New law bars retailers from charging suppliers for shelf space

Large grocery chains will be prohibited from charging suppliers for shelf space or forcing them to pay for promotions or marketing campaigns as part of a major overhaul of retail rules which were signed into law on Monday morning.

The new rules announced by the Minister for Jobs, Enterprise and Innovation, Richard Bruton will also force retailers to give suppliers contracts in writing and stop contracts being varied or terminated except with express consent of both parties. In the future suppliers will have to be paid for goods within 30 days.

Suppliers will no longer be obliged to obtain goods or services from a third party if a retailer or wholesaler receives payment for the arrangement, while provisions will have to be put in place by retailers to deal with “force majeure” non-performance due to circumstances beyond the parties’ reasonable control.

Suppliers will also be able to require of retailers or wholesalers a forecast of the goods that will be needed with any particular order.

There will also be a prohibition on suppliers being required to pay for the stocking or listing of goods or for promotion or marketing costs. Retailers will not be able to charge for better positioning on shelves or for advertising, wastage or shrinkage - except in strictly specified circumstances, based on free agreement between the parties.

Measures to ensure compliance by retailers or wholesalers will include requirements that staff be designated and trained as responsible for compliance and the submission of annual compliance statements and the retention of records.

The Competition and Consumer Protection Commission has substantial powers under the Consumer Protection Act 2007 to enforce compliance with these regulations, including a graded system of penalties up to a fine of €100,000 or two years in prison, as well as a provision explicitly enabling suppliers to take proceedings for damages (including exemplary damages) in the Circuit Court.

The new laws are aimed at rebalancing relationships between different players in the grocery goods sector and ensuring that dealings in the sector are fair and sustainable and operate in the interests of jobs, consumers and sustainable safe food.

The EU Commission is also examining the issues of relationships in the food chain and that there may be some initiatives forthcoming in 2016. However, the Government has recognised that there is a need to do something now in Ireland on this issue.

“There is potentially a real inequality between these players which can be abused in a manner that is not in the interests of jobs, consumers or sustainable safe food,” Mr Bruton said.

“I am now signing an initial set of regulations into law [WHICH]will focus on food and drink, which have clearly been the products on which there has been most concern expressed.”

He said relationships between retailers and suppliers “will continue to be based on commerce and prices will continue to be set by hard negotiations - this is in the interests of consumers”.

He said: “However, new legal provisions will require that in future, contracts must be in writing, certain terms must be included, records must be retained for inspection and a compliance statement must be made. These measures together with strong enforcement powers will ensure that these relationships are fair and sustainable.”