An Roinn Talmhaíochta, Bia agus Mara │ Department of Agriculture, Food and the Marine - PowerPoint Presentation

1. An Roinn Talmhaíochta, Bia agus Mara │ Department of Agriculture, Food and the MarineUnfair Trading Practices RegulationsandOverview of NFO public consultation submissionsFood Industry Development DivisionDepartment of Agriculture, Food and the Marine

2. What do we mean by Unfair Trading Practices (UTPs) ?UTPs can broadly be defined as practices that grossly deviate from good commercial conduct,are contrary to good faith and fair dealing and are unilaterally imposed by one trading partner on another (EC Communication 2014)

3. Why the need to deal with UTPs ?Detrimental mainly to otherwise viable smaller operators such as agricultural producers and SME processors of food products Endanger profitability and ability to compete fairly and to affect their capacity to invest and innovate with regard to the quality of products and services offeredUndermine trust in the overall fairness of the food supply chainCreate dissimilar business conditions for operators Impair the CAP objective of ensuring a fair standard of living for the agricultural community - jeopardises the profitability of farmers and lead to downward pressure on their market income (European Commission Impact Assessment 2018)

4. Importance of fairness in the food supply chain Key stakeholder involvement 2018 EU Wide Opinion Poll 88% of respondents considered that strengthening farmers' role in the food supply chain is importantNational legislation

5. Current Status April 2019: Directive No. 2019/633 on unfair trading practices in business-to- Business relationships in the agricultural and food supply chain 1 May 2021 Deadline for Transposition into national law Ireland 2018 and 2019 Public consultations2020 Commitment in the Programme for Government provided that a new National Food Ombudsman would enforce the Directive and deal with price reporting and analysis - primary legislation Two stage approach 28 April 2021 S.I. No. 198 of 2021 transposing - Minimum Harmonisation Approach11 June 2021 End of public consultation on primary legislation On-Going Primary legislation under preparation for new Office and extending UTP Legislation

6. Key points of UTP legislation Aims to improve the protection of farmers and small, medium and mid-range sized suppliers against stronger buyersProhibits 16 unfair trading practices Provides for an Enforcement Authority and penalties

7. Agricultural and food products - All agriculture and food products included in Annex I to the EU Treaty and products not listed in that Annex but processed for use as food using products listed in that AnnexIncludes non food products such as live trees, plants, cut flowers sup­plied by for planting or for ornamental useproducts the milling industry e.g. malt.

8. Suppliers to be protected and buyers Who is a supplier?IncludesFarmerProcessor Distributor, e.g. wholesalerProducer organisation, including cooperativesNursery garden centres, florists Who is a buyer?Includes ProcessorDistributor, e.g. wholesalerProducer organisation, including cooperatives when they buy from their farmer membersNursery garden centres, florists A retailer or retail associationPublic authorities

9. ComplaintsSuppliers Organisations on behalf of members - Legitimate interest

10. Suppliers to be Protected – Size of turnover (supplier vs buyer)UTPs are less likely to occur when the parties to a transaction have symmetric bargaining power (EU impact assessment)

11. Prohibited UTPsPayments later than 30 days for perishable agricultural and food productsperishable agricultural and food products’ means agricultural and food products that by their nature or at their stage of processing are liable to become unfit for sale within 30 days after harvest, production or processing. Payment later than 60 days for other agricultural and food products Short-notice cancellations of perishable agricultural and food productsUnilateral contract changes by the buyer Fees not related to a specific supply transaction

12. Prohibited UTPs contd6. Risk of loss and deterioration transferred to the supplier7. Refusal to agree to written confirmation of a supply agreement, by the buyer if requested 8. Misuse of trade secrets by the buyer9. Commercial retaliation by the buyer10. Transferring the costs of examining customer complaints to the supplier

13. Prohibited UTPS unless agreed beforehandThe buyer returns unsold products to the supplier without paying for those unsold productsPayment by the supplier for promotion Payment by the supplier for stocking, display and listing Payment by the supplier for marketing Payment by the supplier for advertisingPayment by the supplier for staff of the buyer, fitting out premises

14. Investigation and Enforcement of rules – DAFM Power to Conduct investigations (complaint or on its own initiative)Require buyers and suppliers to provide all necessary informationCarry out unannounced on-site inspectionsTake decisions if finds an infringementIssue a compliance noticeInitiate proceedings for the imposition of fines Publish decisions following investigation

15. Enforcement – Penalties and Prosecutions A person who commits an offence is liable(a) on summary conviction, to a class A fine or to imprisonment for a term not exceeding 6 months or to both, or(b) on conviction on indictment, to a fine not exceeding €500,000 or to imprisonment for a term not exceeding 3 years or to both. Open to Alternative Dispute Resolution

16. Important dates 28 April ‘21: Transposition date 1 July ‘21: All New contracts/ agreements must be compliant (incl from 28 Apr)28 April ‘22: Existing Contracts/ Agreements

17. Considerations when making supply agreementsDoes this arrangement include a practice that deviates from good commercial conduct?Is this agreement contrary to good faith and fair dealing? Is there something unilaterally imposed?

