Competition Law Update: Grocery Goods Regulations introduced in Ireland
11 August 2016
With effect from 30 April 2016, Ireland has introduced a new set of laws regulating the legal relationship between suppliers of food and beverage foodstuffs to certain wholesalers and retailers of those goods.
Since 2006, the Irish Government has in various ways sought to better regulate the legal relationship between suppliers of foodstuffs and those undertakings that sell them. This arises from a perception of an imbalance in the bargaining positions of the parties. The Consumer Protection Act 2007 (Grocery Goods Undertakings) Regulations 2016 (“Regulations”) were introduced to better balance that relationship.
Scope of the Regulations
The Regulations apply to "grocery goods contracts" which are contracts between: (i) a supplier of food and beverage products that are intended to be sold for human consumption; and (ii) wholesalers and retailers of those goods. The Regulations do not apply to suppliers of other goods and only apply if the wholesaler or retailer has an annual worldwide turnover of more than €50 million in those goods.
Obligations under the Regulations
There are three main types of obligations under the Regulations. There are mandatory obligations, restrictions with statutory exceptions and restrictions that can be varied by the terms of the supply agreement itself.
Some of the main obligations and restrictions include:
- a requirement on retailers to provide written supply contracts in clear understandable language;
- a requirement on retailers to provide forecasts;
- a prohibition on seeking payment from a supplier for advertising or displaying goods;
- restrictions on retailers requesting a supplier to use the goods or services of a third party designated by the retailer; and
- restrictions on retailers seeking payments for stocking, displaying or listing suppliers goods.
As noted above, certain of the restrictions can be varied by the terms of the supply agreement and these include restrictions relating to:
- varying, terminating or renewing a supply contract;
- seeking payment in respect of promotions;
- seeking payment for retention, increased allocation or better positioning of shelf space; and
- seeking payments for wastage or shrinkage.
Compliance and enforcement
Wholesalers and retailers are now made subject to a compliance regime in Ireland which requires the appointment of a "liaison officer" under the Regulations and the training of relevant personnel in the wholesaler or retailer. Wholesalers and retailers must also submit an annual compliance report and maintain records under the Regulations.
The Competition and Consumer Protection Commission is the designated Irish regulator and has extensive powers under the Regulations and associated legislation.
In many cases, non-compliance with the Regulations is an offence.
The Regulations are unique to Ireland and are not based on EU law. While the UK introduced requirements between suppliers and wholesalers and retailers some years ago the two systems are quite different.
Therefore it is important for:
- everyone involved to review their supply contracts to ensure compliance with the Regulations;
- relevant Irish wholesalers and retailers to implement the Regulations and put compliance procedures in place;
- Irish suppliers to familiarise themselves with their rights under the Regulations; and
- for suppliers supplying cross-border between Ireland and the UK to be familiar with both systems and their differences.
For more information, please contact a member of our Competition and Antitrust team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.