The Irish Minister for Jobs, Enterprise and Innovation has launched a consultation on draft Regulations governing certain contractual relationships in the grocery sector. The draft Regulations were published on 22 December 2014 and the deadline for responses is 27 February 2015.
The Competition and Consumer Protection Act 2014, which provides for the introduction of such Regulations, allows for rules covering a broad range of grocery goods in many different types of contracts. The draft Regulations are, however, limited in application to contracts concerning food or drink and do not apply to all parties in the supply and distribution chain. It remains to be seen whether broader or further Regulations will be enacted in due course.
The draft Regulations would apply to contracts between:
- Suppliers (i.e., parties involved in direct supply to any wholesaler or retailer) of food and/or drinks in the State; and
- Wholesalers or retailers of food and/or drinks in the State with annual worldwide turnover of more than €50 million.
While most food and drink intended for human consumption is covered, certain limited exceptions apply. Some key elements of the draft Regulations applying to contracts within their scope include:
- A requirement for good faith, fairness, openness and transparency in trading relationships
- A requirement for contracts to be expressed in plain language, recorded in writing and signed by both parties
- Restrictions on unilateral changes to contracts
- Default payment terms
- Specified mandatory contractual terms on liability for non-performance
- Restrictions on requirements for payments by suppliers for shelf space, customer complaints, marketing costs, advertising costs, wastage and shrinkage
- A requirement for certain records to be retained and for annual compliance reports to be made to the Competition and Consumer Protection Commission by the wholesaler/retailer
The terms of the Regulations, when enacted, may not be waived and any contravening term will not be binding against suppliers. Other penalties are also applicable.
The Regulations will only apply to contracts entered into or renewed on or after the date on which the Regulations come into force.