The Consumer Protection Act 2007 (Grocery Goods Undertakings) Regulations 2016
One of the final pieces of law introduced before the dissolution of the government was the Consumer Protection Act 2007 (Grocery Goods Undertakings) Regulations 2016 (the “Regulations”) that were signed into law on 27 January 2016 and apply to retailers and wholesalers in the State having a worldwide turnover of more than €50 million (“retailers”). The Regulations impose significant new requirements on contracts between suppliers and retailers or wholesalers and introduce wide reaching provisions with regard to compliance. The Regulations will commence on 30 April 2016 and will apply to any contracts entered into or renewed after that date.
Some of the key provisions of the Regulations are outlined below:
Contract in writing
Contracts between retailers and suppliers must be in writing in future, containing all of the terms and conditions of the contract in clear understandable language. A signed copy must be given to the supplier. The contract may not be varied, terminated or renewed unless it contains an express provision allowing that, including the period of written notice to be given in respect of such variation, termination or renewal, which must be reasonable. Unless the contract makes express provision for a different timeframe in respect of payments, a retailer must pay the supplier either within 30 days of the date of receipt of invoice or within 30 days of the date of delivery of the goods whichever is the later. Retailers should move to ensure that they have appropriate written contract templates prepared in order to comply with this onerous requirement.
A retailer may not require a supplier to obtain goods or services from a third party from whom the retailer receives payment in respect of the arrangement. This does not apply where the supplier’s source for the goods or services fails to meet reasonable quality standards or charges more for the goods or services than the third party proposed by the retailer.
If requested to do so by the supplier, the retailer must provide the supplier with a forecast of the goods required from the supplier. The forecast must be made in consultation with the supplier, be prepared in good faith and with due care, skill and diligence and given to the supplier along with confirmation in writing of the basis on which it was prepared.
Payments from Supplier
The retailer may not seek payment from the supplier as a condition to stocking, displaying or listing the supplier’s goods unless the payment is based on an objective and reasonable estimate of the cost, with different considerations depending on whether the supplier is dealing with a single store or multiple stores in a chain. Again the supplier may request a statement of the estimate of costs along with the basis on which the estimate was prepared.
The Regulations provide that a retailer may not request a supplier to make a payment in respect of any of the following unless (inter alia) the contract makes express provision for such payment:
- promotion of the supplier’s goods
- marketing costs
- retention of shelf space or increased allocation or better positioning of shelf space
- wastage and
- (retailers only) shrinkage.
The retailer may not compel a supplier to make any payment for the advertising or display of goods of the supplier on the retailer’s premises.
The retailer is required to designate and train appropriate members of staff to be responsible for compliance with the Regulations and the dissemination of information relating to the Regulations to other employees. The retailer is also required to provide the Competition and Consumer Protection Commission (the “Commission”) with details of a member of staff nominated to liaise with the Commission (a “liaison officer”). Guidelines on the Regulations published by the Department of Jobs Enterprise and Innovation suggest that the liaison officer should not be involved directly in purchasing but should more probably be a person already in a compliance role within the organisation. The liaison officer shall be appointed and the appropriate staff designated and trained within three months from the commencement of the Regulations, therefore no later than 31 July 2016.
Regulation 18 provides that a retailer shall, as soon as practicable but not later than 31 March each year, submit an annual compliance report to the Commission detailing the organisation’s compliance with the Regulations and setting out specific information required by the Regulations. The actual form of report will be prescribed by the Commission. The first report shall cover the period 30 April 2016 to 31 December 2016.
All relevant records are to be maintained for a period of 6 years and be available for inspection by the Commission.
Over the next three months retailers coming within the remit of the Regulations need to put in place compliance structures and review their existing contracts to ensure they deal with all the requirements of the Regulations. Suppliers should also become familiar with the provisions of the Regulations and understand their rights.