18. Overview of Submissions to NFO/new Office Consultation

19. Primary legislation for new OfficeThe Programme for GovernmentNational Food Ombudsman (NFO) - to enforce the Unfair Trading Practices Directive.- a specific role in analysing and reporting on price and market data in Ireland.

20. Public consultationWhat powers should the new Office have (in addition to UTP)?Should we extend/amend rules in UTP Directive? Inform principles and policies for primary legislation

21. No of submissions27 Submissions received20% Representative organisations20% Farmer/primary producers10% Producer organisation25% Other

22. Questions on Market transparency Q 2.3 Negative consequences? Yes 40% No 60% Q.2.4 Who would benefit? Suppliers 35%Buyers 25%Consumers 40%Q.2.5 Open to providing additional data to improve market transparency?Yes: 70%No: 30%

23. Questions on Extending Unfair Trading Practices

24. Q.3.1 Changes to turnover 3.1 Should Categories of Turnover be changed? Yes: 65% No: 35%Turnover Values are too high relative to the size of companies in Ireland. Max turnover €350m should be increased Include markets that might have monopoly/oligopoly powers No minimum or maximum turnover - Office should have the powers to investigate complaints irrespective of the level of turnoverMax turnover €350m should not be increasedTurnover levels should not be changed

25. Q 3.2 Change Grey to Black UTPsQ.3.2 Should Grey UTPs to Black UTPs Yes: 70% No: 30%All Grey UTPs should be Black Specific UTPs should be BlackClear Guidelines needed for GreyMore time needed to assess implementation/impact to consider all aspects of contracts and unforeseen consequences Option to change following review later

26. Q.3.3 Additional Unfair Trading PracticesQ.3.3 Is the List of UTPs sufficient? Yes: 30% No: 70%Discrimination and retaliation including delisting related activities Below cost of production selling Unilateral imposition of Quality standards Labelling/Marketing related More time needed to see how implementation operates Grocery Goods Undertakings regulations sufficient with UTPs

27. Q.3.4 and 3.5 Alternative Dispute Resolution and engagement with stakeholders Q.3.4 Should the Office promote ADR?Yes: 85% No: 15%Q.3.5 Should the Office: Engage with Stakeholders: 90% Promote of best practices in agreements 85% Educate stakeholders 65%

28. Q 3.6 Other changes? Q.3.6 Should there be other changes Yes: 70% No: 30%Should deal with all Annex 1 and non-Annex 1 products and relevant non-food grocery products.Regulated practices covered by the existing Grocery Goods undertakings Regulations needs to be maintained Office should deal with below cost selling Have an industry wide forum before recommendations made Recognise role of democratically elected supplier representatives

29. Other suggestions included in written submissions Need clarity between Competition and Consumer Protection Commission Office should have strong enforcement powers Levy fines on buyers in breach of the legislation, outside of the statutory legal framework/courts systemOffice should be a spokesperson for the agri-food sector in communicating what is fair and sustainable trade Office should proactively promoting good conduct, fair trading and fair pricing and identify emerging risks Should include general supervision of the supply chain without necessity of opening infringement proceedings There should be a Meat/red meat regulator

30. Other suggestions included in written submissions contd.Market transparencyReport market transparency on the different stages in the supply chainAggregated vs Specific - Quarterly reportingSeek specific information from buyers Investigate into the entire breadth of the supply chainEnsure uniformity and consistency of certain practices in the sector Reference to role regarding competition law considerations including risk of cartels and market share

31. Q 4.1Practical implications Minimise administrative burden and costsRetain right to make contract changesConsideration to parties in the middle of the supply chain - buyer and supplierDifficulties in 30 days

32. Complexity of agri-food supply chain, multiple actors and channelsThe level of burden imposed on operators regarding data collection;The commercial sensitivities of price data and margins and the right of operators to protect themselves Capacity and Capability to collect data

33. Q.4.2 Name of new Office An Ombudsman is someone who deals with complaints from members of the public about services they have engaged with. They are not regulators.

34. Next Steps Draft Primary legislation for new Office including incorporating the UTP EAComparison with other bodies Legal issuesOireachtas pre-legislative scrutiny

35. Finally – reminder UTPs can be enforced from 1 July 2021 for new agreements28 April 2022 existing agreements Oral or written contracts Contact: UTP@agriculture.gov.ie

36. Thank you