The grocery sector in Ireland will have to cope with a new set of rules from 30 April 2016.
On 1 February 2016, the Minister for Jobs, Enterprise and Innovation signed the Consumer Protection Act 2007 (Grocery Goods Undertakings) Regulations 2016. These Regulations will enter into force on 30 April 2016.
The regulations are different than the draft regulations circulated for comment earlier to the industry so businesses supplying to, or trading in, the grocery sector need to now take a fresh look at the regulations as adopted. The lead-in time of less than three months is short given the need for compliance procedures to be introduced.
The regulations touch on three issues: contracts; compliance; and enforcement. Within those three issues, they deal with topics such as promotions, shelf space, wastage, advertising, marketing costs and so on.
In terms of contracts, a “grocery goods contract” is defined as meaning a contract for the sale or supply of grocery goods by a supplier to a relevant grocery goods undertaking. A relevant grocery goods undertaking is, in turn, defined as a grocery goods undertaking engaged in the retail or wholesale of grocery goods in the State that has, or is a member of a group of related undertakings that has, an annual worldwide turnover of more than €50 million" so it applies to wholesalers as well as retailers. It could also apply to new entrants to the Irish market even though their Irish operations would be quite small. A grocery goods undertaking (but not the supplier) must ensure that all of the terms and conditions of a grocery goods contract to which it is a party, are expressed in clear understandable language and recorded in writing. Moreover, such a contract needs to be signed and retained by the supplier and the relevant grocery goods undertaking. The regulations also deal with issues such as variation, termination or renewal of such contracts. There are also rules on forecasts, force majeure and third party supply obligations. The regulations also generally (but not entirely) prohibit payments from suppliers as a condition of stocking, displaying or listing as well as regulate payments (30 day payment terms being the norm) and promotions.
There is an increased burden in terms of compliance requirements for "relevant grocery goods undertakings". This increased burden includes designation and training of staff, maintenance of records and the preparation of an annual compliance report. It is notable that the burden rests very much on the wholesalers and retailers rather than the suppliers.
In terms of enforcement, there are criminal penalties imposed for breaches which will help to ensure compliance and adherence to the new regime.
The new regulations shall apply to grocery goods contracts entered into on or after 30 April 2016. If a grocery goods contract entered into before 30 April 2016 is renewed on or after that date, the Regulations shall apply to the contract on and after the date of its renewal.
The Minister also published draft Guidelines aimed at providing more information and guidance on the regulations. It is possible to make submissions and feedback on the Guidelines to the Department until 29 February 2016.
For further information please contact Dr Vincent Power or any member of A&L Goodbody’s EU, Competition and Procurement Law Group.