Industry responds to Tanaiste’s grocery proposals

The Tanaiste has opened a window for interested parties to put forward submissions on her proposed code of practice for the grocery industry. It is not yet known whether the code will be voluntary or statutory
The Tanaiste has opened a window for interested parties to put forward submissions on her proposed code of practice for the grocery industry. It is not yet known whether the code will be voluntary or statutory

The grocery industry has responded to the Tanaiste's proposed Code of Practice, submissions will be considered over the following consultation period

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11 September 2009 | 0

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The Tánaiste’s proposals for a grocery code of conduct and ombudsman should be broadened “beyond grocery,” the CSNA has said. If an ombudsman’s office is created, it should deal with all unfair issues within the industry, said CEO Vincent Jennings, including unfair banking charges, the Revenue Commission’s decision to double the price of revenue excise for off-licences, and also dealings with local authorities, NERA, ESB and An Bord Gais.

However, he told ShelfLife that he “failed to see where the benefit of an ombudsman for suppliers would lie,” unless they were prepared to put their names to grievances. “The way things are, suppliers are free to go to the competition authority with a complaint.”

He added that in order for an ombudsman to adjudicate on behalf of suppliers, they would still be required to air grievances without retaining their anonymity, which many are reluctant to do for fear of losing business from the multiples.

RGDATA is also compiling a response to the Tánaiste’s proposals. “When the Groceries Order was removed, the fair play practices went also. At the time we had said these should be continued in order to ensure a level playing field,” said director general Tara Buckley. “It seems timely they’re coming back now,” she added.

In her view, it is not independents who engage in unfair practices with suppliers. She therefore believes such legislation would primarily “put manners” on the multiples, which she believes should be forced to reveal profits made from operating in the Republic of Ireland.  

“Whatever the Government decides to do it needs to maintain the good diversity and competition offered by the independent grocer sector, which holds a 40% market share.”

Superquinn has also defended itself against a Sunday Times article which reported it was charging suppliers for a “wastage allowance” and promotional shelf space. The supermarket said this represented “standard practice across the industry,” and the Competition Authority was satisfied its 2008 price list “was part of normal business practice.”

Musgrave has also said it is “fundamentally opposed” to ‘hello money’ and “illegal, unfair and unsustainable business practices which put the existence of suppliers at risk and damage the reputation of the industry.” It argued however that a distinction must be made between “sharp practices” and legitimate negotiation.

Tesco Ireland’s chief executive Tony Keohane, when asked in May if the company was “calling in” its suppliers to ask for payments to fund 25% price cuts, said: “We are communicating with our suppliers, we are explaining the new reality to them. They have to compete on price. It is a gap that they have to bridge.”

Meanwhile, Fine Gael spokesman Michael Creed told ShelfLife, he hopes the grocery proposals consultation period isn’t “prolonged” and that suppliers who lobby the Tánaiste “leave her in no uncertain terms” about the “vanguard of change” that needs to take place, through the implementation of a statutory code.

 

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