The Minister for Jobs, Enterprise and Innovation has published a draft code of practice for the grocery goods sector.

The draft code is designed to address concerns about grocery prices and the exercise of market power by retailers. The draft code is proposed to regulate business relationships between retailers and suppliers 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

It is intended to place the final code on a statutory footing under forthcoming legislation to merge the National Consumer Agency and the Competition Authority. Certain retailers and suppliers will then be designated as bound by the code (the current proposal covers retailers and suppliers with an annual turnover of €50m or more in the Republic of Ireland).

Publication of the draft code is a first step: the form of the underlying legislation, and the establishment of a body to oversee compliance and resolve disputes, are still under consideration.  The consultation period for the draft code closes on 1 September 2011.

Contributed by Claire Waterson.

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