Unilateral conductUnilateral conduct by non-dominant firms
Are there any rules applying to the unilateral conduct of non-dominant firms?
As a result of the Competition (Amendment) Act 2006, the following types of unilateral conduct on the part of both dominant and non-dominant ‘grocery goods undertakings’ are prohibited (provided that such conduct has the object or effect of restricting, distorting or preventing competition):
- the unilateral application by grocery goods undertakings of dissimilar conditions to equivalent transactions with other grocery goods undertakings;
- any attempt by retailers to compel or coerce the payment of allowances from wholesalers or suppliers in return for advertising particular grocery products in stores; and
- any attempt by retailers to compel or coerce the payment of allowances from wholesalers or suppliers in return for the provision of retail space in newly opened, newly expanded or newly managed stores (a practice referred to in Ireland as ‘hello money’).
A ‘grocery goods undertaking’ means any undertaking (other than in the restaurant and catering sector) engaged for gain in the production, supply or distribution of food or drink for human consumption.
In addition to the regime for grocery goods undertakings under the Competition (Amendment) Act 2006, the Consumer Protection Act (Grocery Goods Undertakings) Regulations 2016 (the Regulations) came into effect on 30 April 2016 and apply to contracts entered on or after this date and contracts entered into before 30 April 2016 but renewed after this date. The Regulations impose new obligations on retailers or wholesalers who, either alone or as part of a group, have an annual worldwide turnover in excess of €50 million. The Regulations apply to these parties’ arrangements with suppliers for the purchase of ‘grocery goods’.
The Regulations impose new obligations on grocery goods undertakings to do the following in particular:
- have a written signed contract in place;
- not vary, terminate or renew a grocery goods contract unless this is expressly provided for and the relevant contract provides for a reasonable notice period;
- provide (on request from a supplier) a forecast of the grocery goods likely to be required in respect of a given future period;
- unless expressly provided for by written contract, pay suppliers within the later of: 30 days of the date of receipt of any invoice; and the date of delivery; and
- not compel a supplier to pay for stocking; promotions; marketing; retention, increased allocation or positioning; advertising or display; wastage; or shrinkage.
Breach of the Regulations (including failure to comply with any contravention notice issued by the CCPC under the Consumer Protection Act 2007) may result in prosecution of a non-compliant ‘grocery goods undertaking’, either by summary or indictment with a maximum potential penalty of a fine of up to €100,000. Failure to comply can also result in criminal prosecutions of individuals including the imposition of fines and terms of imprisonment for relevant directors and officers of the companies concerned.
The CCPC also has powers to investigate compliance with the Regulations and to ‘name and shame’ offenders and statute also provides a legal basis for civil damages actions for breach of the Regulations. In 2018, the CCPC announced that it had begun inspections of relevant grocery goods undertakings to monitor compliance with the Regulations. The CCPC has also called for the introduction of a dedicated Grocery Regulator to enforce the Regulations and any further legislation that may be forthcoming in this sector.