The Competition and Consumer Protection Bill 2014 was published on 31 March 2014. It is envisaged the Bill may be enacted into law as early as, this month, July 2014.
The Bill, once enacted, will make a number of key changes to the application of competition law and consumer protection in Ireland. Specific provisions are reserved for the grocery goods sector. Some of the headline items arising for the grocery goods sector are highlighted below.
- The Bill enables the Minister for Jobs, Enterprise and Innovation to issue regulations to control certain practices and aspects of commercial relationships in the grocery goods sector primarily between "relevant grocery goods undertakings" (i.e. larger players) and other "grocery goods undertakings" (i.e. smaller players).
- The Minister has stated that regulations will be brought into force as soon as practicable after the Bill has been enacted and to enable this, regulations are currently being prepared in parallel.
- Negotiations on price will remain an issue between the contracting parties. The regulations will regulate certain practices but not prices.
- "grocery goods" means any food or drink that is intended to be sold for human consumption and includes any substance or thing sold or represented for use as an additive, ingredient or processing aid in the preparation or production of food or drink for human consumption, and intoxicating liquors
but does not include food or drink served or supplied on the premises of a grocery goods undertaking in the course of providing catering, restaurant or take-away services or any similar hospitality services, or intoxicating liquor served or supplied for consumption on the premises of a grocery goods undertaking.
Household cleaning products, toiletries, garden plants and garden plant bulbs also come within the definition of "grocery goods".
As highlighted above, under the Bill the Minister can issue regulations which can impose key contractual requirements in particular in relation to contracts between "relevant grocery goods undertakings" and other (smaller) "grocery goods undertakings".
- "grocery goods undertakings" are undertakings engaged in the production, supply or distribution, wholesale or retail of grocery goods, whether or not the undertaking is engaged in the direct sale of those goods to the public.
"relevant grocery goods undertakings" are grocery goods undertakings that are engaged in the production, supply, distribution, wholesale or retail of grocery goods and have, alone or together with a group of related undertakings, an annual worldwide turnover of more than €50 million.
- The Minister has stated that an aim is the prevention of certain practices such as the unilateral alteration of contracts by retailers, requiring ‘hello money’ for space on supermarket shelves and suppliers being required to bear the cost of promotions by retailers or for wastage or shrinkage.
Among the contractual requirements that may be provided for and specified under the Regulations are:
- The form of contract to be entered into by a grocery goods undertaking for the supply of grocery goods to, or the purchase or receipt of goods from, a relevant grocery goods undertaking.
- The ways in which a contract for the sale or supply of grocery goods may be varied, terminated or renewed.
- When arrangements relating to the supply or delivery of grocery goods may be varied.
- How certain terms and conditions are to be incorporated into contracts including payment, ordering, supply and promotion.
- The requirement that the conditions under which a relevant grocery goods undertaking may, or may not require a supplier or retailer to obtain goods or services from a third party, and the liability of a party for delays or failures in contract performance beyond the reasonable control of that party, be included in the contract.
- When a relevant grocery goods undertaking may seek payment from a grocery goods undertaking in respect of shrinkage, wastage or marketing costs.
- When a relevant grocery goods undertaking may or may not charge a supplier for listing grocery goods.
- How forecasts for the supply of grocery goods are to be prepared and communicated.
- When a relevant grocery goods undertaking (as a retailer or wholesaler) may, or may not, seek payment from a supplier to retain shelf space or to secure better positioning or an increase in shelf space allocation.
- A prohibition on relevant grocery goods undertakings from compelling grocery goods undertakings to make payment for (i) the promotion of goods on the premises of the relevant grocery goods undertaking, (ii) to retain shelf space, or (iii) to secure better positioning or increase shelf space allocation.
- Limitations on the obligation of grocery goods undertakings to participate in promotions by relevant grocery goods undertakings or similar activities in relation to grocery goods.
- The manner and timing in which payments for grocery goods supplied to relevant grocery goods undertakings are to be made.
- An annual compliance report to be produced by relevant grocery goods undertakings for submission to the new Competition and Consumer Protection Commission.
- Designation and training arrangements for staff and the nature and type of information, documents and records that must be retained by a relevant grocery goods undertaking and the length of time they should be kept.
Breach: Failure to comply with the Regulations or with any Contravention Notice which may be issued under the Regulations is an offence and sanctions for such offences may be pursued summarily or on indictment with including fines (of up to €100,000 or a second or subsequent conviction or indictment) and/or imprisonment for up to 24 months.
Conclusion: This Bill provides a mechanism for significant new law to be made in the area of contractual relations between larger and smaller grocery goods undertakings and is aimed at redressing perceived inequalities in bargaining positions between smaller and larger undertakings in the supply chain.
The Bill which is currently before the Houses of the Oireachtas may be enacted into law as early as, this month, July 2014. Regulations under the Bill are currently being drafted and are expected to issue as soon as possible after the Bill becomes legislation. Accordingly from a timing perspective, legislation is close to being settled.