The Grocery Goods Regulations were signed into law by the Minister for Jobs, Enterprise and Innovation in February this year and will come into force at the end of April 2016. The regulations apply to those retailers and wholesalers who, either alone or part of a group, have an annual worldwide turnover in excess of €50 million and are aimed at overseeing and controlling contractual relationships in the grocery sector (particularly those between supermarkets and suppliers).
The regulations prescribe, amongst other things:
- That suppliers must be paid for goods within 30 days,
- Contracts must be in writing,
- Records must be kept,
- Contracts cannot be varied without express consent of both parties,
- Suppliers cannot be asked for “hello money” i.e. to pay to be stocked, promotions or better positioning on shelves except in strictly specified circumstances, and
- Suppliers cannot be obliged to obtain goods from a third party from whom a retailer receives payment for this arrangement.
Furthermore, the Competition and Consumer Protection Commission has substantial powers to enforce compliance with these regulations, including a graded system of penalties up to a fine of €100,000 or 2 years in prison, as well as a provision explicitly enabling suppliers to take proceedings for damages (including exemplary damages) in the Circuit Court.
The government introduced the regulations in order to ensure transparency and clarity between contractual relations to prevent any further inequality between players in the grocery sector but how do the new regulations affect the retailers and suppliers on the ground?
With the rules only applying to Irish businesses there is now a temptation to use foreign suppliers in order to get around the regulations which will have a detrimental effect on the Irish market as competitors will seek price advantages elsewhere. Retailers and Wholesalers will also now have to review all contracts and ensure they are in compliance with the regulations – both an administrative and costly burden.
New grocery rules will hurt Irish suppliers, says SuperValu