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Consultation on a Draft Code of Practice for the Grocery Goods Sector

The Irish Minister for Jobs, Enterprise andInnovation has published for consultation a draft Code of Practice forthe grocery goods sector.

The draft Code is designed to address concerns about grocery pricesand the exercise of market power by retailers.  The draft Code isproposed to regulate business relationships between retailers andsuppliers in the sector, in particular by:

  • Restricting the ability of retailers to require suppliers to contribute to marketing, shrinkage, and wastage costs
  • Limiting the circumstances in which a retailer may require payments as a condition of listing products or improving shelf positioning
  • Regulating payments made towards promotions
  • Imposing annual reporting obligations on compliance with the Code

Although the introduction of a voluntary code was first mooted anumber of years ago, it is now intended to place the final Code on astatutory footing under forthcoming legislation to merge the NationalConsumer Agency and the Competition Authority. Certain retailers andsuppliers will then be designated as bound by the Code (the currentproposal covers retailers and suppliers with an annual turnover of €50million or more in the Republic of Ireland).

Publication of the draft Code is a first step: the form of anyunderlying legislation and the establishment of a body to overseecompliance and resolve disputes are still under consideration.  Theconsultation period closes on 1 September 2011.