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New grocery goods regulations signed into law printable version

02 Feb 2016: posted by the editor - Ireland

New regulations aimed at regulating certain practices in the grocery goods retaikl and supply sectors have been signed into law by the Government.

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, among the areas covered by the regulations, which cover food and drink products, are:

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

Furthermore, the Competition and Consumer Protection Commission has substantial powers under the Consumer Protection Act 2007 to enforce compliance with these regulations, including a graded system of penalties up to a fine of €100,000 or 2 years in prison, as well as a provision explicitly enabling suppliers to take proceedings for damages (including exemplary damages) in the Circuit Court.

These regulations deliver on an important commitment in the Programme for Government and will enter into force on 30 April 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 EU Commission is also examining the issues of relationships in the food chain and that there may be some initiatives forthcoming in 2016. However, the Government has recognised that there is a need to do something now in Ireland on this issue.

The Minister said: “In 2014, through the Competition and Consumer Protection Act, powers were provided 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. 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. These regulations will focus on food and drink, which have clearly been the products on which there has been most concern expressed.

“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.”

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 is introducing 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.

Guidelines
Draft guidelines are also being sent out for consultation with a view to receiving comments within one month of issue. Once submissions have been received, they will be examined with a view to drawing-up a final set of guidelines which will then be issued well in advance of the date of entry into force of the regulations.

RIA
A Regulatory Impact Analysis (RIA) has been prepared on these regulations and will be published on the Department's website.

Link to regulations: www.djei.ie/Djei/en/Legislation/Legislation-Files/SI-No-35-of-2016.pdf
Guide to regulations: www.djei.ie/Djei/en/Legislation/Legislation-Files/Draft-Guidelines-Grocery-Goods-Regulations-January-2016.pdf

Tags: grocery goods legislation

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