Balance of power shifts away from supermarket giants towards small suppliers

NEW GROCERY SECTOR regulations are set to come into effect that are aimed at balancing the power dynamic between Irish suppliers and large retailers.

The new rules will affect retailers and wholesalers of food and drink based in Ireland with a worldwide turnover that exceeds €50 million, such as Tesco, Dunnes Stores, and Aldi.

Retailers will now be obliged to pay suppliers for goods within 30 days under the changes signed into effect by Minister for Jobs, Enterprise and Innovation Richard Bruton. The amended regulations also require both parties to keep a copy of all new or renewed contracts in writing.

List of changes under the new grocery regulations:

• Grocery goods contracts will be required to be in writing
• Without the express consent of both parties contracts cannot be varied or terminated
• Suppliers cannot be obliged to obtain goods or services from a third party from whom a retailer or wholesaler receives payment for this arrangement
• New provisions will be introduced to deal with non-performance due to circumstances beyond the parties’ reasonable control
• Suppliers can request retailer or wholesaler to provide forecast of the goods that will be needed
• Restrictions on suppliers being asked to pay for stocking goods, better positioning on shelves, advertising, and wastage
• Suppliers must be paid for goods within 30 days.

Good news for suppliers and consumers

Representatives from Food and Drink Industry Ireland (FDII) have welcomed the regulations as a way to address some of the pressure major retailers are able to exert on suppliers.

FDII director Paul Kelly said this redress of power is good news for both suppliers and consumers.

“Consumers are best served by a grocery market that is both fair and competitive, one that offers choice and convenience, and provides an outlet for new products and suppliers. Ireland has been slow to act, but the new rules will help to address some of the unfair pressures currently put on suppliers by major retailers,” he said.

“The regulations present a unique opportunity to create a fair trading environment in the Irish grocery sector, it is now up to the Competition and Consumer Protection Commission (CCPC) to effectively and efficiently enforce the rules.”

Time to adjust

The CCPC have been charged with ensuring compliance to the new regulations by retailers and wholesalers who are affected by the new regulations.

Ahead of the changes coming into effect on 30 April, CCPC chairperson Isolde Goggin said they will be liaising with retailers to remind them of their obligations.

“We have a significant engagement programme planned, which will provide affected grocery businesses with the necessary knowledge they need to put in place the required compliance structures,” she said.

“The new grocery regulations are an important addition to the enforcement tools we have at our disposal and we are committed to using all of our powers to create a culture of compliance in the grocery sector to benefit consumers and businesses.”