Food & Beverage Update: Irish Regulator to Begin Inspections in the Grocery Sector
13 September 2018
Regulations covering contracts between suppliers and wholesalers or retailers of a certain size came into effect in 2016. Up until now, the Competition and Consumer Protection Commission (CCPC) has allowed those involved time to familiarise themselves with their obligations under the Regulations. The CCPC has now announced it is about to start inspections in the grocery sector to ensure traders are complying with their obligations.
Scope of the Regulations
The Consumer Protection Act 2007 (Grocery Goods Undertakings) Regulations 2016 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
- 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
- Seeking payments for wastage or shrinkage
Compliance and enforcement
Wholesalers and retailers are 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 CCPC is the designated Irish regulator and has extensive powers under the Regulations and associated legislation. The CCPC has given retailers and wholesalers over a year to get used to their obligations under the Regulations, the format of the annual reports and to put the required contracts in place. This is now set to change with the head of the CCPC Isolde Goggin stating recently that the CCPC is “moving into an area of inspections”.
Potential penalties for non-compliance with the Regulations range from imprisonment to a fine of up to €100,000 or both. Wholesalers and retailers should now take the time to check that they are in compliance with the Regulations, in order to avoid potential investigations and/or penalties from the CCPC.
The content of this article is provided for information purposes only and does not constitute legal or other advice.