and enforcement powers to help ensure fairness between suppliers and retailers in the grocery goods sector. That Act also gave us the power to introduce strong regulations to govern relationships in this area. 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. Today I am publishing the draft regulations that will guard against that.

“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 provisions will require that in future, contracts must be in writing, certain terms must be included, records must be retained for inspection and a compliance statement must be made. These measures together with strong enforcement powers will ensure that these relationships are fair and sustainable.

“I look forward to hearing feedback from all stakeholders in this area before making decisions on the final regulations for implementation during 2015."

http://www.djei.ie/publications/commerce/2014/ggu_consultation_dec_2014.pdf

The Competition and Consumer Protection Act 2014
The Act 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 bear 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 Act. 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. It is important to note that one option that is open to the Minister 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 powers that the Competition and Consumer Protection Commission (CCPC) will have to investigate and enforce these Regulations are:

to monitor compliance with any regulations (either on its own initiative or on foot of a complaint)

Where the CCPC has reasonable grounds for believing that a relevant grocery goods undertaking has failed or is failing to comply with the regulations, it may investigate the potential breach or any complaints it receives in relation to any such alleged failure

the CCPC can also make preliminary enquiries for the purposes of deciding whether the investigation of a complaint is justified and to request the complainant to provide further written particulars of the complaint within a specified time period

the CCPC can decide to discontinue any such investigation if the complainant fails to supply the requested information and to notify the complainant in writing of any decision not to investigate or discontinue an investigation, together with the reasons for this decision

the CCPC can issue a contravention notice where it is of the opinion that a relevant grocery goods undertaking is contravening or has contravened any provision of any regulations.

Section 63E provides that failure to comply with a contravention notice constitutes an offence. The Section also makes it an offence to fail to comply with any regulations made under this Section.

Sanctions for such offences may be pursued summarily or on indictment with fines as follows (set out in section 79 of the Consumer Protection Act 2007):

A person guilty of an offence under this section is liable on summary conviction to the following fines and penalties: (a) on a first summary conviction for any such offence, to a fine not exceeding €3,000 or imprisonment for a term not  exceeding 6 months or both; (b) on any subsequent summary conviction for the same offence to a fine not exceeding €5,000 or imprisonment for a term not exceeding 12 months or both.

If, after being convicted of an offence, the person referred to in subsection (1) continues to contravene the requirement or prohibition to which the offence relates, the person is guilty of a further offence on each day that the contravention continues and for each such offence is liable on summary conviction to a fine not exceeding €500

A person guilty of an offence is liable on conviction on indictment to the following fines and penalties: (a) on a first conviction on indictment for any such offence, to a fine not exceeding €60,000 or imprisonment for a term not exceeding 18 months or both;  (b) on any subsequent conviction on indictment for the same  offence to a fine not exceeding €100,000 or imprisonment for  a term not exceeding 24 months or both.

Anyone who is aggrieved by the failure of a relevant grocery goods undertaking to comply with any regulations or with any compliance notice issued, will have the right of action for relief against that relevant grocery goods undertaking in the Circuit Court (any such relief, including exemplary damages, not being in excess of the limits of the jurisdiction of the Circuit Court in an action founded on tort).

The CCPC will have the power to publish a list of relevant grocery goods undertakings who have been found guilty of contravening the regulations or against which contravention notices have issued (in essence a “name and shame” provision).

It is important to note that the introduction of any regulations does not, and cannot, guarantee anything in relation to the prices received by any given link in the supply chain. Negotiations on price will remain an issue between the contracting parties as happens in any commercial relationship.

What the new regulations are intended to achieve is to regulate certain practices, not set prices.

Regulations
Draft regulations are being sent out for consultation with a view to receiving comments by 27 February 2015. Once submissions have been received, they will be examined with a view to drawing-up a final set of regulations which will be brought into force. Public enforcement of the regulations will lie with the recently-formed Competition and Consumer Protection Commission.

This initial set of draft Regulations covers the supply of food and drink (as defined) between retailers and wholesalers on one side and suppliers on the other. Interested parties are invited to supply your comments and observations on this draft set of Regulations.

Apart from your inputs on the draft regulations as circulated, they are also requested to address the following related questions:

The Competition and Consumer Protection Act 2014 provides that Guidelines may also be issued in respect of any regulations brought into force: inputs or suggestions as to what might be included in any such Guidelines would be appreciated (in relation to the draft Regulations attached);

In relation to household cleaning products and toiletries (which the Act also foresees may be covered by regulations), which specific provisions in the attached draft Regulations (covering food and drink) do interested parties consider should be included in any separate regulations covering such products;

In relation to large suppliers which supply smaller retailers (viz those with an annual turnover of less than €50 million), which specific provisions in the attached draft Regulations (covering food and drink) do interested parties consider should be included in any separate regulations covering such situations;

In relation to garden plants and bulbs (which the Act also foresees may be covered by regulations), the Department is currently examining the comments and inputs received as a result of the recent consultation process held in the matter. Notwithstanding this examination, which specific provisions in the attached draft Regulations (covering food and drink) do interested parties consider should be included in any separate regulations covering garden plants and bulbs.

As the Department will be drawing-up a Regulatory Impact Analysis (RIA) in relation to the introduction of the proposed Regulations, the Department is also inviting interested parties to supply an estimate of the likely cost in meeting the compliance provisions of the proposed Regulations (as currently drafted) e.g. in terms of the provision of training, maintenance of records, compliance reports, legal advice, responding to disputes, responding to enforcement audits, etc.

Tags: Grocery Goods, Competition and Consumer Protection Act 2014

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