Minister Publishes Legislation to Revoke the Groceries Order
The Minister for Enterprise, Trade & Employment, Micheál Martin has today (Monday December 12, 2005) published the text of the Competition (Amendment) Bill, 2005, which is designed to revoke the 1987 Groceries Order and to strengthen certain elements of the existing Competition Act so as to prevent unfair trading practices in the grocery trade.
Announcing the publication of the Bill, the Minister said: "This draft legislation gives effect to the Government's decision of last month to revoke the Groceries Order and to strengthen certain provisions of the Competition Act 2002. I am delighted it has been possible to produce the Bill in such a short space of time as I believe it is critical at this juncture to provide certainty to participants in the grocery business as to the rules and regulations that govern their trade."
The Minister continued: "The removal of the Groceries Order will introduce greater competition into the grocery trade by allowing retailers freedom to determine the prices which they charge their customers. The sooner we can get this legislation on the statute books the sooner consumers will begin to see the benefit of greater competition in the trade in the form of lower prices."
And he added: "I believe the proposed legislation sets the right balance by prohibiting certain trade practices that might be considered undesirable in certain circumstances and by ensuring that the new competitive environment will be fair for all."
The Minister confirmed that it was proposed to begin debate on the new legislation in the Senate tomorrow (Tuesday 13 December 2005) with a view to having to having the new legislation enacted with the minimum of delay.
The bill can be accessed from the following link:
http://www.djei.ie/publications/commerce/2005/competitionbill.pdf
Notes For Editors
Background
The Competition Act 2002 prohibits anti-competitive behaviour in the economy. It is enforced by the Competition Authority.
Prohibitions in the Act are divided into two categories as follows:
Section 4 prohibits agreements and concerted practices that have the effect of preventing, restricting or distorting competition. The undertakings participating in such activity do not have to be dominant for their activity or conduct to be captured by the provisions of Section 4
Section 5 prohibits similar unilateral conduct (i.e. no agreement or concerted practice is necessary) on the part of dominant undertakings.
The purpose of the amendments to the 2002 Act contained in the attached draft of the Competition (Amendment) Bill 2005 is to prohibit certain unilateral conduct on the part of non-dominant undertakings in the grocery trade which it is feared might emerge following revocation of the Groceries Order and which might not be captured by either S.4 of the 2002 Act (because the conduct did not involve agreements or concerted practices) or by S.5 (because they were not the conduct of a dominant undertaking).
Main provisions of the Bill
The proposed legislation will:
a. revoke the Restrictive Practices (Groceries) Order, 1987
b. prohibit the imposition of resale price maintenance in regard to the supply of grocery goods (resale price maintenance is the practice whereby manufacturers or suppliers specify the minimum prices at which their goods may be resold);
c. prohibit unfair discrimination in regard to the supply of grocery goods. This is a reference to a supplier offering preferential terms to one buyer over another even though the transactions involved are equivalent in nature.
d. prohibit retailers or wholesalers of grocery goods from compelling or coercing suppliers into payment of advertising allowances (e.g. where a retailer seeks payment from a supplier in order to advertise the supplier's goods as a means of attracting customers to the retailer's premises)
e. prohibit retailers from compelling or coercing suppliers into payment of "Hello Money" (i.e. where a retailer demands a payment from a supplier before agreeing to stock that supplier's products). The circumstances in which the practice will be prohibited include on the opening of a new store, an extension to an existing store of a change of ownership of a store.
The conduct described in (b) to (e) above is already prohibited by the Groceries Order. The new legislation will update those provisions, improve the drafting and insert them into the Competition Act. Henceforth, the provisions will be enforced by the Competition Authority whereas the Groceries Order was enforced by the Director of Consumer Affairs.
The prohibitions will be civil in nature. Remedies will include the right of any aggrieved party to seek injunctive relief and the payment of damages, including exemplary damages. The Competition Authority will have a right of action in this regard.
Grocery goods are defined as food and drink for human consumption and this definition includes intoxicating liquor sold for consumption off the premises. Food and drink sold in bars and restaurants are excluded from the definition. Foodstuffs comprise the bulk of products sold in grocery stores.
ENDS
ETE 1476
Last modified: 12/12/2005
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