THE GOVERNMENT has signalled that it will introduce a statutory code of practice to govern the trading relationship between grocery retailers and their suppliers after efforts to agree a voluntary code were unsuccessful.
This statutory code would ban what are considered to be unfair practices in the grocery trade and would introduce enforcement procedures for any breaches.
These unfair practices include requiring suppliers to pay certain marketing costs and to pay for wastage or spillage of products.
It would also regulate the contracts between the two sides and prevent retailers from amending the terms of deals after they had been agreed.
Many Irish suppliers have complained in recent years of retailers making unreasonable requests for financial support to secure shelf space, and of changing the terms of their deals at short notice.
Minister for Jobs, Enterprise and Innovation Richard Bruton yesterday published a draft statutory code and invited interested parties to submit their views by September 1st.
The draft code was prepared by John Travers, who was appointed in May 2010 as a facilitator to establish whether a voluntary code could be drawn up between the two sides.
Mr Travers’ report shows that retailers were opposed to a statutory code being introduced while suppliers supported the move.
Retailers argued that a statutory code risked a new layer of bureaucracy being introduced, with the costs of this being passed on to consumers.
They argued that retailers could resort to increased imports to avoid such costs and said this would be to the detriment of Irish suppliers.
Retailers said the proposals were weighted too much in favour of the suppliers.
Cork-based grocery wholesale and retail group Musgrave said it has “consistently supported” a voluntary code that would eliminate “out-of-contract, unfair and unsustainable business practices targeted at SMEs, be they retailers or suppliers”.
Musgrave said it would participate in the consultation process.
Suppliers argued that the buying power of large retailers is excessive and gives rise to the transfer of risks and unanticipated costs to suppliers.
Mr Travers’s report came on the same day that Tesco announced the recruitment of 35 new local suppliers at its first ever Irish Expo in Dublin.
They are expected to produce sales with Tesco of more than €3 million, and include desserts producer Glenilen and cookies maker Kooky Dough.
